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आदेश/Order
Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the assessee against the order dated 20.3.2018 of the Commissioner of Income Tax (Appeals)-2, Chandigarh [hereinafter referred to as CIT(A)].
At the outset, Ld. Counsel for the assessee has submitted that the only issue raised / pressed upon in this appeal is regarding disallowance u/s 14A of the Income-tax Act, 1961 (in short 'the Act'). He has further submitted that the lower authorities have made / confirmed the disallowance u/s 14A of the Act in respect of the disallowance out of the interest expenditure as well as on account of administrative expenses.
ITA No. 775/Chd/2018- Swaraj Engines Limited, Mohali 2
So far as the issue relating to disallowance out of interest
expenditure is concerned, the Ld. Counsel for the assessee has submitted
that the assessee during the year has not raised any secured or unsecured
loans and no interest expenditure has been incurred by the assessee on any
loan. The only interest paid by the assessee was in respect of delay on
payment of excise duty and service tax. The Ld. DR also could not
contradict this factual aspect pleaded by the assessee. Since the assessee
did not borrow any interest bearing funds during the year, hence, there is
no question of disallowance of expenditure out of the interest expenditure.
In view of this, so far as the disallowance u/s 14A of the Act in respect of
interest expenditure is concerned, we do not find any justification on the
part of the lower authorities in making / confirming the same. Moreover,
the Ld. Counsel for the assessee has also relied upon the decision of this
Tribunal in the own case of the assessee in relation to the earlier
assessment years 2012-13 and 2013-14, wherein, identical issue has been
raised in ITA Nos.1258 & 1259/Chd./2016 and the Tribunal vide order
dated 1.6.2017, on identical facts has decided the same in favour of the
assessee.
So far as the issue relating to the disallowance on account of
administrative expenses is concerned, though the Assessing officer has
made the disallowance by applying the provisions of Rule 8D(2)(iii) of the
Income Tax Rules, however, the assessee, before the Assessing officer,
had demonstrated the working of the administrative expenses. Identical
issue came into consideration before the Tribunal in the earlier assessment
years in ITA Nos. 1258 & 1259/Chd/2016 vide order dated 1.6.2017,
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wherein, the assessee had made identical pleadings claiming that he had already disallowed salary of one employee, 10% salary of his supervisors (Company Secretary) and further 46.30% of the total administrative expenditure. The Tribunal taking into consideration the working of the suo
moto disallowance of administrative expenditure, held that there was no justification of further enhancement of the administrative expenses, therefore, the impugned addition made by the lower authorities were deleted.
Since there are no distinguishing facts in the year under consideration, hence, following the decision of the Tribunal in the earlier years in the own case of the assessee, the disallowance on account of administrative expenditure is also ordered to be deleted.
In the result, the impugned additions made by the lower authorities u/s 14A of the Act are ordered to be deleted. Order pronounced in the Open Court on 21.11.2018
Sd/- Sd/- (अ�नपूणा� गु�ता / ANNAPURNA GUPTA) (संजय गग� / SANJAY GARG) लेखा सद�य/ Accountant Member �या�यक सद�य/ Judicial Member Dated : 21.11 . 2018 “आर.के.”
आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar
ITA No. 775/Chd/2018- Swaraj Engines Limited, Mohali