M/s Ib Valley Transport, Brajrajnagar V. JCIT, Range-1, Sambalpur

ITA 99/CTK/2020

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 2756 (ITAT-CUTTACK)
• Duration Of Justice: 2 year(s) 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 20-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MAHENDRA KUMAR KEDIA
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BEFORE AND ARUN KHODPIA, ACCOUNTANT MEMBER M/s. IB Valley Transport, At/PO: Lamtibahal, Brajrajnagar, Dist: Jharsuguda PAN/GIR No. (Appellant Per Bench This is an appeal filed by the assessee CIT(A) Sambalpur assessment year 2. The appeal condonation petition stated that the order of the CIT(A) dated 8.11.2019 was 21.12.2019 and the second appeal should IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI GEORGE MATHAN, JUDICIAL AND ARUN KHODPIA, ACCOUNTANT MEMBER ITA No.99/CTK/2020 Assessment Year :2012-13 M/s. IB Valley Transport, At/PO: Lamtibahal, Brajrajnagar, Dist: Vs. The Jt. CIT, Sambalpur, Range 1, Sambalpur No.AABFI 6752 q (Appellant) .. ( Respondent Assessee by : Shri Mahendra Kumar Kedia Revenue by : Shri S.K.Mohapatra, Date of Hearing : 9 /5/ 20 Date of Pronouncement : 9 /5 O R D E R This is an appeal filed by the assessee against the order of the Sambalpur dated8.11.2019 in Appeal No.0041/2015 assessment year 2012-13. appeal is time barred by 02 days. The assessee has filed condonation petition in the form of affidavit dated 7.7.2020, wherein, it is stated that the order of the CIT(A) dated 8.11.2019 was 21.12.2019 and the second appeal should have been filed on or before Page1 | 5 IN THE INCOME TAX APPELLATE TRIBUNAL, JUDICIAL MEMBER AND ARUN KHODPIA, ACCOUNTANT MEMBER The Jt. CIT, Sambalpur, Range- 1, Sambalpur Respondent) Mahendra Kumar Kedia, AR S.K.Mohapatra, CIT (DR) / 2022 5/2022 gainst the order of the .11.2019 in Appeal No.0041/2015-16 for the is time barred by 02 days. The assessee has filed in the form of affidavit dated 7.7.2020, wherein, it is stated that the order of the CIT(A) dated 8.11.2019 was received on been filed on or before ITA No.99/CTK/2020 Assessment Year :2012-13 Page2 | 5 19.2.2020. Since the assessee was suffering from illness and was advised complete rest by the doctor from 15.2.2020 to 20.2.2020, the appeal could be filed on 21.2.2020 after joining in the office. Hence, there was delay of 02 days. In support of illness, the assessee has filed certificate of the doctor. 3. After going through the condonation petition, we find that the assessee had reasonable cause for not filing the appeal within the stipulated time. Ld D.R. did not have any objection for condoning the delay. We, therefore, condone the delay of 02 days in filing the appeal before the Tribunal and admit the appeal for hearing. 4. In the grounds of appeal, the assessee has raised a single issue being against the action of the ld CIT(A) in confirming the disallowance made by the AO u/s.14A r.w Rule 8D of the I.T.Rules, to the extent of Rs.4,34,563/-. 5. Shri Mahendra Kumar Kedia, ld A.R. appeared on behalf of the assessee and Shri S.K.Mohapatra, ld CIT DR appeared on behalf of the revenue. 6. It was the submission of the ld A.R. that in the course of assessment proceedings, it was noticed by the AO that the assessee was having exempt income to the extent of Rs.36,62,390/- representing income from the joint venture M/s. IVT VLT (JV). It was the submission that the assesse had shown exempt income from the joint ventures, the ITA No.99/CTK/2020 Assessment Year :2012-13 Page3 | 5 Assessing Officer disallowed the said amount of Rs.4,34,563/- from the financial charges incurred by the assessee out of total amount of Rs.1,14,09,054/-. It was the submission by ld A.R. that the assessee’s investment representing opening balance in the joint ventures was Rs.1,22,68,247/- and its closing balance was to the tune of Rs.1,02,03,075/-. It was his further submission that there was no disallowance u/s.14A r.w. Rule 8D during any of the earlier assessment years though the assessee had earned profit from the joint ventures and same were disclosed as exempt income in the relevant assessment years. It was his further submission that the financial charges were funds representing the loan taken by the assessee for the purpose of its own business and same had nothing to do with the joint ventures. It was further submission that the assessee had opening capital of Rs.5,80,30,700/- and closing capital balance of Rs.5,72,74,976/-. It was his submission that the assessee had its own funds representing its own capital and surplus was invested in the joint ventures, therefore, no disallowance u/s.14A r.w Rule 8D was called for in view of the principles laid down by Hon’ble Supreme Court in the case of South Indian Bank Ltd vs CIT, 438 ITR 1(SC). 7. In reply, ld CIT DR vehemently supported the order of the AO and ld CIT(A). ld CIT DR drew our attention to para 8 of the CIT(A) order, wherein, ld CIT (A) has quantified the borrowed funds to be more than Rs.10 crores to uphold the disallowance of financial charges made by the AO holding to be same to be only about 4%. It was his alternative ITA No.99/CTK/2020 Assessment Year :2012-13 Page4 | 5 prayer that even otherwise the disallowance u/r 8D(2)(iii) was liable to be made u/s. 14A r.w 8D as the same had no relation to the investment which has earned exempt income. 8. We have heard the rival submissions. Admittedly, the assessee has own funds available with it i.e. Rs.5,80,30,700 for making investment in the joint ventures. Consequently, it cannot be said that the assessee has used borrowed funds for making investment in the joint ventures, which has earned exempt income. Consequently, the disallowance u/s.14A r.w Rule 8D (2)(i) and (ii) is not called for. However, we are compelled to agree with the arguments of ld CIT DR that the disallowance u/s.14A r.w 8D(2)(iii) is compulsory to be made. Consequently, the AO shall restrict the disallowance to Rs.56,178/- representing the disallowance liable to be made u/s.14A r.w 8D (2)(iii) of I.T.Rules. 9. In the result, appeal of the assessee is partly allowed. Order dictated and pronounced in the open court on 9 /5/2022. Sd/- sd/- (Arun Khodpia) (George Mathan) ACCOUNTANT MEMBER JUDICIAL MEMBER Cuttack; Dated 9 /05/2022 B.K.Parida, SPS (OS) ITA No.99/CTK/2020 Assessment Year :2012-13 Page5 | 5 Copy of the Order forwarded to : By order Sr.Pvt.secretary ITAT, Cuttack 1. The appellant: M/s. IB Valley Transport, At/PO: Lamtibahal, Brajrajnagar, Dist: Jharsuguda 2. The Respondent. The Jt. CIT, Sambalpur, Range-1, Sambalpur 3. The CIT(A)-, Sambalpur 4. Pr.CIT-, Sambalpur 5. DR, ITAT, Cuttack 6. Guard file. //True Copy//