M/s Swaraj Engines Ltd., Mohali V. DCIT, C-6(1), Mohali

ITA 775/CHANDI/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0358 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 29-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: A K JINDAL
• Section: 14A; 2

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B, CHANDIGARH , ! '# $ % & '# , () BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NO. 775/CHD/2018 / ASSESSMENT YEAR : 2014-15 SWARAJ ENGINES LIMITED, PLOT NO.2, INDUSTRIAL FOCAL, PHASE IX, S.A.S. NAGAR, 160062 VS. THE DCIT, CIRCLE 6(1), MOHALI ./PAN NO: AACCS2990N / APPELLANT /RESPONDENT ! /ASSESSEE BY : SH. A.K. JINDAL, CA ' ! / REVENUE BY : SH. MANJIT SINGH, SR.DR # $ % /DATE OF HEARING : 21.11.2018 &'() % / DATE OF PRONOUNCEMENT : 21.11. 2018 (*/ ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 20.3.2018 OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2, CHANDIGARH [HEREINAFTER REFERRED TO AS CIT(A)]. 2. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ONLY ISSUE RAISED / PRESSED UPON IN THIS APPEAL IS REGARDING DISALLOWANCE U/S 14A OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). HE HAS FURTHER SUBMITTED THAT THE LOWER AUTHORITIES HAVE MADE / CO NFIRMED THE DISALLOWANCE U/S 14A OF THE ACT IN RESPECT OF THE D ISALLOWANCE OUT OF THE INTEREST EXPENDITURE AS WELL AS ON ACCOUNT OF ADMIN ISTRATIVE EXPENSES. ITA NO. 775/CHD/2018- SWARAJ ENGINES LIMITED, MOHALI 2 3. SO FAR AS THE ISSUE RELATING TO DISALLOWANCE OUT OF INTEREST EXPENDITURE IS CONCERNED, THE LD. COUNSEL FOR THE A SSESSEE HAS SUBMITTED THAT THE ASSESSEE DURING THE YEAR HAS NOT RAISED A NY SECURED OR UNSECURED LOANS AND NO INTEREST EXPENDITURE HAS BEEN INCURRED BY THE ASSESSEE ON ANY LOAN. THE ONLY INTEREST PAID BY THE ASSESSEE WAS IN RESPECT OF DELAY ON PAYMENT OF EXCISE DUTY AND SERVICE TAX. THE LD. DR ALSO COULD NOT CONTRADICT THIS FACTUAL ASPECT PLEADED BY THE ASSES SEE. SINCE THE ASSESSEE DID NOT BORROW ANY INTEREST BEARING FUNDS DURING TH E YEAR, HENCE, THERE IS NO QUESTION OF DISALLOWANCE OF EXPENDITURE OUT OF THE INTEREST EXPENDITURE. IN VIEW OF THIS, SO FAR AS THE DISALLOWANCE U/S 14A OF THE ACT IN RESPECT OF INTEREST EXPENDITURE IS CONCERNED, WE DO NOT FIND A NY JUSTIFICATION ON THE PART OF THE LOWER AUTHORITIES IN MAKING / CONFIRMIN G THE SAME. MOREOVER, THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO RELIED U PON THE DECISION OF THIS TRIBUNAL IN THE OWN CASE OF THE ASSESSEE IN RELATIO N TO THE EARLIER ASSESSMENT YEARS 2012-13 AND 2013-14, WHEREIN, IDEN TICAL ISSUE HAS BEEN RAISED IN ITA NOS.1258 & 1259/CHD./2016 AND THE TRIBUNAL VIDE ORDER DATED 1.6.2017, ON IDENTICAL FACTS HAS DECIDED THE SAME IN FAVOUR OF THE ASSESSEE. 4. SO FAR AS THE ISSUE RELATING TO THE DISALLOWANC E ON ACCOUNT OF ADMINISTRATIVE EXPENSES IS CONCERNED, THOUGH THE AS SESSING OFFICER HAS MADE THE DISALLOWANCE BY APPLYING THE PROVISIONS O F RULE 8D(2)(III) OF THE INCOME TAX RULES, HOWEVER, THE ASSESSEE, BEFORE TH E ASSESSING OFFICER, HAD DEMONSTRATED THE WORKING OF THE ADMINISTRATIVE EXPENSES. IDENTICAL ISSUE CAME INTO CONSIDERATION BEFORE THE TRIBUNAL I N THE EARLIER ASSESSMENT YEARS IN ITA NOS. 1258 & 1259/CHD/2016 VIDE ORDER DATED 1.6.2017, ITA NO. 775/CHD/2018- SWARAJ ENGINES LIMITED, MOHALI 3 WHEREIN, THE ASSESSEE HAD MADE IDENTICAL PLEADINGS CLAIMING THAT HE HAD ALREADY DISALLOWED SALARY OF ONE EMPLOYEE, 10% SALA RY OF HIS SUPERVISORS (COMPANY SECRETARY) AND FURTHER 46.30% OF THE TOTAL ADMINISTRATIVE EXPENDITURE. THE TRIBUNAL TAKING INTO CONSIDERATION THE WORKING OF THE SUO MOTO DISALLOWANCE OF ADMINISTRATIVE EXPENDITURE, HE LD THAT THERE WAS NO JUSTIFICATION OF FURTHER ENHANCEMENT OF THE ADMINIS TRATIVE EXPENSES, THEREFORE, THE IMPUGNED ADDITION MADE BY THE LOWER AUTHORITIES WERE DELETED. 5. SINCE THERE ARE NO DISTINGUISHING FACTS IN THE Y EAR UNDER CONSIDERATION, HENCE, FOLLOWING THE DECISION OF TH E TRIBUNAL IN THE EARLIER YEARS IN THE OWN CASE OF THE ASSESSEE, THE DISALLO WANCE ON ACCOUNT OF ADMINISTRATIVE EXPENDITURE IS ALSO ORDERED TO BE D ELETED. 6. IN THE RESULT, THE IMPUGNED ADDITIONS MADE BY TH E LOWER AUTHORITIES U/S 14A OF THE ACT ARE ORDERED TO BE DELETED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.11.2018 SD/- SD/- ( $ % & '# / ANNAPURNA GUPTA) () / ACCOUNTANT MEMBER ( / SANJAY GARG) / JUDICIAL MEMBER DATED : 21.11 . 2018 .. '+ ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , % 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7$ / GUARD FILE '+ # / BY ORDER, 8 ' / ASSISTANT REGISTRAR ITA NO. 775/CHD/2018- SWARAJ ENGINES LIMITED, MOHALI 4