INCOME TAX OFFICER, KOTA V. SHRI VIMAL BIHANI, KOTA

ITA 90/JPR/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6106 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 25-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POONAM RAI
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKWY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRA M SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO.90/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2013-14 INCOME-TAX OFFICER WARD-1(3), KOTA CUKE VS. SHRI VIMAL BIHANI, PROP. M/S MADHU TRADE AGENCIES, 125, NEW GRAIN MANDI, KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ABVPB3323R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SMT. POONAM RAI (DCIT) FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P.C. PARWAL (CA) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 05/06/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 08/06/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) KOTA DATED 14.11.2017 FOR ASSESSMENT YEAR 2013-14 W HEREIN THE REVENUE HAS CHALLENGED THE DELETION OF ADDITION OF RS. 1,21 ,582/- MADE BY THE AO U/S 14A R/W RULE 8D. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE HAS MADE INVESTMENT IN SHARES OF M/S KRP INDUSTRIES LTD. IN F.Y 2010-11 AMOUNTING TO RS. 39,99,966/-. DURING THE COURSE OF ASSESSMENT PR OCEEDINGS, THE AO ISSUED A SHOW CAUSE AS TO WHY THE PROVISIONS OF SECTION 14 A READ WITH RULE 8D SHOULD NOT BE APPLIED. IN RESPONSE, THE ASSESSEE SU BMITTED THAT THE ASSESSEE HAS SUO MOTO DISALLOWED RS. 1,82,984/- TOWARDS INTE REST EXPENSES RELATING TO ITA NO. 90/JP/2018 ITO, WARD-1 (3), KOTA VS SHRI VIMAL BIHANI, KOTA 2 THE AMOUNT OF INVESTMENTS IN SHARES. HENCE, NO FURT HER DISALLOWANCE IS CALLED FOR U/S 14A OF THE ACT. THE ASSESSING OFFICER, REFE RRING TO THE CIRCULAR NO. 5/2014 DATED 11.02.2014 AND THE PROVISIONS OF SECTI ON 14A READ WITH RULE 8D, WORKED OUT DISALLOWANCE OF RS. 3,04,000/- AND AFTER GIVING CREDIT OF 1,82,984/- WORKED OUT THE NET DISALLOWANCE OF RS. 1 ,21,582/- WHICH WAS BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE. 3. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) REFERRING TO THE DECISIO N OF THE HONBLE DELHI HIGH IN CASE M/S CHEMINVEST LTD. VS. CIT (2015) 61 TAXMAN.C OM 118 AND THE DECISION OF THE SPECIAL BENCH IN CASE OF ACIT VS. VIREET INV ESTMENT DATED 22 JUNE, 2017 HAS HELD THAT WHERE NO EXEMPT INCOME HAS BEEN EARNED BY THE APPELLANT, IT DOESNT WARRANT ANY DISALLOWANCE AS P ER THE PROVISIONS LAID DOWN U/S 14A READ WITH RULE 8D. IT WAS FURTHER HELD THAT SINCE THE AO HAS NOT BROUGHT ANY NEXUS BETWEEN THE INTEREST BEARING FUND S HAVING BEEN DIVERTED TOWARDS SUCH INVESTMENT OF RS. 39,99,966/-, THE ADD ITION OF RS. 1,21,582/- WAS DIRECTED TO BE DELETED. 4. IN M/S CHEMINVEST LTD. (SUPRA), THE HONBLE DELH I HIGH COURT HELD THAT SECTION 14A EMPHASISE THAT THERE SHOULD BE ACTUAL R ECEIPT OF INCOME WHICH IS NOT INCLUDIBLE IN THE TOTAL INCOME DURING THE RELEV ANT PREVIOUS YEAR FOR PURPOSES OF DISALLOWING ANY EXPENDITURE INCURRED IN RELATION TO THE SAID INCOME. FURTHER THE SPECIAL BENCH IN CASE OF ACIT V S. VIREET INVESTMENT (SUPRA) HAS HELD THAT ONLY THOSE INVESTMENTS ARE TO BE CONSIDERED FOR COMPUTING AVERAGE VALUE OF INVESTMENTS IN RESPECT O F WHICH EXEMPTS INCOME HAS BEEN RECEIVED DURING THE YEAR. IN LIGHT OF THE SAME, GIVEN THAT NO EXEMPT INCOME HAS BEEN EARNED/RECEIVED DURING THE Y EAR, WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF LD. CIT(A) WHO HAS RIGHTL Y FOLLOWED THE RATIO LAID DOWN BY THE ABOVE REFERRED DECISIONS. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ITA NO. 90/JP/2018 ITO, WARD-1 (3), KOTA VS SHRI VIMAL BIHANI, KOTA 3 ORDER PRONOUNCED IN THE OPEN COURT ON 08/06/2018. SD/- SD/- FOT; IKWY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 08/06/2018 *GANESH KR VKNS'K DH IZFRFYFI VXZSF'KR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT - ITO, WARD-1(3), KOTA 2. IZR;FKHZ@ THE RESPONDENT - SHRI VIMAL BIHANI, KOTA 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDRVIHY@ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 90/JP/2018) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR.