CONSTRUCTIVE FINANCE P LTD., Jaipur V. DEPUTY COMMISSIONER OF INCOME TAX, Jaipur

ITA 723/JPR/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3582 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 29-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 26-09-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A S NEHRA JCIT DR DHK
• Assessee Lawyers: MANISH MEHTA
• Keywords: Rule 8D
• Section: 14A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,O JH HKKXPUN] YS[KK LNL; LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, AM VK;DJ VIHY LA-@ ITA NO. 723/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR: 2012-13 M/S. CONSTRUCTIVE FINANCE PVT. LTD 414/1, 4 TH FLOR, DDA COMMERCIAL COMPLEX, DISTT.CENTRE, JANAKPURI, NEW DELHI-1100588 CUKE VS. THE DCIT CIRCLE - 1 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AACCC9252 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI MANISH MEHTA, CA JKTLO DH VKSJ LS@ REVENUE BY:SHRI A.S. NEHRA, JCIT - DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 09/05/2018 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 10/05/2018 VKNS'K@ ORDER PER BHAGCHAND, AM THE APPEAL FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(A)-1, JAIPUR DATED 11-07-2017 FOR THE ASSESSMEN T YEAR 2012-13. 2.1 THE ONLY ISSUE INVOLVED IN THE APPEAL IS REGARD ING CONFIRMING THE DISALLOWANCE TO THE EXTENT OF RS. 13,73,931/- BY IN VOKING THE PROVISIONS OF SECTION 14A OF THE ACT READ WITH RULE 8D(2)(I) O F THE INCOME TAX RULES, 1962. 2.2 BRIEF FACTS OF THE CASE ARE THAT THE AO HAD CO MPUTED THE DISALLOWANCE OF RS. 1,08,23,139/- TREATING ALL EXPE NSES DIRECTLY RELATED TO ITA NO.723/JP/2017 M/S. CONSTR UCTIVE FINANCE PVT. LTD VS DCIT , CIRCLE 1, JAIP UR 2 EXEMPTED INCOME INSTEAD OF ASSESSEE CALCULATED THE DISALLOWANCE OF RS. 94,28,708/- BY APPLYING RULE 8D OF INCOME TAX RULES , 1962. FROM THE DETAILS WE FIND THAT THE ASSESSEE HAS DEBITED INTER EST EXPENSES OF RS. 87,38,893/-. THE AO TREATED IT DIRECT EXPENSES TO E ARN EXEMPTED INCOME. THE ASSESSEE HAS APPLIED THE FORMULA AS PROVIDED UN DER RULE 8D OF THE INCOME TAX RULES, 1962 AND WORKED OUT THE DISALLOWA NCE AT RS. 73,15,377/-. THE LD. CIT(A) CONFIRMED THE ORDER OF THE AO. 2.3 WE HAVE HEARD BOTH SIDES THE BENCH ENQUIRED REG ARDING THE UTILIZATION OF THE BORROWED FUNDS FOR ANY OTHER PUR POSES THAN ACQUIRING THE ASSETS OF WHICH INCOME DOES NOT FORM PART OF THE TOTAL INCOME. THE LD.AR OF THE ASSESSEE HAS SHOWED HIS INABILITY, HOW EVER, HE PLEADED THAT IF THE MATTER IS RESTORED BACK TO THE FILE OF THE L D. CIT(A) THEN THE DETAILS THEREOF SHALL BE SUBMITTED FOR VERIFICATION. WE HOL D THAT IF WHOLE OF THE INTEREST EXPENSE IS FOR ACQUIRING ASSETS OF WHICH INCOME DOES NOT FORM PART OF THE TOTAL INCOME THEN SUCH INTEREST EXPENSE S ARE DIRECTLY RELATED TO SUCH INCOME, HENCE WHOLE OF THE INTEREST EXPENSE DE SERVES TO BE DISALLOWED. HOWEVER, FOR APPLYING THE FORMULA AS PR OVIDED UNDER RULE 6D OF THE I.T. RULES, THE FINDING OF FACT IS NECESS ARY THAT INTEREST BEARING FUNDS HAVE BEEN UTILIZED FOR BOTH PURPOSE TO ACQUI RE THE ASSETS OF WHICH ITA NO.723/JP/2017 M/S. CONSTR UCTIVE FINANCE PVT. LTD VS DCIT , CIRCLE 1, JAIP UR 3 INCOME FORMS PART OF THE TOTAL INCOME AND ALSO EXEM PTED INCOME. THE MATTER IS RESTORED BACK TO THE FILE OF THE LD. CIT( A) FOR ASCERTAINING THE CORRECT FACTS IN THIS REGARD. THE APPEAL OF THE ASS ESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10-05-2018 . SD/- SD/- FOT; IKY JKO HKKXPUN (VIJAY PAL RAO) ( BHAGCHAND) U;KF;D LNL; / JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 10/05/ 2018 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. CONSTRUCTIVE FINANCE PVT. LTD. NEW DELHI 2. IZR;FKHZ@ THE RESPONDENT- THE DCIT, CIRCLE -1, JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.723/JP/2017) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR