DCIT, Khanna V. M/s R.B. Knit Export, Khanna

ITA 888/CHANDI/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8462 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 08-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO. 888/CHD/2015 ASSESSMENT YEAR: 2012-13 THE DCIT, VS M/S R.B. KNIT EXPORT, CIRCLE, G.T.ROAD, KHANNA. KHANNA. PAN: AADFR7190K (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI MANJIT SINGH ASSESSEE BY : SHRI ASHWANI KUMAR DATE OF HEARING : 15.02.2016 DATE OF PRONOUNCEMENT : 15.02.2016 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY REVENUE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-2 LUDHIANA DATED 02.09.2015 FOR ASSESSMENT YEAR 2012-13. 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE FINDINGS OF AUTHORITIES BEL OW. 3. ON GROUND NOS. 1 TO 4, REVENUE CHALLENGED THE DELETION OF ADDITION OF RS. 54,41,444/- ON ACCOUNT OF DISALLOWANCE OF EXPENDITURE UNDER SECTION 14A READ WITH RULE 8D OF THE INCOME TAX ACT ON INVESTMENT IN FMP MUTUAL FUNDS. THE ASSESSING OFFICER NOTED THAT 2 ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF HOSIERY AND SERVICES AS COMMISSION FABRICAT ION. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD INVES TED IN THE ICICI PRUDENTIAL FMP PLAN. THE ASSESSING OF FICER NOTED THAT ASSESSEE HAD NOT REFLECTED ANY TAXABLE O R EXEMPT INCOME IN THE RETURN OF INCOME. THE ASSESSI NG OFFICER WAS OF THE VIEW THAT ASSESSEE HAD BORROWED CERTAIN FUNDS ON WHICH LIABILITY TO PAY INTEREST IS BEING INCURRED AND ON THE OTHER HAND, CERTAIN AMOUNTS HAD BEEN INVESTED IN EARNING THE FREE DIVIDEND INCOME. ACCORDINGLY, ADDITION WAS MADE. 4. THE ASSESSEE'S WRITTEN SUBMISSION IS QUOTED IN T HE IMPUGNED ORDER IN WHICH THE ASSESSEE BRIEFLY EXPLAI NED THAT DURING THE YEAR, THE ASSESSEE FIRM MADE INVESTMENTS IN FIXED MATURITY PLAN PROCEEDS OF MATURITY OF FM P ARE TAXABLE AS LONG TERM CAPITAL GAIN/LOSS IN THE YEAR OF MATURITY AS PER PROVISIONS OF SECTION 48 OF THE INC OME TAX ACT. DURING THE YEAR UNDER APPEAL, ASSESSEE FI RM DID NOT EARN ANY INCOME ON THE INVESTMENTS MADE IN THE SAID MUTUAL FUND. THE FACT OF THE MATTER IS THAT O N MATURITY, DURING ASSESSMENT YEAR 2013-14, THE ASSES SEE SUFFERED A LOSS WHICH HAS BEEN DECLARED IN THE RETU RN FOR SUBSEQUENT ASSESSMENT YEAR 2013-14 AND ASSESSIN G OFFICER HAS TAKEN NOTE OF THE SAME ALSO. AS THE AS SESSEE DID NOT EARN ANY EXEMPT INCOME IN ASSESSMENT YEAR UNDER APPEAL, THEREFORE, NO DISALLOWANCE IS CALLED FOR 3 UNDER SECTION 14A OF THE INCOME TAX ACT READ WITH R ULE 8D OF THE IT RULES. THE ASSESSEE RELIED UPON DECIS ION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF LAKHANI MARKETING COMPANY 111 DTR 149. 5. THE LD. CIT(APPEALS) CONSIDERING EXPLANATION OF THE ASSESSEE, MATERIAL ON RECORD AND REMAND REPORT OF T HE ASSESSING OFFICER, FOUND THAT ASSESSEE DID NOT EARN ANY EXEMPT INCOME DURING THE YEAR UNDER CONSIDERATION, THEREFORE, NO DISALLOWANCE IS WARRANTED UNDER SECTI ON 14A OF THE INCOME TAX ACT AND RELIED UPON DECISION OF THE HON'BLE HIGH COURT IN THE CASE OF LAKHANI MARKE TING COMPANY (SUPRA). 6. IN VIEW OF THE ABOVE FACTS AND SUBMISSIONS, WE A RE OF THE VIEW THAT ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY JUDGEMENT OF THE JURISDICTIONAL HIGH CO URT IN THE CASE OF LAKHANI MARKETING COMPANY (SUPRA). NO INFIRMITY HAVE BEEN POINTED OUT IN THE ORDER OF THE LD. CIT(APPEALS) IN DELETING ADDITION BECAUSE WHEN ASSE SSEE DID NOT EARN ANY EXEMPT INCOME, NO DISALLOWANCE IS CALLED FOR. THESE GROUNDS OF APPEAL OF THE DEPARTM ENTAL APPEAL ARE ACCORDINGLY, DISMISSED. 7. ON GROUND NO. 5, REVENUE CHALLENGED THE DELETION OF ADDITION OF RS. 1,10,000/- ON ACCOUNT OF DISALLO WANCE OF EXPENSES. THE ASSESSEE SUBMITTED BEFORE LD. CIT(APPEALS) THAT ASSESSING OFFICER, WITHOUT POINTI NG OUT ANY SPECIFIC ITEM OF DISALLOWANCE AND WHICH OF THE 4 VOUCHERS HAVE NOT BEEN MAINTAINED BY ASSESSEE, HAVE MADE ADDITION MERELY ON ESTIMATION. THE LD. CIT(APPEALS) ACCEPTED THE CONTENTION OF THE ASSESSE E BECAUSE ASSESSING OFFICER HAS NOT SPECIFICALLY GIV EN ANY FIGURE OF BILLS/VOUCHERS NOT PRODUCED BY ASSESSEE A ND ACCORDINGLY, DELETED THE ADDITION. 8. AFTER HEARING RIVAL CONTENTIONS, WE ARE OF THE V IEW THAT ADDITION HAS BEEN RIGHTLY DELETED BY LD. CIT(APPEALS) BECAUSE ADDITION WAS MADE MERELY ON ADHOC BASIS WITHOUT POINTING OUT ANY SPECIFIC ITEM FOR WHICH NO BILLS OR VOUCHERS HAVE BEEN PRODUCED BY TH E ASSESSEE. THIS GROUND OF APPEAL OF DEPARTMENTAL AP PEAL IS THEREFORE, DISMISSED. 9. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ( RANO JAIN) (BHAVN ESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 15 TH FEBRUARY, 2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT ,DR ASSISTANT REGISTRAR, ITAT/CHD