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Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH
Before: Shri Rajpal Yadav & Shri Amarjit Singh
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH Before: Shri Rajpal Yadav, Judicial Member And Shri Amarjit Singh, Accountant Member ITA No. 2180/Ahd/2017 Assessment Year 2014-15
Ahmedabad Cement The DCIT, Company Pvt. Ltd. Circle-1(1)(2), 1, Inside Eranda Hall, Vs Ahmedabad Kapasia Bazar, (Respondent) Ahmedabad-380002 PAN: AADCA7074J (Appellant)
Revenue by: Shri Somogyan Pal, Sr. D.R. Assessee by: Shri P.B. Parmar, A.R. Date of hearing : 02-04-2019 Date of pronouncement : 04-04-2019 आदेश/ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:-
This assessee’s appeal for A.Y. 2014-15, arises from order of the CIT(A)-1, Ahmedabad dated 24-07-2017, in proceedings under section 143(3) of the Income Tax Act, 1961; in short “the Act”.
In this case, return of income declaring income of Rs. 47,32,670/- was filed on 28th Sep, 2014. Subsequently, the case was selected under scrutiny by issuing of notice u/s. 143(2) of the act on 18th Sep, 2015. Remaining
I.T.A No. 2180/Ahd/2017 A.Y. 2014-15 Page No 2 Ahmedabad Cement Company Pvt. Ltd. vs. DCIT
facts of the case are discussed while adjudicating the grounds of appeal filed by the assessee.
Ground No. (disallowance u/s. 14A) 3. During the course of assessment , the assessing officer has received dividend of Rs. 39,485/- which was claimed as exempt income from taxes. The assessing officer has asked the assessee why not the provision of section 14A of the act r.w. Rule 8D of the IT Rules should not applied in its case. The assessee has responded that no disallowance u/s. 14A should be made since the investment from which exempt income earned was made out of interest free funds. The assessing officer has not accepted he submission of the assessee. He was of the view that assessee was unable to substantiate the quantum of expenditure which has been incurred in relation to earning exempt income. Therefore, the assessing officer has applied provision of section 14A r.w. Rule 8D and computed an amount of Rs. 2,51,129/- as the expenditure incurred towards earning exempt income and the same was added to the total income of the assessee.
Aggrieved assessee filed appeal before the ld. CIT(A). The ld. CIT(A) has stated that assessing officer has disallowed Rs. 2,51,129/- u/s. 14A r.w. Rule 8D as against the exempt income of Rs. 88,008/- during the year under consideration. The ld. CIT(A) has restricted the disallowance to the extent of exempt income of Rs. 88008/- earned by the assessee.
During the course of appellate proceedings before us, the ld. authorized representative has referred page no. 26 of paper book containing
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balance sheet of the assessee company as on 31st March, 2014. He has submitted that as per the balance sheet, the total interest free fund available with assessee was to the amount of Rs. 1,66,07,251/- and the assessee has only made investment to the amount of Rs. 38,46,706/-. He has further submitted that in view of the aforesaid information, it is clearly established that assessee was having sufficient interest free own fund to cover the investment in the forms of shares. On the other hand, ld. departmental representative has placed reliance on the decision of ld. CIT(A).
We have heard both the sides and perused the material on record carefully. With the assistance of ld. representatives, we have gone through the balance sheet of the assessee company and it is noticed that assessee was having interest free fund in the form of share capital and reserves and surplus to the amount of Rs. 1,66,07,251/- and it has made total investment to the amount of Rs. 38,46,706/- from which it has earned exempt income in the form of dividend to the amount of Rs. 88,008/-. We observed that these material facts demonstrate that assessee was having sufficient interest free own fund as against the investment made in the shares, therefore, after following the decision of Hon’ble Mumbai High Court in the case of CIT vs. Reliance Utilities and Power ltd. 331 ITR 340, we do not justify the decision of ld. CIT(A). However, we observe that without incurring administrative expenditure, it is not possible to earn exempt income, therefore, we restrict the disallowance to the extent of administrative expenditure computed by the assessing officer as per computation at page 5 of the assessment order to the amount of Rs. 20,257/-. Accordingly, this ground of appeal of the assessee is partly allowed.
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Ground No. 2 computation of book profit u/s. 115JB after taking into disallowance u/s. 14A of the act 7. During the course of assessment while calculating book profit u/s. 115B of the act, the assessing officer has added disallowance of Rs. 2,51,129/- made u/s. 14A to the book profit. However, it is noticed that the assessee has not contested this issue in its appeal filed before the ld. CIT(A). We have also gone through the form no. 35 and noticed that assessee has not filed any such ground of appeal. In the light of the above facts, we find that this ground of appeal of the assessee is not arisen from the order of the ld. CIT(A), therefore, this ground of appeal of the assessee stands dismissed.
In the result, the appeal of the assesse is partly allowed. Order pronounced in the open court on 04-04-2019
Sd/- Sd/- (RAJPAL YADAV) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad : Dated 04/04/2019 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. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद