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Income Tax Appellate Tribunal, AHMEDABAD “A” BENCH
Before: Shri Rajpal Yadav & Shri Amarjit Singh
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “A” BENCH Before: Shri Rajpal Yadav, Judicial Member And Shri Amarjit Singh, Accountant Member ITA No. 325 & CO No. 40/Ahd/2016 Assessment Year 2012-13
The DCIT, M/s. Dynemic Products Circle-1(1)(2), Ltd., 301, Satyamev Ahmedabad Vs Complex-1, Opp. New (Appellant/Respondent) Gujarat High Court, Sarkhej-Gandhinagar Highway, Sola Ahmedabad PAN: AAACD4067D (Respondent/Cross Objector)
Revenue by: Shri Prasoon Kabara, Sr. D.R. Assessee by: Shri Rajesh D. Shah, A.R. Date of hearing : 08-06-2018 Date of pronouncement : 25-06-2018 आदेश/ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:-
This Revenue’s appeal and assessee’s cross objection for A.Y. 2012-13, arises from the order of the CIT(A)-1, Ahmedabad dated 23-11-2015, in proceedings under section 143(3) of the Income Tax Act, 1961; in short “the Act”. 2. The revenue has raised following grounds of appeal:- “1. The ld. CIT(A) has erred in law and on facts in deleting the disallowance ofRs.4,61,542/- computed u/s 14A r.w. Rule 8D of the I. T. Act. 2. The ld. CIT(A) has erred in law and on facts in deleting the disallowance for non- deduction of IDS on payment of Rs.60,06,730/-under section 40(a)(ia) of the Act to Bharuch Enviro Infrastructure Ltd.”
I.T.A No. 325 & CO No. 40/Ahd/2016 A.Y. 2012-13 Page No 2 DCIT vs. M/s. Dynemic Products Ltd.
The brief fact of the case is that return of income declaring income of Rs. 5,34,95,446/- was filed on 25th September, 2012. Subsequently, the case was selected under scrutiny by issuing of notice u/s. 143(2) of the act on 6th August, 2013. On scrutiny, the assessing officer has noticed that asessee has made huge investment in shares but has not shown any expenditure incurred towards earning exempt income. Consequently, the assessing officer has worked out disallowance of Rs. 4,61,542/- according to provision of section 14A r.w. Rule 8D of the I.T. Act. The other issue is that assessing officer has noticed that assessee has paid ETP charges of Rs. 60,06,730/- to Bharuch Infrastructure Ltd. on which assessee has not deducted tax u/s. 194C of the act. Consequently, the assessing officer has made disallowance of Rs. 60,06,730/- u/s. 40(a)(ia) of the act.
Aggrieved assessee filed appeal before the ld. CIT(A). The ld. CIT (A) deleted the addition of Rs. 4,61,542/-after referring the decision of ITAT Ahmedabad for assessment year 2007-08 and 2008-09 in the case of the assessee itself. Regarding second issue, the disallowance for non-deduction of TDS u/s. 40(a)(ia), the ld. CIT(A) has allowed the appeal of the assessee after following decision of hon’ble Delhi High Court in the case of CIT vs. Ansal Landmark Township Pvt. Ltd. IT Appeal No. 160/2015 (Delhi High Court) on the ground that disallowance is not to be allowed in case the payee has paid the tax due on the income declared by them in their return of income.
We have heard the rival contention and perused the material on record carefully. Regarding disallowance of Rs. 4,61,542/- u/s. 14A r.w. Rule 8D of the IT Rule, we have noticed that ld. CIT(A) has simply deleted the addition by referring the decision of Hon’ble ITAT for assessment year 2007-08 and 2008-09 without giving any detailed findings. We have also noticed that the assessee has not furnished the complete detail of earning of exempt income and any disallowance made by it u/s. 14A r.w. Rule 8D of the act either before the
I.T.A No. 325 & CO No. 40/Ahd/2016 A.Y. 2012-13 Page No 3 DCIT vs. M/s. Dynemic Products Ltd.
assessing officer or before the ld. CIT(A). Therefore, we are of the considered opinion that without knowing the full fact of the case pertaining to actual earning of exempt income and corresponding disallowance if any made by the assessing officer it is not appropriate to adjudicate this issue, therefore, we restore this issue to the file of the assessing officer to verify the actual amount of exempt income earned by the assessee and actual disallowance of expenditure made by the assessee towards earning this exempt income and decide this case afresh after affording sufficient opportunity to the assessee. In the result, this ground of appeal of the revenue is allowed for statistical purpose. Regarding second ground of appeal, we have noticed that the issue is covered in favour of the assessee by the decision of Hon’ble Delhi high Court in the case of Ansal Landmark Pvt. Ltd. IT Appeal No 160/2015(Delhi High Court) wherein it is held that amendment in the first proviso to section 201(1) of the act was inserted w.e.f. 1st July, 2012 is to be treated as retrospective in nature. The said proviso reads as under:- "Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such resident- (i) has furnished his return of income under section 139; (ii) has taken into account such sum for computing income in such return of income; and (iii) has paid the tax due on the income declared by him in such return of income; And the person furnishes a certificate to this effect from an accountant in such form as may be prescribed.”
In the case of the assessee, we have noticed that assessee has filed Form no. 26A duly certified by the chartered accountant before the assessing officer during the course of assessment proceedings revealing that payee has furnished their return of income u/s. 139. The payee has paid tax due on the income declared by them in their return of income. Form no. 26A was certified by the chartered accountant. After perusal of the records, we consider that it is undisputed fact that payee has paid the taxes on the income earned on which the assessee has not deducted tax. Therefore, we do not find any infirmity in the decision of ld. CIT(A). Accordingly, this ground of appeal of the revenue is dismissed.
I.T.A No. 325 & CO No. 40/Ahd/2016 A.Y. 2012-13 Page No 4 DCIT vs. M/s. Dynemic Products Ltd.
In the result the ground no.1 of appeal of the revenue is allowed for statistical purpose and ground no.2 of appeal of the revenue is dismissed.
CO No. 40/Ahd/2016
The assessee has raised following grounds of appeal in cross objection:- “1. The Learned CIT(A) has rightly allowed our appeal on both the grounds (In chronological order as per the Order of the Learned CIT(A) : 2. The Learned Assessing Officer has given wrong address of the respondent at point no 11 in Form No 36, the correct address of the respondent is as under:- DYNEMIC PRODUCTS LTD. B-301,Satyamev Complex -1, Opp.: New Gujarat High Court, S.G.Highway Road, Sola, Ahmedabad Your respondent of the appeal no 325 request you to serve all the notice to the above referred correct address Ground (1) (1) disallowance of notional expenditure U/s 14A-(Calculated as per Rule 8D of IT Rules.) Rs. 4,61,542/- 3. The appeal for AY 2007-08 & 2008-09 of your appellant with similar grounds, is allowed by Hon'ble ITAT, Ahmedabad with reference No. and year as under: - A. AY 2007-08 Appeal No. 197/Ahd-2011 filed on 25-01-2011.- Order dated 23-05- 2014 B. AY 2008-09 Appeal No. 2769/Ahd-2011 filed on 08-11-2011.- Order dated 22/05/2015 The learned CIT ( A) has allowed our appeal on the basis of the above orders. Ground (2): Disallowance U/s 40(a)(ia) for non deduction of TDS- Rs. 60,06,730/- The order of the CIT (Appeal) is self explanatory to delete the disallowance and allow our appeal by the Learned CIT (Appeal). 4. Your appellant therefore prays for the following relief. :- (i.) To dismiss the Appeal of the appellant on both the above grounds and to uphold the order of the Learned CIT(A).”
The assessee in his cross objection has raised the same grounds of appeal stating that ld. CIT(A) has rightly allowed the appeal of the assessee on both the issues. In view of the detailed findings and discussion made while deciding grounds of appeal of the revenue as supra the cross objection filed by the assessee has become infructuous. Therefore, cross objection filed by the assessee is dismissed.
I.T.A No. 325 & CO No. 40/Ahd/2016 A.Y. 2012-13 Page No 5 DCIT vs. M/s. Dynemic Products Ltd.
In the combined result the ground no.1 of appeal of the revenue is allowed for statistical purpose and ground no.2 of appeal of the revenue is dismissed and the cross objection filed by assessee is dismissed.
Order pronounced in the open court on 25-06-2018 Sd/- Sd/- (RAJPAL YADAV) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad : Dated 25/06/2018 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