Income Tax Appellate Tribunal - Chandigarh
Nahar Spinning Mills Ltd., Ludhiana vs Acit, C-7, Ludhiana on 6 May, 2021
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, "B" CHANDIGARH BEFORE SHRI N.K. SAINI, VICE PRESIDENT & SHRI R.L. NEGI, JUDICIAL MEMBER आयकर अपील सं./ITA Nos. 1160/Chd/2019 नधा रण वष / Assessment Year : 2014-15 Nahar Spinning Mills बनाम Asstt. Commissioner Income Tax, Ltd.,373, Industrial Area-A Circle-7, Aayakar Bhawan, Rishi Ludhiana. Nagar, Ludhiana.
थायी लेखा सं./PAN NO: AAACN5710D अपीलाथ /Appellant यथ /Respondent Hearing through video Conferencing नधा रती क ओर से/Assessee by : Shri Navdeep Sharma, Advocate राज व क ओर से/ Revenue by Sh. Ashok Kumar, Addl. CIT सन ु वाई क तार$ख/Date of Hearing : 09.02.2021 उदघोषणा क तार$ख/Date of Pronouncement : 06.05.2021 आदे श/Order PerR.L. Negi, Judicial Member:
T he a ss es s ee has f il ed t he pr es e nt appe a l aga i ns t t he or der dat ed 0 1/0 6 / 20 1 9 pas s ed by t h e l d. C omm is s io n er o f In c om e T a x (A ppe a l)- 3 ( he r e i n af te r r e fer r ed t o a s t he l d. C IT (A ) w her e by t h e ld .
C IT (A ) pa r tly al l o we d t h e a pp ea l f il ed by t h e as s es se e a g a ins t t he as s es sm en t ord er pas s ed U /s 1 43 (3 ) of t he I n com e T ax A ct , 1 96 1 (f or sho r t ' th e A c t ' ) for t h e as s es sm ent y ear 2 0 1 4- 15 .
2. B rief f ac ts of th e c ase ar e t h at t h e a ss es s ee e ng ag e d i n t h e bus in es s of ma nuf a ct ur i ng a nd t ra d i ng of c ot to n/ b len de d y a rn , c l ot h an d g arme nts , fi le d its r et ur n of i nc om e for the y ear u n d er 2 ITA No. 1160/Chd/2019 Assessment year 2014-15 c ons id era t i o n de c l a ri ng t ot a l i nc om e of R s . 137, 5 1,9 5, 4 8 0/ -. T he c as e w a s se l ec t e d for s cr ut i ny a n d ac c or d i ng ly, t h e A . O . pas s ed as s es sm en t o rd er U /s 1 43( 3) of t he A c t de t erm i n i ng to t a l in c ome o f th e as ses s e e a t Rs . 13 8,3 6 , 8 8, 1 6 5/- un der th e no rm al pro vis io ns o f th e A c t , af t e r m a kin g ad di t io n of Rs . 22, 44 , 1 1 7/- o n ac c ou n t o f dis a l low a nc e U /s 1 4A r ea d w it h Ru l e 8D of t h e I nc o me T ax Ru l es , 19 62 ( i n s h ort , t h e R u le s) , a dd it io n of Rs . 5 7, 26 , 985 /- on ac c o un t o f dis a l low a nc e U /s 3 6(1 )( i i i ) of t h e A ct an d ad di t io n of R s. 5, 2 1, 5 8 3/ - on ac c o u nt of d is al l o wa nc e o n u n pa id c o mmis s io n. F urth e r t h e A .O . det erm i ne d t h e b o ok pro f it of t h e a s s es s ee at R s. 2 0 5 , 33 , 0 2, 26 0/- .
3. T he as se ss ee c ha l le n ged th e as se ss me n t o rd er bef ore t h e l d . C IT (A ). Th e ld. C IT (A ) re st ri c t e d t he ad di t io n on acc o u nt of dis a l low a nc e U /s 1 4A r ead w it h R u l e 8D of t he R u l es t o t he am o u n t c la im e d as e x em pt U /s 10(3 4 ) of th e Ac t, co nf irm ed t h e a dd i ti o n o f R s. 57 , 26 , 9 85 /- U /s 3 6(1) ( ii i ) of the A c t. Still aggr i eve d , the as s es se e i s i n a pp ea l bef or e th is Tr i bu na l.
4. T he as se ss e e h as c ha l l e n ge d t he im p ug ne d ord er pas s e d by t h e ld. C IT (A ) on t he fol lo wi n g gro u nds:
1. a) That the worthy CIT(A)-3, Ludhiana erred in law and on facts in upholding the applicability of rule 8D in spite of fact that the appellant itself computed the disallowance on proportionate basis u/s 14A of the Act.
Directions may be given to compute the disallowance u/s 14A on proportionate basis as held in appellant own case in Assessment Year 2010-11.
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b) Without prejudice & in alternative, Worthy CIT(A)-3, Ludhiana,
i) further erred in law and on facts in not giving directions to compute the disallowance by taking the average total investment of Rs. 2,60,58,554/- on which the dividend exempt income accrued instead of total average investments of Rs. 6,85,93,500/-. Directions be given to compute the disallowance by considering only those investments on which exempt income is earned, as held by Hon'ble ITAT Special Bench in Vireet Investment Ltd...165 ITD 0027 (SB).
ii)further erred in law and on facts in not giving directions to compute the disallowance u/s 14A read with rule 8D, by excluding interest paid on term loan of Rs 27,51,22,000/-, interest on working capital loan of Rs. 36,23,57,000/- as well as other borrowing cost of Rs. 67,42,000/- and interest paid to parties Rs 5,05,000/- for business purposes which are directly attributable to business receipts subjected to tax. Directions be given to compute the disallowance by excluding the above-mentioned interest expenses while computing disallowance u/s 14A read with rule 8D.
iii) further erred in law and on facts in not giving directions to compute the disallowance u/s 14A read with rule 8D, by excluding proportionate administrative expenses or towards expenses directly relatable to earn the exempt income.
Directions be given not to allocate any administrative expenses towards expenses directly relatable to earn the exempt income, since 0.5% of the total investments have already been considered for computing disallowance u/s 14A r.w.r.8D.
2. That the Worthy CIT(A)-3, Ludhiana erred in law and on facts in upholding the addition/disallowance of Rs. 57,26,985 being disallowance of CC account, for purchase of fixed assets.
Directions be given to delete the said disallowance as the appellant has sufficient own funds in the shape of capital and reserves."
5. A t t h e o u ts et , t he l d. C ou ns e l fo r t he as s es se e su bm i tt ed t ha t th e is s ue i nv o lve d i n t h is app e al is c ov ere d in f avo u r o f t h e as s es s e e by t h e d ec is i on of th e IT AT C ha nd ig a rh B e nc h re nd er e d i n t h e c as e of Os wal Wo olen Mills V s ACIT I TA N o. 37/ Chd/2015 f or t h e A . Y. 4 ITA No. 1160/Chd/2019 Assessment year 2014-15 20 10 -1 1. I n t h e s ai d c a se , t he a u th or i ti es b e low had m ade a dd it io n on a c co un t o f d i sa l low a nc e u /s 1 4A c om p ut ed app ly ing R u l e 8D. Dur i n g th e co u rse of a rgum e nts , t h e a ss es s ee f ur nis he d t h e wor k in g of t h e dis a l l owa n c e U /s 1 4A re a d wit h R u l e 8D of t he R u le s o n pro por t io na te ba s i s c ont e n d i ng th at th e A O has wr ongl y app l ie d t h e R u le 8D .T h e T r ib u na l af te r h ear i n g th e r iva l c on te nt io ns of t h e par t i es , se t as id e th e o rder p a ss ed by t he Ld . C IT (A ) c onf i rm i ng t h e add i t i on o n a cc o u nt of d is a l lo wa nc e co mp ut e d by t h e A O u/s 1 4A re ad w it h R ul e 8D an d d irec t e d t h e A O to res t r ic t t h e a dd i t io n t o t he work i ng g ive n by t he as s es se e on prop ort io n a t e b a sis . T h e Ld . C ou ns e l f urt h er s ubm it t e d t ha t s i nc e t h e fa c t s of t he c as e a n d t he is s u es i nv o lved i n th e af or es a id c as e ar e i de n t i ca l t o t h e fac ts an d th e is s ues inv o lv e d i n t he pres e n t c as e,t h e f i nd i ngs o f t h e Ld. C IT (A ) ar e c o ntr ary to t h e d ec is io n of t h e j ur i sdi c t io na l T rib u n a l. T h eref o re , th e imp u g n ed or d e r i s l i ab le t o b e s e t a s id e. T he L d. C ou n se l i nv it ed our a tt e nt io n to t h e wor ki n g of dis a l l owa nc e pl ac ed o n r ec ord i n t he pre se nt ca s e a nd sub m itt ed t ha t si n ce t h e w orki ng is i n ac co rd a nc e wi th t h e d ir e ct io ns give n by t h e T rib u na l o n i de nt ic a l s et of f ac ts i n th e ca s e of Os wal Wo olen M ills V s ACIT afo res a id, th e im p ug ne d ord er may b e s et a sid e a nd t h e A O m ay be d ire ct ed to res tr ict t h e add i t i on t o t he a m ou nt c om p ut ed b y th e as se ss ee i n i ts w orki ng . Wit h ou t pre j u d ic e , th e ld . C o uns e l f or th e as s es se e s ubm it te d t ha t th e d is a ll ow anc e s hou l d h ave b ee n c omp u te d b y ta king a ver a g e 5 ITA No. 1160/Chd/2019 Assessment year 2014-15 i nv es tm e n t o n wh i c h d iv id e nd i nc om e ac cru ed i ns t ea d of av er ag e o f th e t ot al i nv es tm e n t. T h e ld. C o u ns e l r e l i ed on t h e d e c is io n of Sp ec ia l B en c h of Del h i T r i b un a l i n t h e c as e o f A CIT Vs V iree t Inv es tme nt Ltd . I TA No . 165 I TD 07 ( Spe c i a l B e nc h ), d ec isi o n o f C ha nd i ga r h B en c h of t he T rib u n a l i n t h e c as e of Rames h Sof t So lut io ns Pvt . L td . V s ACIT IT A N o. 477/C hd/ 2015 d at e d 14 /0 8/ 20 15 (C h an d ig ar h) a nd Nahar Po ly f ils L td. IT A N o. 76/C hd / 20 17. T h e Ld. c ou ns e l f urt h e r c o nt e n d ed t h at t he dis a l lo w a nc e s h ou l d h a ve b e e n c ompu t ed aft er e x c lu di ng i nt eres t on work i n g c ap i t a l a nd t erm ed lo an s. To s ubs t an t ia t e h is c on te n ti o n, t h e ld . C o u ns e l re l ie d o n t h e j udgm e nts of t he H o n'b le S u pr em e C our t in t he c as e of in the case of Godrej & Boyce Manufacturing Co Ltd. Vs. DCIT 394 ITR 449 (SC), judgment of the Hon'ble High Court of Punjab and Haryana in the case of CIT vs. Max India Ltd. 388 ITR 81 (Pb. & Haryana.) decisions of the Mumbai Benches of the Tribunal in the case of Bennett Coleman & Co Ltd. Vs. Addl. CIT 168 ITD 631 (Mum) and High Tech Engg. Vs. ITO 164 ITD 94 (Mum.) and the decision of the Chandigarh Bench of the Tribunal in the case of ACIT vs. Avon Cycles ITA No. 931/Chd/2013.
6. O n t h e o t her ha n d, t h e Ld . De par t me n ta l R e pres ent a t iv e (DR ) s uppor t in g t h e or d er p as s ed by t h e Ld. CI T( A) s u bm itt e d t h at s i nc e th e AO ha d c om put e d t he d is a ll o wan c e i n ac c ord a nc e w it h t h e pro vis io ns of t he A ct a nd t h e R ul es , th e Ld. C IT has rig ht ly u p he l d th e add i t io n mad e by th e A O . H ow e ve r, t h e Ld . DR adm i tt ed t ha t i n th e c as e of O swal Woo len Mills Ltd. V s. ACIT (s upr a ) the 6 ITA No. 1160/Chd/2019 Assessment year 2014-15 j ur is d ic t io n al T rib u n a l has s et a si d e t h e or de r p as s ed by t he Ld. C IT (A ) up ho ld i n g t he d isa l low a nc e c o mput ed u nde r s ec t io n 1 4A re a d wi th R u l e 8D i n th e s imi l a r s e t o f fac t s a nd d ire ct ed th e A O to re st r ic t t h e d isa l lo wan c e t o t h e a mo u nt c om pu t e d by t he as se ss ee o n pro por t io na te bas i s .
7. We have heard the rival submissions of the parties and gone through the material on record including the cases relied upon by the Ld. Counsel for the assessee and the Ld. D.R. As pointed out by the Ld. counsel, the coordinate Bench of the Tribunal has dealt with the identical issue in case of Oswa l Woo len Mills Ltd. V s. ACIT (sup ra)and directed the AO to restrict the disallowance u/s 14A of the Act, to proportionate amount computed by the assessee. The findings of the coordinate Bench read as under: -
"4. Being aggrieved by the above ord er of the Assessing Officer, the assessee preferred appeal before the Ld. CIT(A). It was plead ed before the Ld. CIT(A) that the funds from which the investments were made were mixed funds. That the assessee was possessed of sufficient own / interest free funds to meet the investment i n questi on. That as per law laid down by the Hon'ble jurisdictional High Court in the case of 'Bright Enterprises Ltd. vs CIT' (ITA No. 224 of 2013) dated 24.7.2015 (supra), wherein, it has b een held that if there are interest free fund s available to meet the investment, a presumption would arise that investment had been mad e out of the interest free fund s generated or avail able with the company, therefore, no interest disallowance was attracted. It was al so pleaded that the assessee had not incurred any expenses out of the administrative expenditure for the investment yielding dividend income. That the assessee made suo motu disallowance of administrative expenses i ncurred vis-a-vi s total income earned by the assessee. However, the Ld. CIT(A) did not agree with the above contention of the assessee and upheld the disallowance made by the Assessing Officer.
5. Before us, the Ld. Counsel for the assessee has submitted a chart to show that the assessee was having sufficient interest free own fund s in the shape of capital, reserves & surpl us 7 ITA No. 1160/Chd/2019 Assessment year 2014-15 and cash accrual to meet the investments in question. A perusal of the said chart revels that the total capital reserves and surp lus of the assessee during the financial year under consideration 2009-10 were at Rs. 19405.71 lacs and the total cash accruals of the assessee during the year were at Rs. 11071.90 l ac s. The total investment duri ng the year including the own old investments were only at Rs. 5809.29 lac s, which shows that the own / i nterest free funds of the assessee were sufficient to meet the investments. The issue is, thus, c overed by the various decisions of the Hon'ble High Courts including that of the Hon'bl eJuri sdictional High Court in 'Bright Enterprises Ltd vs CIT' (ITA No. 224 of 2013) dated 24.7.2015, wherein, it has b een held that if assessee has fund s / interest free funds availab le with it to make investment, the presumption will be that investment mad e by the assessee is out of own fund s. The i ssue is also squarely covered by the recent decision of the Hon'ble Supreme Court in 'CIT (LTU) Vs. Reliance Industries Ltd.' [2019] 410 ITR 466 (SC). We, therefore, do not find any i nfirmity in the order of the Ld. CIT(A) on this issue.
In view of the above, no disallowance of interest expend iture is attracted in this case.
6. So far as the administrative expenses are conc erned, the assessee has given a scientific formula for c alculating the di sal lowance out of administrative expenses. However, we find that the assessee while taking the total admini strative expenses has not considered the personal expenses and other allowances. The authorized representative of the assessee, before us, has submitted another chart, wherein, the personnel expenses and other allowances have been included and thereby the p roportionate of disall owance out of administrative ex penses has been computed as under: -
"Disallowance u/s 14A Incase of regular computation Amount (In Rs.)
1.Amount of di vidend 1065 income 6014
2. Operating income 6336 864325 3 % of divid end income 0.00168
4. Amount of expenses 556724538
5. Proportionate amount 936183 ofdisallowance of expensed to earn dividend Details of expenses a. Interest paid to 21202161 8 ITA No. 1160/Chd/2019 Assessment year 2014-15 others b. Admini strative 130240267 expenses c. Personal expenses 405282110 and other allowances 556724538"
7. None of the lower authoriti es have pointed out any defect in the computation of proportionate disallowance computed by the assessee ex cept that certain part of the administrative expenses were not taken into consideration which has been taken into consideration in the computation made above.
Even the assessee has clai med that it has not incurred any administrative expenses for earning of tax-exempt income. The Assessing Officer in thi s respect has not recorded any di ssatisfaction taking into consideration the accounts of the assessee. The Hon'ble Bombay High Court in the case of 'Godrej & Boyce Manufacturing Co.' 328 ITR 81 has held that under section 14A of the Act, resort can be made to Rule 8D of the Income Tax Rules for d etermining the amount of expend iture i n relation to exempt income, if, the AO i s not satisfied with the correctness of the claim made by the assessee in respect of such expenditure. The satisfaction of the Assessing Officer has to be arrived at, having reg ard to the accounts of the assessee. Sub section (2) does not ipso facto enable the Assessing Officer to app ly the method prescribed by the rules straightaway without considering whether the claim made by the assessee in respect of such expenditure is correct. The satisfaction of the Assessing Officer must b e arrived at on an objective basis. In a situation where the accounts of the assessee furnish an objective basis for the Assessing Offic er to arrive at a sati sfaction in regard to the correctness of the claim of the assessee, there would be no warrant for taking recourse to the method prescribed by the rul es. An objective satisfaction contempl ates a notice to the assessee, an opportunity to the assessee to place on record all the relevant facts including his accounts and in the event that he comes to the conclusion that he is not satisfied with the claim of the assessee. We may further observe that the Hon'ble Delhi High Court in a recent deci sion has further given a similar view in the case of "CIT vs. Taikisha engineering Ind ia Ltd ." (supra) and has held that the AO having reg ard to the accounts of the assessee i s required to record his satisfaction that the sel f or voluntarily expenditure offered by the assessee or claim that no expenditure has been incurred by the assessee in relation to earning of exempt income was not correct or the same was unsatisfactory on exami nation of the accounts of the assessee. Without recording such a sati sfaction, he cannot p roceed to apply Rule 8D for the computation of disallowanc e und er section 14A. However, as 9 ITA No. 1160/Chd/2019 Assessment year 2014-15 observed above, in the c ase i n hand, the Assessing officer has not followed the guidelines of objective satisfaction as laid down by the Hon'ble Bombay High Court in the case of 'God rej & Boyce' (supra) while maki ng the disallowance. Neither the Assessing Officer nor the Ld. CIT(A) has pointed out any defect in the working given by the assessee in computing suo motu disall owance except that a certain p art of tax relating to the p ersonnel expenditure and other allowances were not taken into consideration. In the working given before us, as reproduced above, whereby, the proportionate amount of disallowance of expenditure to earn dividend income has been computed at Rs. 9,36,183/- by including the personnel expenditure and certai n other expenses, as noted above. In view of this, the disall owance of administrative expenses is restricted to Rs. 9,36,183/-. However, the assessee will get the benefit / set off at the suo motu di sal lowance offered by the assessee in the return of income at Rs. 1,33,928/- and ac cordingly the addition is restricted to Rs. 8,02,255/-."
8. In the said case assessee had raised the identical ground in its appeal before the Tribunal as the Ld. CIT(A) had confirmed the disallowance u/s 14A of the Act, computed by the AO under Rule 8D of the Rules. In respect of disallowance under Rule 8D(ii), the contention of the assessee was that it had sufficient own interest free funds to meet the investment in question. Contention of the assessee in respect of disallowance under Rule 8D(iii) was that it had not incurred any administrative expenses for earning exempt income. Since the AO had not recorded any dissatisfaction taking into consideration the accounts of the assessee, the coordinate Bench directed the AO to restrict the disallowance to the proportionate amount computed by the assessee after including the personal expenditure and certain other expenses. In the present case also, the contention of the Ld. Counsel is that there is no change in the facts of the present case and the assessee has submitted the working in this case in accordance with the order passed by the Tribunal in the case discussedabove.
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9. The Ld. DR did not controvert the contention of the Ld. Counsel that there is no material change in the facts of the present case. However, during the course of arguments, the Ld. DR submitted that even if the disallowance is to be computed as per the order of the Tribunal rendered in the case of Oswal Woolen Mills (supra), the working submitted by the assessee cannot be accepted as correct without verifying the same by the AO. Accordingly, the Ld. DR submitted that the issue may be sent back to the AO for determining the disallowance considering the plea of the assessee that the issue involved is covered by the order of the Tribunal. The assessee has placed on record the working of proportionate disallowance after including the personal expenditure. Under these circumstances, we do not find any reason to take a different view in this assessment year. Hence, respectfully following the decision of the coordinate Bench rendered in assessee's own case for the assessment year 2010-11, we send this issue back to the AO for determining the disallowance on proportionate basis in accordance with the direction given by the coordinate Bench in the case of Oswal Woolen Mills Ltd. Vs. ACIT (supra) or to restrict the disallowance to the amount computed in working furnished by the assessee if found in accordance with the order of the Tribunal.
10. Since, we have allowed the main ground of the appeal of the assessee for statistical purposes and send the issue back to the AO for further necessary action, the grounds raised by the assessee, without prejudice to the main ground do not require adjudication.
11. Vide ground No. 2, the assessee has challenged the action of the Ld. CIT(A) in affirming the disallowance of interest amounting to Rs. 57,26,985/-out of CC 11 ITA No. 1160/Chd/2019 Assessment year 2014-15 account for purchase of fixed assets. T he Ld. C o uns el s ubm i t t ed t h at s i nc e th e as s es se e h a d own s uf fi c i e nt fu n d s i n th e s hap e o f ca p it a l a n d re se rves a nd i nt er na l ac c r ua ls , th e l d . CI T(A ) ha s wro n gl y c on f irm ed th e s a id a d d it io n. T he l d. C o u ns e l r e li ed o n t h e j ud g me nt s of t he Ho n'b le S upr em e Co ur t in t he c as e of CIT vs . Re lianc e I nd. Ltd. 410 IT R 466 ( SC ) a nd Godr ej & Bo yce Manuf actur ing Co. Ltd vs . DCIT 394 I T R 449 , Ju d gm e nt s of t h e Ho n'b l e P u nj a b an d Hary a n a H i g h C our t i n t h e c a se o f Bright E nter pr is e ( P ) Ltd. vs . C IT 381 IT R 107 (Pb.) , CIT v s . Kaps on As so cia tes 381 IT R 204 ( Pb .),C IT v s. Max I ndia Ltd. 398 I TR 20 9 ( Pb.) , C IT vs . Max I nd ia L td 3 88 IT R 81 ( P& H) an d th e de c is io ns of th e Ch a n d igar h B e nc h of t he T r ib u na l i n t he c as e o f Gr oup C om pa n y M /s Mont e Carlo Fa shio n Ltd. IT ANo. 1341/ Chd/ 2016 A Y 2 0 12 -1 3. t o s u bs ta nt ia t e his c o n t en t io n.
12. O n t h e o th er ha nd , t he Ld. D R s u pp o rt in g t h e a ct io n o f th e Ld . C IT (A ) s ubmi t t ed t ha t t he as ses s ee h ad m a de ad di t i o n t o fix e d as s ets amo u nt i ng t o R s . 18 6. 8 0 C ro r e i n cl ud i n g p l a nt s a nd mac h i ne r y an d had c a p ita l wor k in pr o gres s a mo u nt i ng t o R s . 61. 47 C ror e. Fur t h er , t h e as se ss ee ha d c ap it a l iz e d i n te r es t of Rs . 2 26. 7 3 La cs o n as s ets c a p it al iz e d. H e nc e , t h e A O dis a l low ed t h e i nter e st of R s. 95, 4 4, 97 6/- an d af ter app ly i ng the de bt eq ui t y ra t io of 6 0 :4 0 c ompu t ed i n t er e st dis a l lo wa nc e , r ig h t ly ho ld i n g t h at t h e dis a l l owa nc e is to b e ma de i n ab ove r at io ou t of th e in te r es t p a id o n work i ng 12 ITA No. 1160/Chd/2019 Assessment year 2014-15 c ap it a l l oa n. T he Ld. DR f urt h e r s u bmi t t ed t h at th e L d. C IT (A ) has rig ht ly c o nfirm ed t he ac t io n of t he A O .
13. We h a ve p e rus ed th e m at er ia l o n rec or d i nc lu d i ng t he c as es re l i ed u po n by t he Ld. C o u ns e l f or t he as s es se e an d t h e a ut h or i t ie s be lo w. T he co nt e n ti o n of t h e a ss es s ee is t h at it h ad s uf fic i e nt f u nds i n t h e s h ap e of c a pi ta l r es er v e a nd s urp l us , t h e ref or e t he fi nd i ngs o f th e L d. C IT (A ) ar e c on tra ry t o t h e s et t le d pr i nc ip le s of la w. We no t i ce t ha t t h e au t hor it i es b e low h a v e not r eb ut t ed t h e co nt en t io n o f th e as s es s e e t ha t it had s u ffi c i en t f unds f or ac qu ir i ng a ss e t s i n qu es t io n. A s po i nt ed o u t b y t h e Ld . C o uns el , t h e c oo r di na t e B enc h has d ea lt wi t h th e id en t ic a l i ss ue th e c as e of M o n te C a rl o Fas h i ons vs . A IC T ( supr a ) a nd s et a si de t o t he f i le of th e AO ho l di ng t ha t :
" Th e j u d g m e nt of v ar i ous C our t s i n t he c ase of H er o C y c l es( P) Lt d . Vs. C IT, L ud hi a na C . A . No 5 14 of 2 008 d t. 05 /1 1/2 015 . , Bri g ht E nt erp ri se s P vt L t d . Vs. C IT Jal and ha r (2 01 6)3 81 IT R 1 07 ( P& H ) h el d th at no d i sa l l o wa nc e o f i nt er est i s c al l ed fo r w her e t h e a s se s see ha s g ot suf f i c i en t o wn f u nd s. Th e A s se ssi ng O ff i c e r i s d i r ec t ed t o g o thro ug h th e f und posi ti o n na m el y c ap ita l an d i n te re st f re e a d v an c e s, r ese rv e s a nd su rp l us t o d e te rm i ne whe t her an y b o rr owe d f und s h av e b ee n u t i l i ze d m or e th an av a i l ab l e ow n fu nd s and t ak e a d e c i si on k ee p i n g i n v i ew t he d ec i si o n s ren d e re d ab o v e. I f t he suf f i c i en t own f un d s a re av ai l ab l e, no d i sa l l ow an c e i s c a l l ed fo r. Th i s g r oun d m ay b e t re at ed a s se t a si d e t o th e f i l e of A sse s si n g Of fi ce r. "
14. T he c oor d in a t e B e nc h h as de al t wi t h th e i de nt ic a l is su e i n t h e c as e of as se ss ee ' s gro u p c omp a ny M/s Mo nte Car lo F as hio ns L td (s upra ). F urt h er, t he f ac ts of t he s a i d c ase ar e s im i l ar t o t he f ac ts o f th e pr es e n t c as e. T he ref ore , we f in d mer it i n t he c o nt e n t io n of t he 13 ITA No. 1160/Chd/2019 Assessment year 2014-15 Ld . C o u ns e l for th e as s es se e. H e nc e, r e sp e ct f ul ly fol lo wi n g t he dec is i on of t he c o ordi n a t e B e nc h in th e a for e sa id c a se we s et as i de th e f i n d i ngs of t he l d. C IT (A ) a n d s e nd t h is is s ue ba c k t o t he A O f or dec id i ng t he is s ue af res h i n ac c ord a n c e w it h t he d ir ec ti on g iv e n by th e c oo rd i na t e B e nc h i n t h e c as e dis c us s ed abo v e, aft er g iv i n g a re as o na b le opp or t u ni ty o f be i ng h ea rd to t he a ss es s e e .
In the result, the appeal filed by the assessee for the assessment year 2014- 15 is allowed for statistical purposes.
Order pronounced on 06/05/2021.
Sd/- S d /-
(N.K. SAINI) (R.L. NEGI)
उपा य /Vice President या यक सद य/ Judicial Member
Dated: 06/05/2021
*Ranjan
आदे श क त/ल0प अ1े0षत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आयु2त/ CIT
4. आयकर आयु2त (अपील)/ The CIT(A)
5. 0वभागीय त न5ध, आयकर अपील$य आ5धकरण, च7डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File आदे शानस ु ार/ By order, सहायक पंजीकार/ Assistant Registrar