M/S. KAKKAR COMPLEX STELS PVT. LTD,HOSHIARPUR vs. ASSISTANT COMMISSIONER OF INCOME TAX, RANGE-III, CIRCLE-III, JALANDHAR

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. N.K.CHOUDHRY, JUDICIAL MEMBER AND SH. O.P.MEENA, ACCOUNTANT MEMBER

ITA No. 149/Asr/2018 Assessment Year: 2014-15 M/s. Kakkar Complex Steels Asst. CIT, Pvt. Ltd. Circle-III, 7 km, Jalandhar Road, Vs. Jalandhar Hoshiarpur. [PAN:AAACK 9865A] (Appellant) (Respondent)

Appellant by: Sh. Ashwani Kalia (Ld. CA) Respondent by: Sh. Charan Dass (Ld. DR) Date of hearing: 20.12.2019 Date of pronouncement: 20.12.2019

ORDER PER N.K.CHOUDHRY, JM:

This appeal has been preferred by the Assessee against the

order dated 03.01.2018 passed by the Ld. CIT(A)-2, Jalandhar u/s

250(6) of the I.T. Act, 1961 (hereinafter called as ‘the Act’).

Rs.18,52,896/- made under clause (ii) of Rule 8D (2) of the Income Tax (14th Amendment) Rules, 2016 confirmed by the Ld. CIT(A) .

ITA N0.149/Asr/ 2018 (A.Y.2014-15) 2 M/s Kakkar Complex Steels Pvt. Ltd. Vs. ACIT

In fact the Assessing Officer added the amount of

Rs.9,26,448/- on account of certain expenses incurred by the

assessee under Rule 8D of I T Rules 1962 (hereinafter called as the

Rules) read with section 14A of the Act @ 0.5.% which was

subsequently enhanced by the Ld. CIT(A) @ 1% by referring the sub- clause (ii) of Rule 8D(2) which came into effect from the 2nd June,

2016.

that the Assessing Officer was not certain about the expenditure

incurred by the assessee for the investment made by the assessee

and therefore, on the basis of presumption the addition is not

sustainable even at the rate of 0.5%, because the assessee has not

incurred any expenditure on investment. Secondly, clause (ii) to sub- rule-2 of Rule 8D came into effect from 2nd June, 2016, therefore, the

addition enhanced from 0.5 % to 1% by the Ld. CIT(A) is also not

sustainable.

available on record.

4.1 First we will decide the issue relating to enhancement of

addition qua expenditure on investment from 0.5% to 1% by the Ld.

CIT(A) under clause (ii) of Rule 8D(2) of Rules r.w. section 14A of

ITA N0.149/Asr/ 2018 (A.Y.2014-15) 3 M/s Kakkar Complex Steels Pvt. Ltd. Vs. ACIT

the Act. We are of the considered view that as it reflects from the

impugned order itself that sub-clause (ii) was made applicable in the Rule 8D(2) of the Income tax Rules from 2nd June, 2016 and

therefore that would be applicable from Asst. Year: 2016-17 onwards

and not applicable to the case in hand as it pertains to assessment

year 2014-15. Hence, we are unable to sustain the enhancement of

the disallowance from 0.5% to 1%. Consequently the decision of Ld.

CIT(A) for enhancement is set aside .

4.2 Coming to the second issue qua addition @ 0.5% under Rule

8D of I T Rules 1962 read with section 14A of the Act. From the

assessment order it reflects that the Assessing Officer made the

addition @ 0.5% under Rule 8D of the Rules read with section 14A

of the Act without determining the amount of expenditure incurred by

the assessee on the ground that the assessee has not been able to

substantiate its claim qua non-expenditure on the investment.

Therefore, in the absence of crystallization of expenditure by the

Assessing officer, we are unable to sustain the addition @ 0.5%,

however in the interest of justice and for determination of correct

income, we feel it appropriate to remand this issue to the file of the

Assessing Officer for decision afresh.

ITA N0.149/Asr/ 2018 (A.Y.2014-15) 4 M/s Kakkar Complex Steels Pvt. Ltd. Vs. ACIT

Order pronounced in the open Court on 20/12/2019.

Sd/- Sd/- (O.P.MEENA) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 20/12/2019. /PK/ Ps. Copy forwarded to: 1. The Appellant 2. The Respondent 3. The CIT 4. Then CIT(Appeals) 5. SR DR, I.T.A.T. Amritsar 6. Guard File True Copy By Order