Income Tax Appellate Tribunal - Pune
M/S. Dharamveer Sambhaji Urban Co-Op. ... vs Deputy Commissioner Of Income-Tax,, on 13 June, 2018
आयकर अपील
य अ धकरण "बी" यायपीठ पण
ु े म ।
IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH, PUNE
ी डी. क णाकरा राव,लेखा सद य, एवं ी !वकास अव थी, या#यक सद य के सम$
BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM
आयकर अपील सं. / ITA No. 1569/PUN/2016
#नधा'रण वष' / Assessment Year : 2010-11
M/s. Dharamveer Sambhaji Urban
Co-Op. Bank Ltd.
Shivdarshan Complex, 1st Floor,
38, Vinayak Nagar, New Sangvi,
Pune-411 061.
PAN : AAAAD2878G
.......अपीलाथ / Appellant
बनाम / V/s.
The Deputy Commissioner of Income Tax,
(HQ), Admn. Pune.
......
यथ / Respondent
Assessee by : Shri Pramod Shingte
Revenue by : Shri Sanjeev Ghei
सन
ु वाई क तार ख / Date of Hearing : 06.06.2018
घोषणा क तार ख / Date of Pronouncement : 13.06.2018
आदे श / ORDER
PER VIKAS AWASTHY, JM
This appeal by assessee is directed against the order of Commissioner of Income Tax (Appeals)-6, Pune dated 31.05.2016 for the assessment year 2010-11.
2ITA No. 1569/PUN/2016
A.Y.2010-11
2. The solitary issue raised in the present appeal by assessee is against confirming of disallowance u/s.14A of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') r.w. Rule 8D of the Income Tax Rules, 1962 ( hereinafter referred to as 'IT Rules').
3. The brief facts of the case as emanating from records are: The assessee is a co-operative society engaged in the business of banking activity. The case of assessee was selected for scrutiny assessment. During the course of assessment proceedings, the Assessing Officer observed that the assessee earned dividend income of Rs.8,37,247/- during the period relevant to assessment year under appeal and has not made any suo-moto disallowance u/s.14A of the Act in respect of expenditure incurred for earning tax free income. The Assessing Officer invoked the provisions of section 14A(3) r.w. Rule 8D of the I.T Rules and made disallowance of Rs.1,58,905/-.
4. Aggrieved by the addition made by Assessing Officer vide assessment order dated 11.12.2012, the assessee filed appeal before the Commissioner of Income Tax (Appeals).
5. During First Appellate proceedings, the Commissioner of Income Tax (Appeals) vide impugned order rejected the contention of assessee qua addition/ disallowance of expenditure made u/s. 14A r.w.Rule 8D. Now, the assessee is in second appeal before the Tribunal assailing the findings of Commissioner of Income Tax(Appeals).
6. Shri Pramod Shingte appearing on behalf of assessee submitted that the assessee has earned dividend income of Rs.8,37,247/- on investments made in mutual funds. There was no direct relatable expenditure to earn 3 ITA No. 1569/PUN/2016 A.Y.2010-11 such dividend income. The Authorities below have erred in allocating interest expenditure on the investments made by the assessee disregarding the fact that own funds of the assessee are much more than investments made. The ld. AR referring to the Balance Sheet of assessee as on 31.03.2010 pointed that the assessee has Paid-up Share Capital of Rs.2,55,81,225/- and has Reserve Funds to the tune of Rs.3,89,16,024/-. As against the above availability of own interest free funds, the assessee has made investment of Rs. 2Crores only over a period of time. The ld. AR asserted that the case of assessee is squarely covered by the decision of Hon'ble Bombay High Court in the case of HDFC Bank Ltd. Vs. Deputy Commissioner of Income Tax, reported as 366 ITR 505 (Bom.).
7. On the other hand, Shri Sanjeev Ghei representing the Department vehemently defended the order of Commissioner of Income Tax (Appeals) in confirming the disallowance made u/s. 14A r.w. Rule 8D of the I.T Rules. The ld. DR submitted that for earning interest free income, the assessee must have incurred some expenditure. The Assessing Officer has rightly invoked the provision of Rule 8D r.w.s 14A of the Act to make disallowance of such expenditure. The ld. DR prayed for dismissing the appeal of assessee and confirming the order of Commissioner of Income Tax(Appeals).
8. We have heard the submissions made by representatives of rival sides and have perused the orders of Authorities below. It is an undisputed fact that the assessee has earned dividend income of Rs. 8,37,247/- in the period relevant to assessment year under appeal. The assessee has not made any suo-moto disallowance in respect of expenditure incurred for earning interest free income. The contention of assessee is that no direct or indirect expenditure was incurred for earning tax free income. As far as interest 4 ITA No. 1569/PUN/2016 A.Y.2010-11 expenditure is concerned, it has been pointed that own interest free funds of the assessee in the form of Paid-up of Share Capital and Reserves are much more than the investment made. This fact is evident from Balance Sheet as on 31.03.2010 furnished by the ld. AR of the assessee. The Hon'ble Jurisdictional High Court in the case of HDFC Bank Ltd. Vs. Deputy Commissioner of Income Tax (supra.) has held that where the assessee is having own funds, as well as interest bearing funds, presumption would be that the assessee has made investment out of interest free funds available with the assessee and hence, no disallowance u/s. 14A r.w. Rule 8D of the I.T Rules is called for.
Thus, in view of the fact that assessee is having sufficient own interest free funds to cover the investment and in the light of decision of Hon'ble Jurisdictional High Court, no disallowance u/s. 14A r.w. Rule 8D(2) of the I.T Rules is called for. Accordingly, we reverse the findings of Commissioner of Income Tax (Appeals) in respect of disallowance u/s.14A r.w.Rule 8D of the I T Rules. Thus, the grounds raised by the assessee in appeal are allowed.
9. In the result, appeal of the assessee is allowed.
Order pronounced on Wednesday, the 13th day of June, 2018.
Sd/- Sd/-
(डी. क णाकरा राव/D. KARUNAKARA RAO) (!वकास अव थी /VIKAS AWASTHY)
लेखा सद य/ACCOUNTANT MEMBER या यक सद य/JUDICIAL MEMBER
पुणे / Pune; !दनांक / Dated : 13th June, 2018
SB
5
ITA No. 1569/PUN/2016
A.Y.2010-11
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)-6, Pune.
4. The Pr. CIT-5, Pune.
5. %वभागीय त न(ध, आयकर अपील य अ(धकरण, "बी" ब,च, पण ु े / DR, ITAT, "B" 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.