Income Tax Appellate Tribunal - Pune
Ranadey Micronutrients Pvt.Ltd,, Pune vs Deputy Commissioner Of Income Tax,, ... on 28 September, 2018
आयकर अपील
य अ धकरण पुणे यायपीठ "एक-सद य" मामला पुणे म
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "SMC", PUNE
ी वकास अव थी, या यक सद य के सम
BEFORE SHRI VIKAS AWASTHY, JM
आयकर अपील सं./ ITA No. 638/PUN/2017
नधा!रण वष! / Assessment Year : 2008-09
Ranadey Micronutrients Pvt. Ltd.
"Shrikrishna" Krishnakeval
Town Ship, 1-A, Kondhwa
Khurd, Pune-411 048
PAN : AAACR8134R
.......अपीलाथ / Appellant
बनाम / V/s.
The Deputy Commissioner of Income Tax,
Circle-6, Pune.
...... यथ / Respondent
Appellant by : Shri Arvind V. Sonde
Respondent by : Shri Sudhendu Das
सन
ु वाई क तार ख / Date of Hearing : 19.09.2018
घोषणा क तार ख / Date of Pronouncement : 28.09.2018
आदे श / ORDER
PER VIKAS AWASTHY, JM
This appeal by assessee is directed against the order of Commissioner of Income Tax (Appeals)-4, Pune dated 10.10.2016 for the assessment year 2008-09.
2ITA No.638/PUN/2017
A.Y.2008-09
2. The only ground raised by assessee in appeal is against disallowance of Rs.23,22,105/- u/s.14A of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') r.w.r 8D(2)(ii) of the Income Tax Rules, 1962.
3. Shri Arvind V. Sonde appearing on behalf of the assessee submitted that the assessee is a Company engaged in the business of manufacture and sale of inorganic and Micronutrient Mixture Fertilizers. During the course of scrutiny assessment proceedings, the Assessing Officer made disallowance of Rs.24,83,143/- u/s.14A r.w.R. 8D(2)(ii) & (iii). The disallowance made under provisions of Rule 8D(2)(ii) on account of interest expenditure is Rs.23,22,105/-. The assessee explained that investment was made from own interest free funds available with the assessee. Interest bearing funds were not utilized for making investment. However, the Assessing Officer rejected the contentions of the assessee. Aggrieved with the assessment order dated 29.11.2010, the assessee carried the matter in appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax(Appeals) without appreciating the facts of the case rejected the contentions of the assessee. Now, the assessee is in second appeal before the Tribunal. The ld. AR pointed that the assessee has interest free funds to the tune of Rs.4,83,83,857/- in the shape of share capital, reserves and surplus. The assessee made investment to the tune of Rs.4,47,60,486/- out of which dividend yielding investments are only to the tune of Rs.1,30,83,378/-. During the period relevant to the assessment year under appeal, the increase in dividend yielding tax free investment is Rs.59,10,000/-. The ld. AR contended that the case of the assessee is squarely covered by the decision of Hon'ble Jurisdictional 3 ITA No.638/PUN/2017 A.Y.2008-09 High Court in the case of CIT Vs. HDFC Bank Ltd., reported as 366 ITR
505.
4. On the other hand, Shri Sudhendu Das representing the Department vehemently defended the order of Commissioner of Income Tax (Appeals) in confirming disallowance made under Rule 8D(2)(ii).
5. Both sides heard. Orders of the Authorities below perused. The solitary issue raised by assessee in appeal is against disallowance made under Rule 8D(2)(ii) in respect of interest expenditure. The Assessing Officer has made disallowance under Rule 8D(2)(iii) as well, however, the same is not disputed by the assessee. The ld. AR has drawn my attention to the P & L account for the year ending 31st March, 2008 and Balance Sheet as on 31st March, 2008. A perusal of the Balance Sheet shows that the assessee has share capital of Rs.75,00,000/- and reserves and surplus are to the tune of Rs.4,08,83,857/-. Thus, the assessee is having interest free funds aggregating to Rs.4,83,83,857/-. As against this investment by assessee over a period of time is Rs.4,47,60,486/-. The Hon'ble Bombay High Court in the case of CIT Vs. Reliance Utilities and Power Ltd. reported as 313 ITR 340 has held that where both interest free funds and interest bearing funds are available and the interest free funds are more than the investment made, the presumption is that the investment is made out of interest free funds available with the assessee. The said decision was rendered by the Hon'ble Jurisdictional High Court in the context of Section 36(1)(iii) of the Act. The Hon'ble High Court, thereafter, applied the same principle while interpreting the provisions of section 14A of the Act in the case of CIT Vs. HDFC Bank Ltd. (supra.). The Hon'ble High Court observed that where investment is made in tax free securities by the 4 ITA No.638/PUN/2017 A.Y.2008-09 assessee, it would be presumed to have been made from own funds in case they are in excess of investment made.
6. Thus, in the light of the facts of the case and the ratio laid down by the Hon'ble Jurisdictional High Court in the case of CIT Vs. HDFC Bank Ltd. (supra.), the disallowance in respect of interest expenditure made under Rule 8D(2)(ii) is deleted. The impugned order is modified, accordingly, the ground raised in appeal by the assessee is allowed.
7. In the result, appeal of the assessee is allowed.
Order pronounced on Friday, the 28th of September, 2018.
Sd/-
( वकास अव थी /VIKAS AWASTHY) या यक सद य/JUDICIAL MEMBER पुणे / Pune; !दनांक / Dated : 28th September, 2018. SB आदे श क% & त(ल प अ)े षत / Copy of the Order forwarded to :
1. अपीलाथ / The Appellant.
2. यथ / The Respondent.
3. The CIT (Appeals)-4, Pune.
4. The Pr. CIT-3, Pune.
5. %वभागीय त न(ध, आयकर अपील य अ(धकरण, "एक-सद य" ब,च, पण ु े / DR, ITAT, "SMC" Bench, Pune.
6. गाड/ फ़ाइल / Guard File.
// True Copy // आदे शानुसार / BY ORDER, नजी स(चव /Private Secretary आयकर अपील य अ(धकरण, पण ु े / ITAT, Pune.