BALAJI INFRASTRUCTURE & DEVELOPMENT CO. LTD,MUMBAI vs. ACIT CIR 2(1), MUMBAI
In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal held that the Assessing Officer should re-compute the disallowance under Rule 8D after excluding the share application money from the value of investment. The Assessing Officer was directed to examine the facts and decide in accordance with law, giving the assessee an opportunity of being heard.
What were the facts?
The assessee received share application money totaling Rs. 4,59,10,000. The Assessing Officer added this amount under Section 68 as unexplained cash credit. The assessee claimed that details of the transactions were provided. The Assessing Officer also considered the value of investment in an associate company for disallowance under Section 14A.
What were the issues?
Whether share application money should be included in the value of investment for computing disallowance under Section 14A, and whether the addition under Section 68 was justified without proper verification.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCHES “B”, MUMBAI
Before: Shri Joginder Singh, & Shri Rajesh Kumar
Per Joginder Singh (Judicial Member) The assessee is aggrieved by the impugned order dated 24/12/2012 of the ld. First Appellate Authority, Mumbai, The only ground raised in this appeal pertains to invoking the provisions of section 14A of the Act r.w.r.8D of the Income Tax Rules and directing the Assessing Officer to work out the 2 M/s Balaji Infrastructure & Development Company Ltd. 14A of a sum computed by applying method prescribed under Rule 8D or Rs.12,15,034/-, whichever is lower, assuming that said expenditure must have been incurred by the assessee for earning exempt income and further erred in upholding the action of the Assessing Officer considering the value of investment in associate company i.e. Balaji Infra Projects Ltd. of Rs.31.75 crores in the qualifying the amount in reckoning the average value of investment for working out the disallowance under Rule-8D of the Rules.
During hearing of this appeal, the ld. counsel for the assessee, Shri Sunil Nahata, advanced his arguments, which are identical to the ground raised by submitting that the assessee neither earned any income nor claimed any exempt income. On the other hand, Shri Vijay Kumar Soni. Ld. DR, defended the conclusion arrived at in the impugned order.
2.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee is engaged in the business of infrastructure development, during the relevant year, declared income of Rs.2,69,878/-. The assessee received share application money amounting to Rs.4,59,10,000/- which was held as an unexplained cash credit by the ld. Assessing Officer and added u/s 68 of the Act by opining that the assessee could not prove the existence, creditworthiness and genuineness of the transaction. The claim of the assessee is 3 M/s Balaji Infrastructure & Development Company Ltd. Assessing Officer vide letter dated 24/11/2011. The stand of the assessee is that through this letter, name, PAN, amount, confirmation letter, bank statement were filed before the Assessing Officer. The assessee claimed that Rs.73,10,000/- were received from M/s Balaji Infra Projects Ltd., a company which is assessed in the same charge of the Assessing Officer, therefore, it could have been verified by the Assessing Officer himself and the balance share application money of Rs.3,86,00,000/- was received from M/s Sai Granite Exporters and Development Pvt. Ltd. and the details of which were also filed before the Assessing Officer. We note that the letter dated 07/09/2012 of the assessee has been reproduced as page-2 onwards in the impugned order along with the case laws, relied upon by the assessee. The submissions of the assessee were forwarded to the Assessing Officer for getting the remand report, which has also been reproduced at page-8 onwards of the impugned order. The remand report dated 13/12/2012 has also been reproduced at page-9 and the rejoinder dated 17/12/2012 is also available at page 10 onwards of the order of the ld. First Appellate Authority. The assessee, during the relevant period, received share application money totaling the tune of Rs.4,59,10,000/-, which consist of Rs.73,10,000/-, received from M/s Balaji Infra Projects Ltd. which have been verified from the books of accounts by the Assessing Officer. The stand of the assessee is that the Assessing Officer has included the share application money in the investment for computing 4 M/s Balaji Infrastructure & Development Company Ltd. Rule-8D. Totality of facts clearly indicates that the Assessing Officer was rightly directed to re-compute the disallowance under Rule-8D after excluding the share application of money for value of investment. It is also seen that the assessee claim expenses/loss of Rs.1,32,71,596/-, which consist of loss on sale of shares of Rs.1,20,56,562/-. The total operative and administrative expenses were charged to profit & loss account are the tune of Rs.12,15,034/-. It was claimed that the total disallowance u/s 14A cannot exceed this amount. In view of this fact, and the claim of the assessee, we direct the ld. Assessing Officer to examine the facts and then decide in accordance with law, in the light of the decision from Hon’ble jurisdictional High Court in Godrej & Boyce Mfg. Ltd. The assessee be given opportunity of being heard, thus, the appeal of the assessee is allowed for statistical purposes.
Finally, the appeal of the assessee is allowed for statistical purposes.
This Order was pronounced in the open court in the presence of ld. representatives from both sides at the conclusion of the hearing on 26/10/2015.
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