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Income Tax Appellate Tribunal, PANAJI, BENCH PANAJI
O R D E R Per Bench : These two appeals have been filed by the two different assessees against the separate orders passed by the CIT(A)-1, Panaji, both dated 10.10.2017 for the assessment year 2012-2013.
Since the issue involved in both the appeals are common, therefore, both the appeals were heard together and decided by this consolidated order. First we shall take up the appeal filed by the assessee-Mr. Prasad Vasudev Keni in filed for the 2 ITA Nos.350&351/PAN/2017 assessment year 2012-2013 and the grounds mentioned therein as under :-
1. 1. The Ld. CIT erred in upholding the action of the AO making disallowance u/s. 14A read with rule 8D, of Rs. 32,39,310/- (being 50% of Rs. 64,78,619/- in terms of Sec 5A) - Ref. Para 4.5 of Assessment Order.
2. While the AO has reached his conclusion on the basis that "no separate management is kept for looking after above investment" (Ref. para 4.3 of the order) the Ld. CIT erred in holding that the appellant's submission is not supported by tangible evidence since separate accounts are not maintained in regard to investments. This is factually incorrect.
3. For these and such other reasons that may be urged at the time of hearing it is prayed that the disallowances be set aside in entirety & the order of CIT(Appeals) be modified accordingly.
4. The appellant prays leave to add to alter and amend any of the above grounds of Appeal
3. Further, the ld.AR of the assessee during the course of hearing submitted an application in both the appeals for admission of additional ground and the additional ground raised in both the appeals is as under :- 1) The CIT(A) erred in upholding the disallowance eof Rs.32,39,310/- made by the Assessing Officer u/s.14A of the Act disregarding order passed by the Hon’ble ITAT in the appellant’s own case for an earlier year (2010-2011) for non-recording of satisfaction by the Assessing Officer.
4. Ld.DR has fairly submitted that the department has no objection for admitting the additional ground raised by the assessee. In the light of the above said facts and considering the judgment of the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd., (1998) 229 ITR 383 (SC), the additional ground raised by the assessee is admitted.
5. At the outset, ld.AR of the assessee had submitted that the case of the assessee is covered by the decision of the coordinate bench of the 3 Tribunal in the case of the assessee for the earlier years, wherein the Tribunal in para 8 has held as under :- 8. As the Revenue has not been able to point out the recording of satisfactiion in respect of disallowance made under sec. 14A in the hands of the assessee, respectfully following the decision of the Hon'ble Bombay High Court as also the decision of the Hon'ble Delhi High Court referred to supra, the findings of the Commissioner of Income Tax (Appeals) on this issue stands confirmed. It was also submitted by the ld. AR of the assessee that there is no change in facts and, therefore, the addition made u/s.14A of the Act by the Assessing Officer and confirmed by the CIT(A) is required to be deleted.
On the other hand, ld. Departmental Representative relied upon the orders passed by both the authorities below.
We have heard rival contentions of the parties and perused the material on record. The Assessing Officer in the assessment order has not recorded any satisfaction for the purpose of bringing the case of the assessee u/s.14A of the Act, wherein the Assessing Officer at paras 4.1, 4.2 & 4.3 held as under :- 4.1 During the year, the assessee received Rs.57,57,066/- towards Dividend on Mutual Funds and shares as exempted income u/s 10. The assessee was requested to work out the disallowance u/s 14A r.w.r 8D. The assessee's Authorized Representative submitted that the Bank has not incurred any expenses on the said investments and investment made by the bank in Mutual fund and share was without any borrowing from external source. The explanation of the assessee is considered carefully. 4.2 During the year the assessee has earned tax free income in the form of dividend amounting to Rs.57,57,066/-. These income earned from mutual fund or shares where assessee has made investment in earlier year. The assessee has borrowed fund from bank which is utilized for business purpose as well as in purchase of mutual fund/shares. The expenditure in the form of interest incurred on fund utilized for purchase of above investment is non 4 business related expenses, therefore same needs to be disallowed as per provision of section 14A r.w.r. 8D. 4.3 The provisions of section 14A attracts in this case. Accordingly, as per Rule 8D the disallowance is worked out as under: 8. On perusal of the above observations of the Assessing Officer, in our view, the requirement of law has not been complied with, therefore, relying on the decision of the coordinate bench of the Tribunal in assessee’s own case passed in ITA Nos.460&461/PAN/2015, order dated 29.03.2016 and the decision of the Hon’ble Supreme Court in the case of Godrej and Boyce Manufacturing Company Ltd. Vs. DCIT, 394 ITR 449, we delete the addition made by the Assessing Officer in both the cases of the assessee.
In the result, both appeals of the assessee are allowed. Order pronounced in the open court on 06/10/ 2021. Sd/- Sd/- (डॉ मीठा ऱाऱ मीना) (ऱलऱत कुमार) (DR. MITHA LAL MEENA) (LALIET KUMAR) ऱेखा सदस्य / ACCOUNTANT MEMBER न्याययक सदस्य / JUDICIAL MEMBER पणजी/Panaji; ददनाांक Dated 06/10/2021 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रयिलऱपप अग्रेपषि/Copy of the Order forwarded to : अऩीऱाथी / The Appellant- 1.