Income Tax Appellate Tribunal - Chandigarh
The Derabassi Primary Cooperative ... vs Acit, C-2(1), Chandigarh on 7 December, 2019
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ, च डीगढ़ I N T H E I NC OM E T A X A P PEL L A TE T RI B U N AL C H A NDI G A RH B EN CH , ' SM C' , C H A N DI G A RH ी संजय गग , या यक सद य B E F OR E S H R I S A N J A Y G A R G, J U D I C I A L M E M B E R आयकर अपील सं./ ITA No. 1 2 7 9 / C H D / 2 0 1 8 नधा रण वष / Assessment Year : 2014-15 The Derabassi Primary Vs. The ACIT, Cooperative Agricultural बनाम Circle 2 (1), Development ltd., Chandigarh Derabassi, Mohali थायी लेखा सं./PAN NO. AAABT0240P अपीलाथ /Appellant यथ /Respondent नधा रती क ओर से/Assessee by : Shri Amitab Kamboz राज व क ओर से/ Revenue by : Sh. Manjit Singh CIT DR सन ु वाई क तार%ख/Date of Hearing : 07.11.2019 उदघोषणा क तार%ख/Date of Pronouncement : 07.11.2019 आदे श/Order The present appeal has been preferred by the assessee against the order dated 04.07.2018 of the Commissioner of Income Tax (Appeals)-1, Chandigarh [hereinafter referred to as 'CIT(A)'].
2. The sole issue involved in this appeal is relating to the disallowance made by the Assessing Officer and further confirmed by the Ld. CIT(A) u/s 14A of the Income Tax Act, 1961 (in short 'the Act') with respect to the expenditure incurred for earning of tax exempt income . The assessee during the year earned a sum of Rs. 5,00,383/- as dividend from investment in shares of another cooperative bank. The ITA No. 1279-CHD-2018- The Derabassi Primacy Cooperative Agricultural Devp Board, Derabassi 2 Assessing Officer invoked the provisions of section 14A of the I.T. Act, 1961 read with Rule 8D of the Income Tax Rules, 1962 and made the disallowance of Rs. 9,54,936/- on account of expenditure which the assessee might have incurred for earning of tax exempt income.
3. Before the Ld. CIT(A), the assessee made submissions that the assessee was possessed of sufficient own funds to meet the investment. It was pleaded before the Ld. CIT(A) that the share capital of the assessee was at Rs.2,39,50,000/- and the reserves and surpluses were at Rs. 7,40,18,113/-, whereas, the total investment made by the assessee during the year was at Rs. 1.33 crores which was very less as compared to the interest free funds available with the assessee. The Ld. CIT(A), however, held that since the assessee had used mixed funds for investment, hence, as per the law laid down by the Hon'ble Punjab & Haryana High Court in the case of M/s Avon Cycles Ltd [53 taxmann.com 297], the disallowance u/s 14A was attracted. He however, agreed with the plea of the assessee that the disallowance u/s 14A of the Act cannot exceed the total tax exempt income earned by the assessee. He accordingly restricted the disallowance to the total tax exempt income of the assessee at Rs. 5,00,383/-.
4. Being aggrieved by the aforesaid order of the CIT(A), the assessee has come in appeal before us.
ITA No. 1279-CHD-2018- The Derabassi Primacy Cooperative Agricultural Devp Board, Derabassi 3
5. So far as the plea of the assessee that the assessee was possessed of sufficient own funds to meet the investment, the issue is no more res intgra in the light of the latest decision of the Coordinate Bench of the Tribunal in the case of 'ACIT Vs. Janak Global Resources Pvt Ltd' ITA No. 470/Chd/2018 order dated 16.10.2018, and the latest decision of the Hon'ble Supreme Court in the case of 'CIT (LTU) Vs. Reliance Industries Ltd.' [2019] 410 ITR 466 (SC).
However, it is found from the record that the Ld. CIT(A) has not examined the factual fact of availability of the sufficient funds with the assessee. In view of this, the issue is restored to the file of the Assessing Officer for examination of this limited aspect of availability of own funds to meet the investment as was pleaded before the CIT(A). If the contention of the assessee is found correct then no disallowance will be attracted u/s 14A of the Act in the light of the decision of the various higher courts including the decision of the Hon'ble Supreme Court in the case of 'CIT (LTU) Vs. Reliance Industries Ltd.' (supra).
With the above observations, the appeal of the assessee stands allowed for statistical purposes.
Order dictated and pronounced in the Open Court immediately on completion of hearing. Sd/-
(संजय गग / SANJAY GARG) या यक सद य/ Judicial Member Dated : 07. 11.2019 "आर.के."
ITA No. 1279-CHD-2018- The Derabassi Primacy Cooperative Agricultural Devp Board, Derabassi 4 आदे श क त,ल-प अ.े-षत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आयु/त/ CIT
4. आयकर आयु/त (अपील)/ The CIT(A)
5. -वभागीय त न2ध, आयकर अपील%य आ2धकरण, च4डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File आदे शानस ु ार/ By order, सहायक पंजीकार/ Assistant Registrar .