ITO, NEW DELHI vs. M/S. KAMA HOLDINGS LTD, NEW DELHI

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ITA 1555/DEL/2014Status: DisposedITAT Delhi11 May 2016AY 2009-103 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s order, finding no infirmity in restricting the disallowance. The CIT(A) had accepted the assessee's working and noted that the AO had not found fault with the quantum of disallowance in previous years with similar facts.

What were the facts?

The assessee company claimed disallowance under Section 14A of the Income Tax Act. The Assessing Officer (AO) made a disallowance, which was then restricted by the CIT(A). The Revenue appealed this decision.

What were the issues?

The primary issue was the quantum of disallowance under Section 14A, specifically whether the CIT(A) erred in restricting the disallowance and deleting a portion computed under Rule 8D(2)(ii).

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCHES : “D” NEW DELHI

Before: SHRI H.S. SIDHU & SHRI J. SUDHAKAR REDDY

For Appellant: Ms. Rashmita Jha, Sr.DR
Hearing: 04.05.2016Pronounced: 11.05.2016

This is an appeal filed by the assessee directed against the order of the Commissioner of Income Tax (Appeals) XI, New Delhi dated 30.10.2013 for the assessment year 2009-10 on the following grounds :-

1. “Whether on the facts and circumstances of the case & in law, the Ld. CIT(A) erred in restricting the additional disallowance made u/s 14A to Rs. 1,08,59,701/- and allowing relief of Rs. 5,18,61,299/- to the assessee without appreciating the provision of Rule 8D ? 2. Whether on the facts and circumstances of the case & in law, the Ld. CIT(A) erred in deleting the disallowance computed under Rule 8D(2)(ii)

ITO vs. M/s. Kama Holdings Ltd. amounting to Rs. 6,06,19,000/- made by the AO and accepting the working of the assessee of disallowances at Rs. 87,58,151/- under Rule 8D(2)(i), ignoring the fact that the provision of Rule 8D does not make any such distinction?”

2.

After hearing rival contentions we hold as follows : 3. Ground No. 1 and 2 are on the issue of quantum of disallowance u/s 14A. Ground No. 3, 4 and 5 are general in nature.

4.

The first appellate authority at page 8 of his order held as follow:

“However, the appellant has objected the disallowance under Rule 8D(2)(ii) of the IT Rules, since it has already been accepted by the AO that before 31st March, 2005, an amount of Rs. 875.04 lac has been utilised for investment and remaining loan was for business purposes. Since then no new investment in shares has been made by the appellant and various loans obtained by the appellant have been utilised for specific purpose of business working capital requirement. The appellant’s argument have force and it is undisputed that the AO had determined in AY 2006-07, the loan amount of Rs. 857.04 lac utilised for investment in share out of total borrowings of Rs. 4612.12 lac and same has been followed in AY 2007-08 as the quantum of investment in shares remained unchanged. The facts being the same during the year under consideration and the amount of disallowance has already been disallowed by the appellant under Rule 8D(2)(i) of IT Rules, there remains no justification for making further disallowance under Rule 8D(2)(ii) of IT Rules.

5.

We find that the AO has passed orders on the directions of the Hon’be Delhi High Court in the assessee’s own case for the assessment year 2006-07 in order dated 2.12.2011. The AO has accepted in the earlier years orders that the loan amount of Rs. 857.04 lacs only was utilised for investment of shares out of the total borrowings of Rs. 4612.12 lacs . He did not find any fault with 2 20x5

ITO vs. M/s. Kama Holdings Ltd. the quantum of disallowance made by the assessee. The facts and circumstances being same during the impugned assessment year we find no infirmity in the order of the first appellate authority.

6.

In the result the appeal of the revenue is dismissed.

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