Income Tax Appellate Tribunal - Ahmedabad
Samir Stockholdings Pvt. Ltd.,, ... vs The Dy.Cit, Circle-8,, Ahmedabad on 6 August, 2018
ITA No.1230/Ahd/2015
Samir Stockholding Pvt. Ltd.
Assessment Year: 2011-12
Page 1 of 3
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD 'D' BENCH, AHMEDABAD
[Coram: Pramod Kumar AM and Madhumita Roy JM]
ITA No.1230/Ahd/2015
Assessment Year: 2011-12
Samir Stockholding Pvt. Ltd., ........................Appellant
8, Abhishree Residency - 2,
B/h. Kantam Party Plot,
Rajpath - Ambali Road, Ambali,
Ahmedabad - 380 058
[PAN: AACCS 6455 J]
Vs.
Dy. Commissioner of Income Tax,
Circle - 8, Ahmedabad. .......................Respondent
Appearances by
Dhinal Shah for the Cross Objector
Lalit P. Jain for the respondent
Hearing concluded on: 01.08.2018
Order pronounced on : 06.08.2018
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 05.02.2015, passed by the learned CIT(A), in the matter of assessment under section 143(3) of the Income Tax Act 1961, for the assessment year 2011-12, on the following ground :-
"The learned CIT(A) has erred in confirming the disallowance of Rs.2,63,939/- under section 14A read with Rule 8D in as much as the assessee has not incurred any expenditure in earning exempt income and that the assessee has not incurred any administrative expenditure."
2. To adjudicate on this appeal, only a few material facts need to be taken note of. The impugned disallowance consists of two elements - first, interest disallowance of Rs.31,786/-; and second 0.5% expenses of average investment towards administrative ITA No.1230/Ahd/2015 Samir Stockholding Pvt. Ltd.
Assessment Year: 2011-12 Page 2 of 3 expenses. This disallowance has been made in accordance with the provisions of section 14A read with Rule 8D. The short point that the assessee has raised before us is that in the present case disallowance for interest cannot be made for the simple reason that the interest-free available to the assessee are far more than the investment yielding tax exempt income in respect of which disallowance under section 14A was made. This plea has not been found favour with the authorities below. Aggrieved by which the assessee is in appeal before us.
3. Having heard the rival contentions and having perused the material on record, we see merit in the plea of the ld. counsel for the assessee. The co-ordinate benches have consistently held that as long as investment yielding tax exempt income are less than the interest-free funds available to the assessee, it is unreasonable to proceed on the basis that interest bearing funds has been used for investment yielding tax exempt income in respect of which disallowance under section 14A has been made - particularly when there is no direct nexus between interest bearing funds and investments in question. We see no reasons to deviate from the consistent view so taken by the co- ordinate bench of this Tribunal. Respectfully following the same, we delete the impugned addition to the extent of Rs.31,786/- relatable to interest on funds presumed to have been used in interest free and tax exempt income. To this extent the plea of the assessee is indeed correct and merits acceptance.
4. As regards the disallowance of Rs.2,32,153/-, being 0.5% expenses of average investment on account of administrative expenses, we see no infirmity in the approach of the authorities below that the mandate of Rule 8D is clear and unambiguous and disallowance has been made in conformity with the same. In any event, looking to the smallness of the amount, learned counsel for assessee did not have much to say on this point. He, however, submitted that since he is giving up this claim on account of smallness of amount, his action should not be construed on account of lack of merits in his claim.
5. In view of the above discussions and bearing in mind entirety of the case, we uphold the grievance of the assessee to the extent of disallowance of Rs.31,786/- on account of interest. To this extent, appeal filed by the assessee is partly allowed in the terms indicated above.
ITA No.1230/Ahd/2015Samir Stockholding Pvt. Ltd.
Assessment Year: 2011-12 Page 3 of 3
6. In the result, appeal is partly allowed. Pronounced in the open court today on the 6th August, 2018.
Sd/- Sd/-
Madhumita Roy Pramod Kumar
(Judicial Member) (Accountant Member)
Dated: 6 th August, 2018
PBN/*
Copies to: (1) The appellant
(2) The respondent
(3) CIT
(4) CIT(A)
(5) DR
(6) Guard File
By order
Assistant Registrar
Income Tax Appellate Tribunal
Ahmedabad benches, Ahmedabad