Income Tax Appellate Tribunal - Ahmedabad
Adani Welspun Exploration Ltd.,, ... vs The Income Tax Officer, Ward-1(1)(1),, ... on 20 March, 2018
आयकर अपील य अ धकरण, अहमदाबाद यायपीठ 'एस. एम. सी', अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL " SMC " BENCH, AHMEDABAD सव ी द प कुमार के डया, लेखा सद य एवं महावीर साद, या यक सद य के सम ।
BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER आयकर अपील सं./I.T.A. No.1948/Ahd/2016 ( नधा रण वष / Assessment Year : 2012-13) Adani Welspun Exploration बनाम/ The ITO Ltd. Vs. Ward-1(1)(1) Adani House Ahmedabad Nr.Mithakhali Six Roads Navrangpura Ahmedabad-380 009 थायी ले खा सं . /जीआइआर सं . / PAN/GIR No. : AAFCA 3786 P (अपीलाथ& /Appellant) .. ( 'यथ& / Respondent) अपीलाथ& ओर से / Appellant by : Shri Vijay Ranjan, & Ms.Ira Kapoor, ARs 'यथ& क) ओर से/Respondent by : Ms. Prajna Paramita, Sr.DR ु वाई क) तार ख / सन Date of Hearing 08/03/2018 घोषणा क) तार ख /Date of Pronounce ment 20/ 03 /2018 आदे श / O R D E R PER PRADIP KUMAR KEDIA - AM:
The captioned appeal has been filed at the instance of the Assessee against the appellate order of the Commissioner of Income Tax(Appeals)-1, Ahmedabad [CIT(A) in short] dated 24/05/2016 ITA No.1948/Ahd/2016 Adani Welspun Exploration Ltd. vs. ITO Asst.Year - 2012-13 -2- arising in the assessment order passed under s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") dated 17/03/2015 relevant to Assessment Year (AY) 2012-13.
2. The solitary issue in the captioned appeal involves disallowance of Rs.20,90,781/- under s.14A of the Act against tax-free dividend income received by the assessee.
3. When the matter was called for hearing, the Ld.AR for the assessee at the outset referred to the financial statements and Profit & Loss account in particular and submitted that the assessee has not incurred any revenue expenditure during the year which calls for disallowance. The Ld.AR pointed out that entire expenditure incurred is in the nature of capital expenditure and has been capitalized as capital work in progress being Project Development Expenditure - Exploration Phase. The Ld.AR secondly argued that the dividend income has been generated from investments in mutual funds where the administrative expenditure are incurred by the fund are factored in the cost price. The Ld.AR thirdly submitted that dividend from mutual funds have been reduced from the cost of capital work-in-progress (WIP) and therefore any disallowance made under s.14A of the Act would require to be correspondingly adjusted in the capital work-in-progress item of the financial statement.
ITA No.1948/Ahd/2016Adani Welspun Exploration Ltd. vs. ITO Asst.Year - 2012-13 -3-
4. The Ld.DR relied upon the order of the CIT(A).
5. We have heard the rival submissions. We find merit in the appeal of the assessee on first glance. In the absence of any expenditure incurred of revenue nature, the disallowance of the same and addition to the total income is not permissible. Section 14A has no application for adjustments towards capital expenditure. The scope and sphere of section 14A of the Act is restricted to the computation of total income which means computation of chargeable income. Its scope does not expend to encompass expenditure of capital nature which has bearing in computation of chargeable income. Therefore, we find considerable force in the plea of the assessee.
6. Accordingly, we direct the AO to reverse the effect of disallowance made under s.14A of the Act.
7. In the result, appeal of the assessee is allowed.
This Order pronounced in Open Court on 20/ 03 /2018
Sd/- Sd/-
(महावीर
साद) (
द प कुमार के डया)
या यक सद य ले खा सद य
( MAHAVIR PRASAD ) ( PRADIP KUMAR KEDIA )
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad; Dated 20/ 03 /2018
ट .सी.नायर, व. न.स./T.C. NAIR, Sr. PS ITA No.1948/Ahd/2016 Adani Welspun Exploration Ltd. vs. ITO Asst.Year - 2012-13 -4- आदे श क त!ल"प अ#े"षत/Copy of the Order forwarded to :
1. अपीलाथ& / The Appellant
2. 'यथ& / The Respondent.
3. संबं6धत आयकर आयु8त / Concerned CIT
4. आयकर आय8 ु त(अपील) / The CIT(A)-1, Ahmedabad
5. 9वभागीय त न6ध, आयकर अपील य अ6धकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड फाईल / Guard file.
आदे शानुसार/ BY ORDER, स'या9पत त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad
1. Date of dictation .. 8.3.18 (dictation-pad 5-pages attached at the end of this appeal-file)
2. Date on which the typed draft is placed before the Dictating Member ...9.3.18
3. Other Member...
4. Date on which the approved draft comes to the Sr.P.S./P.S.................
5. Date on which the fair order is placed before the Dictating Member for pronouncement......
6. Date on which the fair order comes back to the Sr.P.S./P.S.......20.3.18
7. Date on which the file goes to the Bench Clerk.....................20.3.18
8. Date on which the file goes to the Head Clerk..........................................
9. The date on which the file goes to the Assistant Registrar for signature on the order..........................
10. Date of Despatch of the Order..................