AQUAGEL CHEMICALS(BHAVNAGAR)P. LTD.,BHAVNAGAR vs. DCIT, CIRCLE-1, BHAVANAGAR

PER SHRI KUL BHARAT, JUDICIAL MEMBER :

1. The learned CIT(A) has erred both in law and on the facts of the case in confirming the action of the AO of invoking the provisions of Rule 8D without recording any dissatisfaction to the claim of appellant.

- 2 - Aquagel Chemicals vs. DCIT Asst.Year – 2014-15

5. The learned CIT(A) has erred in law and on facts of the case in confirming action of the Ld. AO in levying interest u/s.234A/B/C of the Act.

The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal.”

2. The only effective ground of this appeal is against disallowance made u/s 14A r.w.r. 8D of the Income Tax Act, 1961 (hereinafter referred as to ‘the Act’).

3. The facts giving rise to the present appeal are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s 143(3) of the Act was framed vide order dated 11.11.2016. While framing the assessment the Assessing Officer made disallowance by invoking the provision of section 14A and applying Rule 8D of the Income Tax Rules, 1962 (hereinafter referred as to ‘the Rule’) amounting to Rs.11,08,135/- thus the Assessing Officer assessed the income at Rs.1,18,39,508/- against the income declared at Rs.1,07,31,373/-. Aggrieved by this the assessee preferred an appeal before the Learned CIT(A) who after contending the submission sustained the addition. Now the assessee is in appeal before the Tribunal.

- 3 - Aquagel Chemicals vs. DCIT Asst.Year – 2014-15 4. At the outset, the Learned Counsel for the assessee contended that so far disallowance qua interest is concerned authorities below are not justified in making the addition as the assessee has sufficient interest free fund of its own per contra the Learned DR opposed the submission. Learned Counsel placed reliance in the following cases: � CIT vs. Reliance Industries Ltd. - 410 ITR 466 (SC); � CIT vs. Torrent Power Ltd. - 363 ITR 474 (Guj); � CIT vs. Suzlon Energy Ltd. - 354 ITR 630 (Guj); � CIT vs. Gujarat Power Corporation Ltd. - 352 ITR 583 (Guj); � CIT vs. Hitachi Home & Life Solutions (I). Ltd. - (2014) 41 taxmann.com 540 (Guj); � CIT vs. Reliance Utilities & Power Ltd. - 313 ITR 340 (Bom); � Munjal Sales Corporation vs. CIT - 298 ITR 298 (SC);

In rejoinder, Learned Counsel for the assessee placed reliance working made in the chart. The assessee has stated in chart as under: Particulars Balance as at Balance as at 31.03.2014 (Rs.) 31.03.2013 (Rs.) (A) Interest free funds : Share capital 22,00,00,000 22,00,00,000 Research & Surplus 1,06,49,675 -53,090 23,06,49,675 21,99,46,910 (B) Investments 6,84,11,238 19,89,87,795 (C) Ratio of interest 3.37 times 1.11 times free funds & Investments (A/B * 100)