Benny Impex (P) Ltd, New Delhi V. ACIT Circle-4(2), New Delhi

ITA 7398/DEL/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 6092 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Appeal Filed On: 08-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 43; 13; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A” DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER I.T.A. No.7398/DEL/2019 Assessment Years 2016-17 Benny Impex (P) Ltd., B-209, Naraina Inds. Area, Phase-I, New Delhi. v. ACIT, Circle-4(2), New Delhi. TAN/PAN: AAACB5411H (Appellant) (Respondent) Appellant by: Shri D.P. Agarwal, Adv. Respondent by: Shri Kanav Bali, Sr.D.R Date of hearing: 28 06 2022 Date of pronouncement: 18 07 2022 O R D E R PER PRADIP KUMAR KEDIA, A.M.: Th e cap tio n ed ap peal h as b een filed at th e in s tan ce o f th e assesse e ag ain st t h e o rd er o f th e Co mmiss io n er o f Inco me Tax (Ap p eals)-II, New Delh i [‘CIT(A)’ in sh o rt] d ated 28 .0 6 .2019 arisin g fro m th e a ssess men t o rd er d ated 1 7 .1 2 .2 01 8 p assed b y the Assessin g Offic er (AO) u n d er Sectio n 1 43 (3 ) o f th e In co me Tax Act, 1 9 6 1 (th e Act ) co n cern in g AY 20 1 6 -1 7 . 2 . As p er it s g ro u n d s o f ap p eal , th e asse ssee h as ch al len g e d ; (i) d isal lo wan ces o f Rs .1 6 ,4 5 ,3 2 1 /- un d er Sectio n 1 4 A o f th e Act; (ii) d isa l lo wan ce o f Rs .2 ,2 5 ,1 4 8 /- b y in v o k in g prov ision s o f Sect io n 4 0 (A)(3 ) of th e Ac t. I.T.A. No.7395/DEL/2019 2 3 . In th e in stan t ca se, th e assess ee is en g ag ed in th e b u siness o f imp o rt an d su p p ly o f milk an a ly zers an d au to mat ic mi l k co llec tio n u n it. Th e asse ssee fi led retu rn o f in co me d ec larin g to t al in co me o f Rs.9 ,6 3 ,0 2 ,6 1 0 /-. Th e retu rn o f in co me fi led b y th e as sessee was su b jected to scru t in y assess men t. I n th e co u rse o f t h e scru tin y assess men t , th e Assessin g Officer in ter a lia n o tic ed th at th e assesse e h as sh own Lo n g Term Cap it al Gain (LTCG) o f Rs. 1 6 ,5 7 ,68 4 /- o n acco u n t o f sale o f mu tu al fu n d u n its wh ich h av e b een clai med ex emp t u n d er Sectio n 10 (36 ) o f th e Act. Th e Assessin g Offi cer mad e d isal lo wan ces u n d er Sectio n 1 4A r.w. Ru le 8 D o f th e In co me Tax Ru le s o n th e g ro u n d wh ere th e assesse e h as c lai med ex emp t in co me u n d er Sectio n 1 0(3 6 ) o f th e Act, o b v io u sly th e asse ssee h as in cu rred ex p en ses to earn th is in co me wh ich d o es n o t fo rm p ar t o f th e tax ab le i n come. Th e Assessin g Offic er fu rth er o b serv ed th at th e as sessee h as in cu rred ex p en ses in cash in ex cess o f Rs.2 0 ,0 0 0 /- in a sin gle d ay ag g reg atin g to Rs.2 ,2 5 ,1 4 8 /-. He acco rd in g ly d isallo wed th e afo resa id amo u n t fo r b reach o f Secti o n 4 0 (A)(3 ) o f th e Act o u t o f sales p ro mo tio n ex p en ses. 4 . Ag g riev ed , th e assessee p referred ap p eal b efo re th e CI T(A). Th e CIT(A) restricted th e d isa l lo wan ce to th e ex tent o f ex emp t in co me earn ed , i. e. , Rs . 1 6 ,4 5 ,3 2 1 /-. 5 . As reg ard s th e d is allo wan ces mad e u n d er Sectio n 4 0 (A)(3 ) o f th e Act , th e C IT(A) o b serv ed th at n o ev id en ce h as b een p u t fo rth b y th e ass e ssee to reb u t th e al leg at io n o f the Assessin g Officer in th is re g ard . Th e actio n o f th e Assessin g Officer was acco rd in g ly co n fir med . I.T.A. No.7395/DEL/2019 3 6 . Fu rth er ag g riev ed , th e ass essee p re ferred ap p eal b efo r e th e Trib u n al. 7 . We h av e h eard th e riv al su b miss io n s o n th e g rievan ces r aised an d p eru sed th e ca se reco rd s. 8 . As reg ard s d isallo wan ces u n d er Sectio n 1 4 A attrib u tab le to p ro fit ar isin g fro m sa le o f mu tu a l fu n d , it was p o in ted o u t on b eh alf o f th e asse ssee th a t th e in v e st men t in mu tu al fu n d s and Eq u ity In v estmen t stan d a t Rs.1 6 .7 6 cro re as o n 3 1 .0 3 .2 01 6 as ag ain st th e co rres p o nd in g in terest free fu n d s av ailab l e with th e assesse e b y way o f Gen eral Reserv e at Rs. 2 9 .3 0 crore. It was th u s su b mit ted th a t in v iew o f th e ju d g men t o f th e Ho n ’ble Su p reme Co u rt in So u th In dia n Ba n k Ltd . vs. CIT (2 0 2 1 ) 13 0 ta xma n n .com 1 7 8 (S C), th e d isal lo wan ce o f in t erest a mo u n tin g to Rs.1 3 ,5 2 ,4 6 2 /- co mp u ted u n d er Ru le 8 D(2 )(ii) is u n ca ll ed fo r. 9 . We fin d meri t in th e p lea o f th e assessee fo r lac k o f ju sti fica t io n o f in terest d isa l lo wan ce attr ib u tab le to ex emp t in co me wh ere th e o wn fu n d s is d emo n strat ed to b e i n ex cess o f co rresp o nd in g in vest men t . Th e asse ssee th u s g ets the reli ef o f Rs.1 3 ,5 2 ,4 6 2 /- out o f d isa llo wan ce s o f Rs.1 6 ,5 7 ,6 84/- carried u n d er Sectio n 1 4 A o f th e Ac t. 1 0 . Gro un d No .1 o f th e ap p eal o f th e ass essee is p art ly al lo wed . 1 1 . As reg ard s d isal lo wan ces u n d er Sect io n 4 0 A(3 ) fo r in cu rrin g ex p en d itu re in cas h in ex cess o f th resh o ld li mit p rescr ib ed u n d er Sect io n 4 0 (A)(3) o f th e Act , th e a ssessee fa il ed to o ffer an y co g en t ex p lan atio n to warran t in terferen ce with th e fin d i n g s o f th e I.T.A. No.7395/DEL/2019 4 lo wer au th o rities . We th u s d eclin e t o in terfere wi th th e o rd er o f th e CIT(A). 1 2 . Gro un d No .2 o f th e ap p eal o f th e ass essee is d is mi ssed . 1 3 . In th e resu l t, th e a p p eal o f th e asses s ee is p art ly a l lo wed . Order pronounced in the open Court on 18/07/2022. Sd /- Sd /- [KUL BHARAT] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /07/2022 Prabhat