Income Tax Appellate Tribunal - Lucknow
M/S. U.Psidc,, Kanpur vs Department Of Income Tax on 21 August, 2014
1
IN THE INCOME TAX APPELLATE TRIBUNAL
LUCKNOW BENCH "A", LUCKNOW
BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER
AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER
ITA No.423/LKW/2012
Assessment year:2007-08
Dy.C.I.T.-6, Vs. U.P. State Industrial
Kanpur. Development
Corporation Limited, (UPSIDC)
A-1/4, Lakhanpur, Kanpur
PAN:AAACU1759K
(Appellant) (Respondent)
Assessee by Shri P. K. Kapoor, C.A.
Shri Ashish Bansal, Advocate
Revenue by Shri Manoj Kumar Gupta, CIT, D.R.
Date of hearing 26/06/2014
Date of pronouncement 21/08/2014
ORDER
PER A. K. GARODIA, A.M.:
This is Revenue's appeal directed against the order passed by learned CIT (A)-I, Kanpur dated 27/03/2012 for assessment year 2007-2008.
2. The grounds raised by the Revenue are as under:
"1. The order of CIT(A) is not acceptable in view of the fact that the addition was made as per provision of the Income Tax Act. The substantive law was already in existence and provisions (2) & (3) and Rule 8D were merely introduced to clarify the mode of calculation of expenses incurred in relation to exempted income.
2. Since the Department has not accepted the order of CIT(A) as well as the order of the I.T.A.T. on this issue and appeal has been filed before the Hon'ble High Court for earlier years, the order of CIT(A) is not acceptable on this issue.2
3. That the order of CIT(A)-I Kanpur being erroneous in law and on facts deserves to be vacated and the order of the Assessing Officer be restored."
3. Learned D.R. of the Revenue supported the assessment order whereas Learned A.R. of the assessee supported the order of learned CIT(A).
4. We have considered the rival submissions. We find that this issue was decided by learned CIT(A) as per para 8.1 of his order, which is reproduced below for the sake of ready reference:
"8.1 Discussion/Decision I have gone through the findings given by the Assessing Officer and also the submissions made by the Learned A.R. of the assessee. In view of the decision of Hon'ble Bombay High Court in the case of Godrej & Boyce Manufacturing Co. Ltd. vs. DCIT 328 ITR 81, it has to be held that Rule 8D could not be invoked by the Assessing Officer for the assessment year 2007-08. However, there is no embargo on the Assessing Officer in computing the disallowance u/s 14A on a reasonable and fair basis. This issue also came before the undersigned in the appeal proceedings for earlier years (in assessee's own case), wherein it was decided that a L.S. disallowance of Rs. 1 lac would meet the end of justice. Ordered accordingly."
4.1 From the above Para from the order of CIT(A), we find that he has followed the judgment of Hon'ble Bombay High Court rendered in the case of Godrej & Boyce Manufacturing Co. Ltd. vs. DCIT 328 ITR 81 wherein it was held that Rule 8D cannot be invoked prior to assessment year 2008-09. The CIT(A) has held that disallowance of Rs. One lac would meet the ends of justice. We also find that even as per Rule 8D, the disallowance made by the Assessing Officer was only of Rs.6,44,865/-. This includes the disallowance of Rs.54,105/- out of interest expenditure and disallowance of Rs.5,90,760/- on account of administrative expenses. In our considered opinion, disallowance 3 of Rs. One lac is reasonable in the facts of the present case and hence, we decline to interfere in the order of CIT(A) on this issue.
5. In the result, the appeal of the Revenue stands dismissed.
(Order was pronounced in the open court on the date mentioned on the caption page) Sd/. Sd/.
(SUNIL KUMAR YADAV) ( A. K. GARODIA ) Judicial Member Accountant Member Dated:21/08/2014. *C.L.Singh Copy of the order forwarded to : 1. The Appellant 2. The Respondent. 3. Concerned CIT 4. The CIT(A) 5. D.R., I.T.A.T., Lucknow Asstt. Registrar