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Income Tax Appellate Tribunal, AHMEDABAD “B” BENCH
Before: SHRI PRADIP KUMAR KEDIA & SHRI MAHAVIR PRASAD
PER MAHAVIR PRASAD, JUDICIAL MEMBER
This appeal filed by the Assessee is directed against the order of the Ld. CIT(A)-2, Ahmedabad dated 24.11.2017 pertaining to A.Y. 2014-15 and following grounds have been taken:
2 . A.Y. 2014-15 1.1 The order passed u/s.250 on 24.11.2017 for A.Y.2014-15 by ClT(A)-2, A'bad upholding the disallowance of Rs.l6,70,177/- u/s 14A-r.w.R. 8D(2) made by AO is wholly illegal, unlawful and against the principles of natural Justice. 1.2 The Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the submissions while confirming the impugned disallowance. 2.1 The Ld. CIT(A) has grievously erred in law and on facts in confirming the disallowance of Rs. 16,70,177/- u/s 14A r.w.R. 8D. 2.2 That in the facts and circumstances of the case as well as in law, the Ld.CIT(A) ought not to have upheld the disallowance of Rs. 16,70,177/- u/s 14A r.w.R. 8D. 3.1 Without prejudice to above and in the alternative, the impugned disallowance as worked out by AO u/s 14A r.w.R. 8D and confirmed by CIT(A) is highly excessive and calls for substantial reduction. It is therefore, prayed that the disallowance of Rs. 16,70,177/- upheld by the ld. CIT(A) may kindly be deleted.
[1] The erstwhile Moly Metal Pvt. Ltd. was merged into Electro Ferro Alloys Pvt. Ltd. vide Gujarat High Court Order dated 26.08.2014, Thereafter, the name of Electro Ferro Alloys Pvt. Ltd. was changed to Moly Metal Pvt. Ltd. The financial statements of Moly Metal Pvt. Ltd. (formerly known as Electro Ferro Alloys Pvt. Ltd.) for FY 2013-14 were prepared and presented incorporating the income of the erstwhile Moly Metal Pvt. Ltd. and Electro Ferro Alloys Pvt. Ltd.
The original Income Tax Return for AY 2014-15 was e-filed on 23.11.2014 in the name of Moly Metal P/t. Ltd. (formerly known as Electro Ferro Alloys Pvt. Ltd.) declaring Total Income of Rs. 1,66.39,094/-. The revised Return of 3 . A.Y. 2014-15 Income was filed by the assessee company on 10.09.2015 declaring Total Income of Rs. 1,66,39,094/-.
The Assessment Order was made by the Ld. DCIT, Circle-2(l)(2), Ahmedabad on 29.11 .2016 u/s. 143(3) of the Act for AY 2014-15, assessing/ determining Total Income at Rs.2,23,84,840/-against the Returned Income of Rs..l, 66,39,094/- by making disallowance of Rs.57,45,744/- u/s. 14A read with Rule 8D of the Act/ Rules. The disallowance u/s. 14A read with Rule 8D was made by the Assessing Officer on the ground that the assessee failed to prove the nexus between the investment made to earn exempt dividend income and its immediate source thereof. He further stated that the assessee also failed to prove that sue1 1 investment was made from its own funds or from the funds on which no interest payment is made by the assessee. And finally made disallowance of Rs. 57,45,744/- under section 14 read with Rule 8D.
Against the said order, assessee preferred first statutory appeal before the ld. CIT(A) who partly allowed the appeal of the assessee.
We have gone through the relevant record and impugned order and heard both the parties. At the outset, ld. A.R. filed a chart wherein working of Section 14A read with Rule 8D(2) have been given wherein it is mentioned that total exempt income is Rs. 2164258/- . And assessee has made suo motu disallowance of Rs. 189293/- and average investment of dividend fund is Rs. 27988469/-. And ld. A.R. further stated that it has invested money through Mutual Funds.
In view of the above, we set aside this matter to the file of the A.O. to re- determine the disallowance under Rule 8D(2)(iii) having regard to investments which have generated the exempt income and after exclusion of investments 4 . A.Y. 2014-15 not giving rise to any exempt income in the light of decision of Special Bench in Vireet Investments Ltd. 165 ITD 27 (SB) as well as exclusion of investments giving rise to taxable income.
In the result, appeal filed by the Assessee is allowed for statistical purposes.
Order pronounced in Open Court on 29 - 07- 2019