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Income Tax Appellate Tribunal - Pune

Ranadey Micronutrients Pvt.Ltd,, Pune vs Deputy Commissioner Of Income Tax,, ... on 2 July, 2019

             आयकर अऩीऱीय अधधकरण "ए" न्यायऩीठ ऩण
                                              ु े में ।
    IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH, PUNE

श्री डी. करुणाकरा राव, ऱेखा सदस्य, एवं श्री ववकास अवस्थी, न्याययक सदस्य के समक्ष ।
 BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM


                  आयकर अऩीऱ सं. / ITA No.639/PUN/2017
                  यनधाारण वषा / Assessment Year : 2012-13


      Ranadey Micronutrients Pvt. Ltd.,
      "Shrikrishna" Krishnakeval Twon Ship,
      1-A, Kondhwa Khurd,
      Pune - 411048

      PAN : AAACR8134R
                                                       .......अऩीऱाथी / Appellant

                                  बनाम / V/s.


      Deputy Commissioner of Income Tax,
      Circle - 5, Pune
                                                       ......प्रत्यथी / Respondent



                   Assessee by         : Mrs. Anita Singh
                   Revenue by          : Ms. Shabana Parveen




             सन
              ु वाई की तारीख / Date of Hearing              : 12-06-2019
             घोषणा की तारीख / Date of Pronouncement         : 02-07-2019



                               आदे श / ORDER


PER VIKAS AWASTHY, JM :

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-4, Pune dated 10-10-2016 for the assessment year 2012-13.

ITA No. 639/PUN/2017, A.Y. 2012-13

2. Mrs. Anita Singh appearing on behalf of the assessee submitted that the solitary issue raised in appeal by the assessee is with respect to disallowance made u/s. 14A r.w. Rule 8D(2)(ii) of the Act. The ld. AR submitted that the assessee is a private limited company engaged in the business of manufacture and sale of Inorganic and Micronutrient Mixture Fertilizers. The assessee had filed return of income for the impugned assessment year on 29-09-2012 declaring total income of Rs.91,36,633/-. In scrutiny assessment proceedings, the Assessing Officer inter alia made disallowance of Rs.13,52,528/- u/s. 14A r.w. Rule 8D. During the period relevant to the assessment year under appeal, the assessee had earned dividend income of Rs.14,92,000/- exempt u/s. 10(34) of the Act. The ld. AR submitted that the assessee is having own interest free funds to the tune of Rs.7,54,94,324/-, whereas, the investments during the relevant period are only Rs.4,25,91,226/-. The assessee has not utilized borrowed funds for making the investments. Thus, there is no question of making disallowance u/s. 14A with respect to interest expenditure. The ld. AR submitted that similar disallowance on account of interest expenditure u/s. 14A was made in assessment years 2008-09 and 2010-11. The issue travelled to the Tribunal. The Tribunal in ITA No. 638/PUN/2017 for assessment year 2008-09 decided on 28-09-2018 and ITA No. 137/PUN/2015 for assessment year 2010-11 decided on 18-10-2017 deleted the disallowance in respect of interest expenditure under Rule 8D(2)(ii). The ld. AR further in support of her contentions referred to the Balance sheet of assessee as on 31-03-2012 at page 7 of the paper book. The ld. AR submitted that the authorities below have totally disregarded the law laid down by the Hon'ble Jurisdictional High Court in the case of 3 ITA No. 639/PUN/2017, A.Y. 2012-13 Commissioner of Income Tax Vs. HDFC Bank Ltd. reported as 366 ITR

505.

3. On the other hand Ms. Shabana Parveen representing the Department vehemently defended the impugned order. However, the ld. DR fairly admitted that similar issue has been adjudicated in assessee's own case in preceding assessment years. The ld. DR further contended that the financial position has to be seen in each assessment year.

4. Both sides heard. Orders of the authorities below perused. The assessee in appeal has raised single issue assailing disallowance of Rs.12,08,801/- u/s. 14A r.w. Rule 8D(2)(ii) of the Act. The ld. AR has drawn our attention to the Balance sheet as on 31-03-2012 at page 7 of the paper book. A perusal of Balance sheet shows that the assessee is having own interest free funds comprising of share capital, reserves and surplus aggregating to Rs.7,54,94,323/-, as against the investments of Rs.4,26,14,226/-. Since, the assessee's own interest free funds are sufficient to cover the investments it is presumed that entire investments are made from non-interest bearing funds. The Hon'ble Jurisdictional High Court in the case of Commissioner of Income Tax Vs. HDFC Bank Ltd. (supra) has held that where the assessee is having both interest free funds and interest bearing funds, the presumption is that the investments are made from interest free funds. Accordingly, the disallowance of Rs.12,08,801/- u/s. 14A r.w. Rule 8D(2)(ii) in respect of interest expenditure is deleted.

ITA No. 639/PUN/2017, A.Y. 2012-13

5. In the result, the appeal of assessee is allowed.

Order pronounced on Tuesday, the 02nd day of July, 2019.

                      Sd/-                                     Sd/-
     (डी. करुणाकरा राव/D. Karunakara Rao)        (ववकास अवस्थी / Vikas Awasthy)
     ऱेखा सदस्य / ACCOUNTANT MEMBER               न्याययक सदस्य / JUDICIAL MEMBER


ऩण
 ु े / Pune; ददनाांक / Dated : 02nd July, 2019
RK

आदे श की प्रयिलऱवऩ अग्रेवषि / Copy of the Order forwarded to :

1. अऩीऱाथी / The Appellant.

2. प्रत्यथी / The Respondent.

3. आयकर आयुक्त (अऩीऱ) / The CIT(A)-4, Pune

4. The Pr. Commissioner of Income Tax-3, Pune

5. ववभागीय प्रयतयनधध, आयकर अऩीऱीय अधधकरण, "ए" बेंच, ऩुणे / DR, ITAT, "A" Bench, Pune.

6. गाडड फ़ाइऱ / Guard File.

//सत्यावऩत प्रयत // True Copy// आदे शानुसार / BY ORDER, यनजी सधचव / Private Secretary, आयकर अऩीऱीय अधधकरण, ऩण ु े / ITAT, Pune