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Income Tax Appellate Tribunal, JAIPUR BENCHES, JAIPUR
Before: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA. No. 833/JP/2018
आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR Jh fot; iky jko] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA. No. 833/JP/2018 fu/kZkj.k o"kZ@Assessment Years : 2014-15 cuke M/s APM Industries Ltd. The ACIT, Vs. SP-147, RIICO, Industrial Area, Circle-2, Bhiwadi, Alwar. Alwar. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AACCA 5114 G vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri S.L. Poddar (Adv.) jktLo dh vksj ls@ Revenue by : Shri Ran Singh (Add. CIT) lquokbZ dh rkjh[k@ Date of Hearing : 10/10/2018 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 15/10/2018 vkns'k@ ORDER
PER: VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of ld. CIT(A) Alwar dated 08.05.2018 for the Assessment Year 2014-15 wherein the sole ground of appeal relates to confirmation of addition of Rs. 12,24,717/- under section 14A of the Act.
Briefly, the facts of the case are that during the course of assessment proceedings, the AO observed that the assessee has received dividend income of Rs. 1,98,605/- which has been claimed as
2 ITA No. 833 /JP/2018 M/s APM Industries Ltd. vs. ACIT
exempt income. Accordingly, a show cause notice was issued to the assessee to justify whether the amount disallowed by the assessee amounting to Rs. 5,51,643/- is as per Section 14A of the Act r.w. Rule 8D. Thereafter, considering the submissions of the assessee and the value of the investment reflected in the balance sheet, the AO recomputed the disallowance as per Rule 8D which comes to Rs. 17,76,360/- and the difference amount of Rs. 12,24,717/- was disallowed and added back to the income of the assessee.
Being aggrieved, the assessee carried the matter in appeal before the ld. CIT(A) who has sustained the said disallowance.
During the course of hearing, the ld. AR has submitted that out of total investment of Rs. 12,57,74,026/- as on 31.03.2014, the investment in M/s V.S. Lignite Power Pvt. Ltd. amounting to Rs. 2,37,02,610/- has not yield dividend income during the year. Further, in respect of investment in IIFLME NFO & Reliance Money Manager amounting to Rs. 4,00,00,000/-, the income thereon is taxable in the hands of the assessee and the same has not been claimed as exempt. It was accordingly submitted that the lower authorities have failed to appreciate the same and while working out the disallowance, they have not excluded these investments for the purpose of computing the disallowance under Rule 8D of the Act.
It was further submitted that a similar issue was involved in assessee’s own appeal in ITA No. 239/JP/2017 dated 02.05.2018 for the
3 ITA No. 833 /JP/2018 M/s APM Industries Ltd. vs. ACIT
A.Y. 2011-12 wherein the Coordinate Bench in para 8 has held as under:- “8. We have considered the rival submissions as well as relevant material on record. It is not disputed that out of the total investment of Rs. 1,75,97,416/-, a major part of the investment to the extent of Rs. 1,11,42,220/- is in the redeemable preference shares of V.S. Lignite Power Pvt. Ltd. It is also not in dispute that the assessee is purchasing the power from the said company at a lower rate tariff in comparison to the JVVNL. However, in view of the decision of the Hon’ble Supreme Court in the case of Maxopp Investment Ltd. vs. CIT (supra), the dominant purpose of shares held by the assessee are not relevant for the purpose of section 14A of the IT Act. The assessee has further pointed out that there is no fresh investment for the year under consideration and the assessee has not earned any dividend on the investment made in the shares of V.S. Lignite Power Pvt. Ltd. Accordingly, to the extent of investment made in the said company the disallowance under section 14A is not called for as the assessee has not earned or received any dividend income. As regards the remaining investment, since the assessee has considered the proportionate disallowance on the other investment, therefore, the matter is set aside to the record of the AO for re-computation of the disallowance under section 14A by excluding the investment in the shares of V.S. Lignite Power Pvt. Ltd. as the assessee has not received any dividend income on the said investment. Further, the AO has also not made any disallowance under section 14A in respect of the said investment for the assessment year 2010-11 while passing the order in the set aside proceedings. Accordingly, the issue is set aside to the record of the AO for limited purpose of re-computing disallowance.”
4 ITA No. 833 /JP/2018 M/s APM Industries Ltd. vs. ACIT
The ld. DR is heard who has relied on the findings of the lower authorities.
We have heard the rival contentions and perused the material available on record. From the perusal of the assessment order, it is noted that the Assessing Officer has considered the investment on 31.03.2013 amounting to Rs. 8,07,74,026/- and investment on 31.03.2014 amounting to Rs. 12,57,74,026/- and has computed the disallowance under Rule 8D amounting to Rs. 17,76,360/-. The investment as on 31.03.2014 amounting to Rs. 12,57,74,026/- comprises of investment in Government securities, Shares in M/s V.S. Lignite Power Pvt. Ltd, investment in equity shares, investment in IIFLME NFO & Reliance Money Manager and investment in IIFCL Tax free bond & HUDCO Tax Free Bond, the details thereof are appearing at page 5 of the ld. CIT(A) order. The ld. AR has contended that the investment in M/s V.S. Lignite Power Pvt. Ltd. has not yielded any dividend income during the year. Further, income on investment in IIFLME NFO & Reliance Money Manager is fully taxable. In our view, the disallowance U/s 14A of the Act is therefore not called for in respect of these investments as the assessee has not earned or received any dividend income on investment in V.S. Lignite Power Pvt. Ltd. and as far as investment in IIFLME NFO & Reliance Money Manager is concerned, the same will not be subject to any disallowance under section 14A as income thereof has been claimed as taxable in the hands of the assessee. It has been further contended that where the aforesaid two investments are excluded, the disallowance under section 14A would be Rs 551,643 as disallowed by the assessee in its return of income.
5 ITA No. 833 /JP/2018 M/s APM Industries Ltd. vs. ACIT Accordingly, we set aside the matter to the file of the Assessing Officer to verify these facts as contended by the ld. AR and recompute the disallowance under section 14A of the Act.
In the result, the appeal of the assessee is disposed off in light of above directions.
Order pronounced in the open Court on 15/10/2018.
Sd/- Sd/- ¼fot; iky jko½ ¼foØe flag ;kno½ (Vijay Pal Rao) (Vikram Singh Yadav) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 15/10/2018. *Santosh आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- M/s APM Indistries Ltd., Alwar. 2. izR;FkhZ@ The Respondent- ACIT, Circle-2, Alwar. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 6. xkMZ QkbZy@ Guard File { ITA No. 833/JP/2018} vkns'kkuqlkj@ By order,
सहायक पंजीकार@Aेेज. त्महपेजतंत