DCIT, Ludhiana V. M/s Shree Ganesh Jewellers Ltd., Ludhiana

ITA 969/CHANDI/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8236 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 08-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: K J SHELLY
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 969/CHD/2016 ASSESSMENT YEAR : 2012-13 THE DCIT, CIRCLE-5, VS. M/S SHREE GANESH JEWELLER S LTD, LUDHIANA LUDHIANA PAN NO.AAECS0983M (APPELLANT) (RESPONDENT) APPELLANT BY : SH. MANJIT SINGH RESPONDENT BY : SH. K.J. SHELLY DATE OF HEARING : 09.03.2017 DATE OF PRONOUNCEMENT : 15.03.2017 ORDER PER BHAVNESH SAINI, JM THIS APPEAL BY THE REVENUE HAS BEEN DIRECTED AGAINS T THE ORDER OF LD. CIT(A)-2, LUDHIANA FOR ASSESSMENT YEAR 2012-13 CHAL LENGING THE DELETION OF ADDITION OF RS. 51,51,709/- U/S 14A OF THE INCOM E-TAX ACT, 1961. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT AS SESSEE CHALLENGED THE ADDITION OF RS. 51,51,709/- U/S 14A OF THE ACT BEFO RE LD. CIT(A). THE ASSESSEE FILED RETURN OF INCOME DECLARING INCOME OF RS. 5,01,45,358/-. THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF MANUFACTUR ING OF TRADING OF GOLD AND DIAMOND JEWELLERY DURING THE PERIOD UNDER CONSI DERATION. DURING THE 2 COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER OBSERVED THAT ASSESSEE HAD MADE INVESTMENT AS ON 31.3.2011 AND 31 .3.2012 WAS RS. 7,19,15,000/- AND 7,19,15,000/- RESPECTIVELY, INCOM E FROM WHICH WAS EXEMPT FROM TAX. THE ASSESSEE HAD INCURRED INTEREST EXPENSES OF RS. 5,67,80,290/- IN ADDITION TO OTHER ADMINISTRATIVE E XPENSES. THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THE PROVISIONS OF SECTION 14A OF THE ACT READ WITH RULE 8D SHOULD NOT BE MADE APPLICABLE IN THIS CASE AND DISALLOWANCE BE MADE ACCORDINGLY. IN RESPONSE, THE ASSESSEE INTER ALIA CONTENDED THAT UNLESS AND UNTIL THERE IS A RECEIPT OF EXEMPT INCOME FOR THE CONCERNED YEAR, SECITON14A OF THE ACT CANNOT BE INV OKED. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE REPLY OF THE ASS ESSEE AND MADE THE ABOVE ADDITION U/S 14A OF THE ACT. THE ASSESSEE FILED W RITTEN SUBMISSIONS BEFORE LD. CIT(A) AND CONTENDED THAT ADDITION IS WH OLLY UNJUSTIFIED. THE LD. CIT(A) FOUND THAT HE HAD DECIDED IDENTICAL ISSU E IN ASSESSEES OWN CASE FOR PRECEDING ASSESSMENT YEAR 2011-12 VIDE ORD ER DATED 19.11.2015 AND DELETED THE ENTIRE IDENTICAL ADDITION. THE LD. CIT(A) FOLLOWING HIS ORDER FOR 2011-12 DELETED THE SIMILAR ADDITION VID E ORDER DATED 7.6.2016. IT MAY BE MENTIONED THAT LD. CIT(A) THEREAFTER PASS ED THE CORRIGENDUM DATED 14.7.2016 FOR RECTIFYING THE MISTAKE AND ULTI MATELY THE DISALLOWANCE AMOUNTING TO RS. 51,51,709/- STANDS DELETED VIDE OR DER DATED 14.7.2016 AND ORIGINAL ORDER WAS RECTIFIED ACCORDINGLY. 3. LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMI TTED THAT IDENTICAL ISSUE HAS ALREADY BEEN DECIDED BY ITAT CHANDIGARH B ENCH IN ASSESSEES OWN CASE IN ACIT VS. SHRI GANESH JEWELLERY LTD ITA NO. 73/CHD/2016 3 DATED 9.6.2008 WHEREBY THE DEPARTMENTAL APPEAL HAS BEEN DISMISSED. THE FINDINGS OF THE TRIBUNAL IN PARA 5 & 6 ARE REPRODUC ED AS UNDER:- AFTER CONSIDERING RIVAL SUBMISSIONS, WE DO NOT FIND MERIT IN THE DEPARTMENTAL APPEAL. THE HON'BLE PUNJAB HARYANA HIGH COURT IN THE CASE OF WINSOME TEXTILE INDUSTRIES LTD , 319 ITR 204 OBSERVED THAT 'ASSESSES DID NOT MAKE CLAIM OF EXEMPTION - 14A DO NOT APPLY. OWN FUNDS USED TO ACQUIRE SHARES AND NO EXPENSES INCURRED'. HON'BLE PUNJAB & HARYANA HIGH COURT ALSO IN THE CASE OF LAKHANI MARKETING CO. 111 DTK 149 HELD THAT 'WHEN NO EXEMPT INCOME EARNED, NO DISALLOWANCE UNDER SECTION 14A', HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF ABHISHEK INDUSTRIES LTD. 380 ITR 652 HELD THAT 'ONUS IS ON THE ASSESSING OFFICER TO RECORD SATISFACTION THAT INTEREST BEARING FUNDS USED FOR INVESTMENTS TO EARN TAX FREE INCOME'. HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF KAPSON ASSOCIATES 381 ITR 204 HELD THAT WHEN ASSESSEE CLAIMED OLD INVESTMENTS OUT OF CAPITAL AND RESERVES, NO SEPARATE AMOUNT BORROWED FOR MAKING INVESTMENTS, NO DISALLOWANCE IS PERMISSIBLE'. 6. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF THE ABOVE DECISIONS AND SUBMISSIONS OF THE ASSESSEE WHICH HAVE NOT BEEN REBUTTED BY THE DEPARTMENTAL THROUGH ANY EVIDENCE OR MATERIAL ON RECORD, WE DO NOT FIND ANY MERIT IN THE 4 DEPARTMENTAL APPEAL, SAME IS ACCORDINGLY DISMISSED. 4. COPY OF THE ORDER IS GIVEN TO THE LD. DR WHO HAS AGREED THAT ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. 5. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT O F THE FACT THAT THE TRIBUNAL HAS ALREADY DISMISSED THE DEPARTMENTAL APP EAL, ON IDENTICAL ISSUE IN PRECEDING ASSESSMENT YEAR 2011-12 IN THE CASE OF SAME ASSESSEE VIDE ORDER DATED 9.8.2016 (SUPRA), THERE IS NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION FOLLOWING THE ORDER OF THE LD. CIT(A). THE DEPARTMENTAL APPEAL STANDS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (ANNAPURNA GUPTA) (BHAVNESH SAINI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 15 TH MARCH, 2017 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR