PRAMOD B RANKA,PUNE vs. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE - 5, PUNE

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ITA 2712/PUN/2017Status: DisposedITAT Pune08 June 20224 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found merit in the assessee's stand based on settled legal position. It directed the Assessing Officer to recompute the disallowance after verifying the interest-free and interest-bearing funds against investments.

What were the facts?

The assessee's appeal for AY 2013-14 challenged the disallowance of proportionate interest and administrative expenditure under Section 14A read with Rule 8D. The assessee argued that their non-interest bearing funds exceeded investments made for exempt income.

What were the issues?

Whether the disallowance under Section 14A read with Rule 8D was correctly computed, considering the assessee's interest-free funds and the principles laid down in relevant judicial precedents.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(3)Show list

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Income Tax Appellate Tribunal, “A” BENCH, PUNE

Before: SHRI S.S.GODARA, JM & SHRI DR. DIPAK P. RIPOTE, AM

For Appellant: Shri Kisore B Phadke
For Respondent: Shri S. P. Walimbe
Hearing: 12.05.2022Pronounced: 08.06.2022

आदेश / ORDER PER S. S. GODARA, JM :

1.

This assessee’s appeal for A.Y. 2013-14 is directed against the CIT(A) - 4, Pune’s order dated 04/07/2017 passed in case No. PN/CIT(A) -4/DCIT, Circle-5, Pune/143/2016-17/456 involving proceeding u/s. 143(3) of the Income Tax Act, 1961 ; in short “the Act”. Heard both the parties. Case file perused.

2.

Coming to the assessee’s sole substantive grievance both the lower authorities erred in law and on facts in invoking section 14A r.w. Rule 8D disallowance of proportionate interest and administrative expenditure heads; totaling to Rs.19,51,288/-, learned counsel’s sole argument before us is that this tax-payer’s non bearing funds are much more than corresponding investments made for deriving exempt income. He quotes CIT Vs Reliance Utilities & Power Ltd. 313 ITR 340 that necessary presumption in such an instances is of investment of non interest bearing funds only. Mr.Phadke further sought to highlight the fact hon’ble apex court’s latest decision in (2021) 13 taxmann.com 178 (SC) South Indian Bank Vs. CIT has also reiterated the very legal position.

3.

The Revenue placed strong reliance of both the lower authorities action making the impugned disallowance.

4.

We have given our thoughtful consideration to the forgoing rival pleadings and find force in assessee’s stand in principle in view of the settled legal position as on date (supra) . The facts also remains that the Assessing Officer needs to compute the impugned proportionate interest disallowance afresh after carrying out the factual verification of assessee’s interest free as well as interest bearing funds viz-a-viz the investments made herein. Coupled with this there is no indication that the learned lower authorities have made administrative expenses disallowance going by the investments yielding exempt income only in light of ACIT Vs. Vineet Investments (P) Ltd 165 ITD 27 (Delhi) (SB) and (2013) 144 ITD 141(Kolkata) REI Agro Ltd. Vs. DCIT. We thus restore both these issues qua the impugned u/s. 14A rule 8D disallowance; back to the Assessing Officer in very terms. Ordered accordingly.

5.

This assessee’s appeal is allowed for statistical purposes in above terms. Order pronounced in the Open Court on this 8th day of June, 2022.

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