Income Tax Appellate Tribunal - Ahmedabad
Kunvarji Finance Pvt. Ltd.,, Ahmedabad vs The Acit, Osd-I, Circle-4,, Ahmedabad on 11 January, 2018
ITA N o. 07/Ahd/2014
Kunvarji F inance Pvt Ltd vs. ACIT
Assessment Year : 2009-10
Page 1 of 3
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "B" BENCH, AHMEDABAD
[Coram: Pramod Kumar AM and S S Godara JM]
ITA No. 07/Ahd/2014
Assessment Year: 2009-10
Kunvarji Finance Pvt Ltd .........................Appellant
111, Shyamak Complex,
Ambawadi, Ahmedabad - 380015
[PAN : AAACK 8759 R]
Vs.
The Asstt. Commissioner of Income-tax .......................Respondent
OSD-1, Ahmedabad
Appearances by:
PM Mehta & Ira Kapoor for the Appellant
Mudit Nagpal for the Respondent
Date of concluding the hearing : 11.01.2018
Date of pronouncing the order : 11.01.2018
O R D E R
Per Pramod Kumar, AM:
1. By way of this appeal, the assessee-appellant has challenged correctness of the order dated 18th September 2013 passed by the by the CIT(A)-VIII, Ahmedabad, in the matter of assessment under section 143(3) of the Income-tax Act, 1961, for the assessment year 2009-10.
2. The grievances raised by the assessee are as follows:-
"1. Ld.CIT (A) has erred in law and on facts in enhancing the disallowance under section 14A of the Income Tax Act, 1961 to the tune of Rs.16,37,628/.
2. On the facts and in the circumstances of the case, the Ld. CIT (A) has erred in making addition of Rs.16,37,628/- which is more than the exempt income claimed. There cannot be any disallowance under section 14A of the Act exceeding the tax free income claimed.
3. Even, the Ld. CIT(A) has erred in law and on facts, by not appreciating that the investments were made by the appellant from the own funds not bearing interest i.e. paid up capital and free reserves.
ITA N o. 07/Ahd/2014 Kunvarji F inance Pvt Ltd vs. ACIT Assessment Year : 2009-10 Page 2 of 3
4. Further, the Ld. CIT(A) has erred in law and on facts in considering the investments for disallowance u/s 14A of the Income Tax Act from which no exempt income is earned.
5. Ld. CIT (A) has erred in law and on facts in confirming the levy of interest under section 234A, 234B, 234C & 234D of the Act."
2. When this appeal was called out for hearing, the learned Counsel for the assessee pointed out that, in the present case, there is no tax exempt income inasmuch as the dividends earned on the shares have been offered to tax and accepted as business income for the reasons that the related shares, on which these dividends were earned, were held as stock in trade. The Assessing Officer has, however, made the impugned disallowance under Section 14A in respect of the expenses allegedly attributable to earning of dividend income. Learned Counsel submits that the issue as to whether a disallowance under section 14A can be made even in the absence of tax exempt income has been settled in favour of the assessee by a series of orders of this Tribunal, as also of Hon'ble jurisdictional High Court; in particular, he invites our attention to the judgments of the Hon'ble jurisdictional High Court in the case of CIT vs. Corrtech Energy (P.) Ltd, [2014] 45 taxmann.com 116 (Gujarat) and Pr. CIT vs. Ambalal Sarabhai Enterprises Ltd, [2017 (3) TMI 1526. On the strength of these arguments, learned Counsel for the assessee urged us to delete the impugned disallowance of Rs.16,37,626/- under Section 14A of the Act.
3. Learned Departmental Representative does not dispute the factual and legal contentions so raised by the learned Counsel for the assessee, but relied on the orders of the authorities below nevertheless.
4. The plea indeed is well taken. The legal position is fairly well settled that in the absence of any tax exempt income, disallowance under Section 14A cannot be made. Hon'ble jurisdictional High Court in the case of Corrtech Energy (P.) Ltd. (supra) has upheld this approach. In the case of Ambalal Sarabhai Enterprises Ltd (supra), the Hon'ble jurisdictional High Court has once again upheld this proposition and observed that "it cannot be said that the learned Tribunal has committed any error in deleting the addition made by the Assessing Officer on disallowance under Section 14A of the Act", in a situation in which the assessee did not have any tax exempt income. In view of these discussions, as also bearing in mind entirety of the case, we uphold the grievance of the assessee and direct the Assessing Officer to delete the impugned disallowance of Rs.16,37,628/- under Section 14A of the Act.
5. In the result, appeal is allowed in the terms indicated above. Pronounced in the open court today on the 11th day of January, 2018.
Sd/- Sd/-
S S Godara Pramod Kumar
(Judicial Member) (Accountant Member)
Ahmedabad, the 11th day of January, 2018
ITA N o. 07/Ahd/2014
Kunvarji F inance Pvt Ltd vs. ACIT
Assessment Year : 2009-10
Page 3 of 3
*bt
Copies to: (1) The appellant
(2) The respondent
(3) Commissioner
(4) CIT(A)
(5) Departmental Representative
(6) Guard File
By order
TRUE COPY
Assistant Registrar
Income Tax Appellate Tribunal
Ahmedabad benches, Ahmedabad
1. Date of dictation: ..2 pages dictation pad, as dictated by Hon'ble AM, is attached..11.01.2018
2. Date on which the typed draft is placed before the Dictating Member: 11.01.2018......
3. Date on which the approved draft comes to the Sr. P.S./P.S.: ... 11.01.2018.....
4. Date on which the fair order is placed before the Dictating Member for Pronouncement: .
11.01.2018..
5. Date on which the file goes to the Bench Clerk : ... 11.01.2018..................
6. Date on which the file goes to the Head Clerk : ..................................
7. The date on which the file goes to the Assistant Registrar for signature on the order: ......
8. Date of Despatch of the Order: ........................