Seth Dua & Associates, Delhi V. ACIT, Circle-61(1), New Delhi

ITA 9092/DEL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1508 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2016-2017
• Appeal Filed On: 25-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S. N. MEENA
• Keywords: Depreciation; Earning of tax free income
• Section: 14A; 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES FRIDAY/A, NEW DELHI BEFORE MS. SUSHMA CHOWLA, VICE PRESIDENT DR. B. R. R. KUMAR, ACCOUNTANT MEMBER ITA NO. 9092/DEL/2019 : ASSTT. YEAR : 201 6-17 SETH DUA & ASSOCIATES, 601-603, 607-608, DLF SOUTH COURT, SAKET, NEW DELHI-110017 VS ACIT, CIRCLE-61(1), NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AA GFS0160F ASSESSEE BY : SH. G. S. GIREWAL, ADV. REVENUE BY : SH. S. N. MEENA, SR. DR DATE OF HEARING: 07 . 0 2 .2020 DATE OF PRONOUNCEMENT: 21 .02 .2020 ORDER PER DR. B.R.R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF LD. CIT(A)-20, NEW DELHI DATED 27.09.2 019. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESS EE: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ASSESSING OFFICER ERRED IN ASSESSIN G TOTAL INCOME OF THE APPELLANT AT INR. 1,18,11,510 A S AGAINST THE RETURNED INCOME OF INR. 98,55,180 AS DECLARED BY THE APPELLANT. 2. THAT LD CIT (A) ERRED ON FACTS AND IN LAW IN DISALLOWING INTEREST EXPENDITURE AMOUNTING TO INR. 19,56,328 UNDER THE PROVISIONS OF SECTION 14A OF TH E ACT. 2.1. THAT LD CIT (A) ERRED ON FACTS AND IN LAW IN DISALLOWING INR. 19,56,328 UNDER SECTION 14A OF THE ACT, WITHOUT CONSIDERING SUBMISSIONS OF THE APPELLANT; WITHOUT DISTINGUISHING A PLETHORA OF CAS E ITA NO. 9092/DEL/2019 SETH DUA & ASSOCIATES 2 LAW ON THE SUBJECT SUBMITTED BY THE APPELLANT; AND WITHOUT RECORDING HIS SATISFACTION AS TO INVOCATION OF PROVISIONS OF SECTION 14A OF THE ACT. 2.2. THAT LD CIT(A) HAS NOT APPRECIATED THAT THE INVESTMENTS IN MUTUAL FUNDS WAS MADE FROM RETAINED SURPLUS / EARNING FROM PRECEDING YEARS. THE AMOUNT OF DEPRECIATION OF PROCEEDING YEARS HAVE BEEN GROSSLY IGNORED IN CALCULATING THE CASH SURPLUS AVAILABLE WITH THE FIRM FOR MEETING THE WORKING CAPITAL REQUIREMENT. 3. THAT LD CIT (A) FAILED TO APPRECIATE THAT INTERE ST ON PARTNER'S CAPITAL IS NOT EXPENDITURE REFER IN SE C 14A, IT IS A SPECIFIC STATUTORY ALLOWANCE FOR A PARTNERSHIP FIRM. FURTHER, THE SAID INTEREST ON CAP ITAL IS TAXED IN HANDS OF INDIVIDUAL PARTNERS AND DISALLOWANCE WOULD LEAD TO DOUBLE TAXATION IN HANDS OF PARTNER AS WELL AS FIRM. 4. THAT, WITHOUT PREJUDICE, THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN MAKING DISALLOWANCE OF INR. 19,56,328 UNDER THE PROVISIONS OF SECTION 14A OF THE ACT, WITHOUT APPRECIATING THAT, DURING THE PERIOD RELEVANT TO ASSESSMENT YEAR 2016-17, TOTAL EXEMPT INCOME EARNED BY THE APPELLANT WAS ONLY INR. 60,706. 5. THE ABOVE GROUNDS OF APPEAL ARE IN THE ALTERNATI VE AND WITHOUT PREJUDICE TO ONE ANOTHER. 3. THE RELEVANT FACTORS WHICH ARE UNDISPUTED BY BOT H THE PARTIES AS REQUIRED FOR ADJUDICATION OF THE CASE AR E AS UNDER: A. DIVIDEND RECEIVED BY THE ASSESSEE - RS.60,70 6/-. B. AMOUNT DISALLOWED BY THE REVENUE - RS.19.56 LACS C. EXPENDITURE DISALLOWED BY THE ASSESSEE - NIL D. OWN FUNDS OF THE ASSESSEE (AS PER CASH PROFITS) - RS.1.22CR. TO 1.32CR. E. FUNDS INVESTED - RS.1.75 CRORES F. WHETHER ANY SATISFACTION AS PER PROVISIONS OF SECTION 14A(2) RECORDED BY THE AO - NO ITA NO. 9092/DEL/2019 SETH DUA & ASSOCIATES 3 4. SINCE NO EXPENDITURE HAS BEEN DISALLOWED BY THE ASSESSEE IN RELATION TO THE INCOME NOT INCLUDED IN TOTAL INC OME, SINCE THE ASSESSEE HAS SUFFICIENT OWN FUNDS WHICH WERE U TILIZED FOR INVESTMENTS & PAID NO INTEREST ON THE FUNDS INVESTE D AND SINCE THE ASSESSING OFFICER HAS NOT EXPRESSED ANY DISSATI SFACTION ABOUT THE NATURE OF EXPENDITURE CLAIMED (IN THE INS TANT CASE NIL), KEEPING IN VIEW THE PROVISIONS OF SECTION 14A , JUDGMENTS OF HONBLE SUPREME COURT IN THE CASE OF CIT VS RELI ANCE INDUSTRIES LTD. (CA NO. 10 OF 2019), CHEMINVEST LTD . VS CIT (SC), H.T. MEDIA VS PCIT ITA 548/2015 (DEL. HC), TH E ADDITION MADE BY THE ASSESSING OFFICER IS HEREBY RESTRICTED TO RS.60.706/-. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21/02/2020. SD/- SD/- (SUSHMA CHOWLA) (DR. B.R.R. KUMAR) VICE PRESIDENT ACCOUNTANT MEM BER DATED: 21/02/2020 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR