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Income Tax Appellate Tribunal, AHMEDABAD “C” BENCH
Before: Shri Rajpal Yadav & Shri Amarjit Singh
Revenue by: Shri L.P. Jain, Sr. D.R. Assessee by: Shri Hemanshu C. Shah, A.R. Date of hearing : 09-09-2020 Date of pronouncement : 07-10-2020 आदेश/ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:-
This assessee’s appeal for A.Y. 2004-05, arises from order of the CIT(A)-9, Ahmedabad dated 03-07-2018, in proceedings under section 143(3) r.w.s. 254 of the Income Tax Act, 1961; in short “the Act”.
The solitary ground of appeal
of the assessee against the order of ld. CIT(A) in confirming the disallowance of Rs 14,982,931/- u/s. 14A r.w.r. 8D of I.T. Rules.
3. The fact in brief is that return of income declaring income of Rs. 4,53,83,570/- was filed on 1st Nov, 2004. The case was subject to scrutiny assessment. The assessment u/s. 143(3) of the Act was completed on 30th Nov, Page No 2 Nirma Chemical Works Pvt. Ltd. vs. Dy. CIT 2006 and disallowance of Rs. 2,86,937/- u/s. 14A of the Act out of interest expenses and Rs. 37,37,962/- out of administrative expenditure was made u/s. 14A of the Act. The ld. CIT(A) has confirmed this addition. However, the Co- ordinate Bench of the ITAT vide has set aside the issue to the file of Assessing Officer for deciding the issue afresh after verification of details and revised working of interest expenses furnished by the assessee. The Assessing Officer has passed order u/s. 143(3) r.w.s. 254 of the Act on 15th December, 2007 and computed disallowance u/s. 14A r.w. rule 8D of the I.T. Rules to the amount of Rs. 14,82,931/-.
4. Aggrieved assessee has filed appeal before the ld. CIT(A). The ld. CITA has dismissed the appeal of the assessee.
During the course of appellate proceedings before us, the ld. counsel has filed paper book comprising copies of balance sheet, profit and loss account and order of the ITAT pertaining to the assessment year 2012-13. The ld. counsel has contended that vide the Co-ordinate Bench of the ITAT in the case of the assessee itself on similar issue and identical facts has held that assessee was having substantial interest free fund, so, there was no justification for making disallowance u/s. 14A out of interest expenditure and justified the disallowance out of administrative expenditure to the expenditure of Rs. 6 lacs after considering the nature of expenditure as assessee has not specifically claimed any expenditure for taking care of investment i.e. salary of particular employee etc. On the other hand, the ld. Departmental Representative has supported the order of lower authorities.
We have heard both the sides and perused the material on record. The Assessing Officer has computed disallowance of Rs. 14,82,931/- for Page No 3 Nirma Chemical Works Pvt. Ltd. vs. Dy. CIT administrative expenses u/s. 14A r.w. Rule 8D of the I.T. Rules. During the course of assessment and appellate proceedings, the assessee has submitted that it had share capital and reserves of Rs. 532.12 crores as on 31st March, 2014 as against investment of Rs. 14.60 crores. Therefore, there was no justification for making disallowance out of interest expenditure incurred on earning exempt income. However, in respect of disallowance of administrative expenditure, we have gone through the order of the Co-ordinate Bench of the ITAT in the case of the assessee itself for the assessment year 2012-13 wherein the disallowance in respect of administrative expenditure was restricted to Rs. 6 lacs after taking into consideration the total exempt income earned by the assessee of Rs. 63,35,308/-. Respectfully following the decision of the Co-ordinate Bench on the similar facts and identical issue, we restrict the disallowance out of administrative expenses to Rs. 7 lacs as asssesse has earned dividend income of Rs. 77,60,108/- as against dividend income of Rs. 63,35,308/- earned in A.Y. 2012-13. Accordingly, the appeal of the assessee is partly allowed.
In the result, the appeal of the assessee is partly allowed. . Order pronounced in the open court on 07-10-2020 Sd/- Sd/- (RAJPAL YADAV) (AMARJIT SINGH) VICE PRESIDENT ACCOUNTANT MEMBER Ahmedabad : Dated 07/10/2020 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file.
Page No 4 Nirma Chemical Works Pvt. Ltd. vs. Dy. CIT