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Income Tax Appellate Tribunal, DELHI BENCH ‘E’ NEW DLEHI
Before: SHRI PRASHANT MAHARISHI & SHRI K. NARASIMHA CHARY
PER K. NARASIMHA CHARY, J.M.
Aggrieved by the order dated 16/08/2017 passed by the learned Commissioner of Income Tax (Appeals)-Ghaziabad ("Ld. CIT(A)") for the assessment year 2014-15, Micromatic Grinding Technology Ltd.(“the assessee”) filed this appeal. 2. Brief facts of the case are that the assessee company is engaged in the business of manufacturing and sale of High Precision Cylindrical Grinding Machines. For the assessment year 2014-15, they have filed their return of income on 28.11.2014 declaring nil income and current
year loss of Rs.81,56,113/-. During the year assessee received dividend income of Rs.22,61,700/- and the assessee had disallowed a sum of Rs.92,485/- on account of disallowance u/s. 14A relating to exempt income. Assessing Officer, however, not having been satisfied by such disallowance, proceeded to calculate the disallowance in terms of Rule 8D of the Income-tax Rules (“the Rules” for short) and made an addition of Rs.5,10,411/- over and above the disallowance of Rs.92,485/- made by assessee.
Aggrieved by the same, assessee preferred an appeal before the CIT(A) and contended that they have got sufficient own funds to make the impugned investments and therefore, no interest component under Rule 8D(2)(ii) could be added back. Assessee further submitted that towards administrative expenses u/s. 80(2)(iii) they have disallowed Rs.92,485/- which is sufficient and also found to be correct by the ld. Assessing Officer.
When the matter is called, there is no representation from the assessee. Notice was sent to the address given in form No. 36. If the assessee is available in such address, such notice should have been served on the assessee. If for any reason, the assessee is not available there, it is for the assessee to make arrangements for service of such notice by furnishing the address where the assessee would be available, or to deliver it to some authorised person, or by making request to the postal department to detain the mail till the assessee claims the same. Non-service of notice is solely attributable to the conduct of assessee. In these circumstances, we proceed to decide the appeal basing on the material available on record.
Learned DR places reliance on the orders of the authorities below. 6. We have gone through the record in the light the submissions made by ld. DR. From the order of CIT(A) at page 4 para-4, we find that during the relevant assessment years of investments, the assessee had sufficient funds at their disposal. The table reveals that at the beginning of assessment year 1995-96, in which year the investment to the tune of Rs. 5,00,000/- was made, the assessee had Rs.141.95 lacs in their hands. Same is the case with other investments and assessment years. There is no material to the contra. We, therefore, hold that there is no reason for the Assessing Officer to compute the disallowance in terms of Rule 8D(2)(ii) of the Rules. In so far as Rule 8D(2)(iii) is concerned, the assessee voluntarily disallowed 0.5% of the average value of investment and even the Assessing Officer also reached the same figure. In these circumstances, we find that the disallowance of any amount under Rule 8D(2)(ii) cannot be sustained. Assessee, accordingly, succeeds and we direct the Assessing Officer to delete the addition made under Rule 8D(2)(ii) of the Rules. 7. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on this 8th day of July, 2021. Sd/- Sd/- (PRASHANT MAHARISHI) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 08/07/2021 ‘aks’