NAHAR CAPITAL AND FINANCIAL SERVICES LTD.,LUDHIANA vs. ACIT, C-7, LUDHIANA

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH’B’, CHANDIGARH

BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI B.R.R. KUMAR, ACCOUNTANT MEMBER

ITA No.1447/Chd/2017 Assessment Year: 2012-13

Nahar Capital and Financial Vs. Asst. CIT Services Ltd. Circle-7 375, Industrial Area-A Ludhiana Ludhiana

PAN No. AACCN2866Q

(Appellant) (Respondent)

Assessee By : Sh. Jaikarna Singh Revenue By : Sh. Ashish Abrol

Date of hearing : 28/02/2018 Date of Pronouncement : 02/05/2018

ORDER PER DR. B.R.R.KUMAR:

The present appeal has been filed by the Assessee against the order of Ld. CIT(A)-3, Ludhiana, dt. 21/07/2017.

Directions may be given to restrict the disallowance u/s 14A as computed by the Appellant Company in its return in view of the decision of Bombay High Court in the case of Godrej Boyce Mfg. Co. Ltd V/s DCIT wherein the method of proportion has been held to be a recognized method for disallowance u/s 14A of the Act. Further, directions may be given not to apply Rule 8D read with section 14A of the Act.

2.(a) That the Worthy CIT(A) erred in Law and on the facts in sustaining the disallowance made by the Assessing Officer by applying Rule 8D which was made, without recording any satisfaction with cogent reasons in the order

regarding the correctness of the claim of expenditure in relation to income which does not form part of total income .

Directions be given not to apply Rule 8D as the provisions of Section 14 A (2) are not applicable in the case herein.

(b) That the Worthy CIT(A), further erred in law and on facts in upholding the disallowance made by the Assessing Officer by considering the average total investments of the Company, while computing disallowance as per rule 8D, which is totally wrong .

Directions be given to consider only the average of total investments on which the dividend income i.e exempt income was received during the year instead of the average total investments of the company.

That the Worthy CIT(A), erred in Law and on facts in upholding the application of Rule 8D, for the purpose of diisallowance of expenses relatable to exempt income while computing Book profits u/s 115 JB of the Act. Directions may be given to compute book profits without applying Rule 8D as per decision of this Hon'ble Bench in Appellant's own case in preceding years. The book profits shown & computed in the return may be directed to be accepted.

That the appellant craves, leave to add, amend, alter, modify or substitute all or any of the above mentioned Grounds of Appeal before the appeal is finally heard and disposed off.

The assessee is engaged in business of investments and other financial activities. The Assessing Officer noted that assessee had disallowed a sum of Rs.1,05,62,112/- and Rs. 57,69,738/- under section 14A of the Act while computing the business income under normal provisions while computing the book profit under section 115JB of the Act respectively. The Assessing Officer after recording detailed reasons, made disallowance under section 14A read with Rule 8D. The Assessing Officer computed the disallowance under section 14A read with Rule 8D for computing income under normal provisions at Rs. 1,93,20,946/-. As the assessee had himself disallowed an amount of Rs. 1,15,24,217/- in the return of income, Assessing Officer disallowed the remaining amount of Rs. 77,96,729/- for computing the income under normal provisions. Similarly, for computing the book profit under section 115JB, the Assessing Officer computed the disallowance under Rule 8D at Rs. 1,86,01,030/-. As the assessee had himself disallowed the sum of Rs. 57,69,738/- under section 14A while computing the book profit under section 115JB, the Assessing Officer disallowed the remaining amount of Rs. 1,28,31,292/- for computing the book profit under section 115JB of the Act. The assessee pleaded before ld. CIT(Appeals) that issue is covered in assessee's own case for assessment year 2010-11. The ld. CIT(Appeals), following the order of the Tribunal in the case of the assessee in assessment year 2010-11 in ITA 870/2013 dated 06.06.2014 deleted the disallowances made by the Assessing Officer. Since the similar issue stands adjudicated in the earlier years in favour of the assessee, in the absence of any new facts brought to our notice we hereby delete the addition. We hereby direct the disallowance made by the Assessing Officer be deleted.

Order pronounced in the open court.

Sd/- Sd/- (DIVA SINGH) (B.R.R.KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 02/05/2018 AG Copy to: The Appellant, The Respondent, The CIT, The CIT(A), The DR