Jyoti Ceramic Industries P.Ltd, Mumbai vs Assessee
- CitationI.T.A. No. 3005/Mum/ 2013
Ratio decidendi
The rule this decision rests on
Where the assessing officer's disallowance under section 14A rests on the assumption that the investments were funded by borrowed money, and the assessee contends the investments were made from its own funds, the matter must be re-examined by the assessing officer in light of the jurisdictional High Court's decision in HDFC Ltd., and the assessee's submissions on the availability of own funds must be considered before any disallowance is sustained. Where a disallowance under section 43B is based on a tax audit report, and the assessee produces a clarification issued by the tax auditor correcting the error together with supporting books of account, the tax authorities are not justified in ignoring that clarification and the books; the claim must be examined afresh on the basis of the books of account and the clarification.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
IN THE INCOME TAX APPELLATE TRIBUNAL "J" BENCH, MUMBAI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER
आयकर अपील सं./I.T.A. No. 3005/Mum/ 2013 ( नधा रण वष / Assessment Year : 2008-2009
Jyoti Ceramic Industries बनाम/ Addl. Commissioner of Pvt. Ltd., Income Tax - 5(2), Vs. B-603, Parle Udyan Co-op 5 t h floor, Hsg. Soc. Ltd., Aayakar Bhavan, 25, Park Road, M.K. Road, Vile Parle (East), Mumbai - 20. Mumbai - 400 057. थायी ले खा सं . /PAN : AAACJ0247P (अपीलाथ /Appellant) .. ( यथ / Respondent)
आयकर अपील सं./I.T.A. No. 1981/Mum/ 2013 ( नधा रण वष / Assessment Year : 2008-2009
Addl. Commissioner of बनाम/ Jyoti Ceramic Industries Income Tax - 5(2), Pvt. Ltd., Vs. 5 t h floor, B-603, Parle Udyan Co- Aayakar Bhavan, op Hsg. Soc. Ltd., M.K. Road, 25, Park Road, Mumbai - 20. Vile Parle (East), Mumbai - 400 057. थायी ले खा सं . /PAN : AAACJ0247P (अपीलाथ /Appellant) .. ( यथ / Respondent)
Assessee by Shri K. Gopal Revenue by : Shri Pawan Kumar Birla
ु वाई क तार ख / Date of Hearing सन : 15-06-2015 घोषणा क तार ख /Date of Pronouncement : 15-06-2015 [ 2 ITA 3005 & 1981/M/13
आदे श / O R D E R
PER B.R. BASKARAN, A.M.
These cross appeals are directed against the order dated 06-12-2012 passed by the ld. CIT(A) - 9, Mumbai and they relate to the A.Y. 2008-09.
2. The common issue contested by both the parties relates to the disallowance made u/s 14A of the Income Tax Act, 1961.
3. The ld. Counsel appearing on behalf of the assessee submitted that the assessee is having sufficient own funds and the investments have been made out of own funds only. Hence, there was no requirement of making any disallowance u/s 14A of the Act out of interest expenditure. Though these factual aspects presented before the ld. CIT(A), yet the first appellate authority granted only partial relief. Against this decision of ld. CIT(A), both the parties have filed these appeals before the Tribunal.
4. The ld. Counsel for the assessee further submitted that the contention of the assessee is duly supported by the decision of Hon'ble jurisdictional High Court in the case of HDFC Ltd. reported in 366 ITR 505.
5. On the contrary, the ld. D.R. submitted that the submissions of the assessee require verification.
6. Having heard the rival submissions, we are of the view that the disallowance made u/s 14A of the Act by the A.O. requires fresh examination by duly considering the submissions of the assessee in the light of decision of Hon'ble jurisdictional High Court rendered in the case of HDFC Ltd. (supra). Accordingly, we set aside the order of ld. CIT(A) on this issue and restore the 3 ITA 3005 & 1981/M/13
same to the file of the A.O. with a direction for fresh examination in the light of the aforesaid discussion.
7. The next issue contested by the assessee relates to the disallowance of bonus expenditure made u/s 43B of the Act.
8. The ld. Counsel appearing on behalf of the assessee submitted that the A.O. disallowed a sum of Rs. 4,67,661/- u/s 43B of the Act being the bonus not paid by the assessee before the date of completion of the tax audit. The ld. Counsel submitted that the tax auditor had committed an error with regard to the disallowance to be made u/s 43B of the Act. However, the tax auditor has rectified the error by issuing a clarification. Further the books of accounts of the assessee also support the clarification issued by the tax auditor. The Ld A.R further submitted that the ld. CIT(A), however, refused to consider the clarification issued by the tax auditor and accordingly confirmed the addition. Accordingly, the ld. Counsel submitted that the assessee should be given an opportunity to substantiate the claim with the books of account.
9. We have heard the ld. D.R. and examined this issue. We notice that the tax authorities have taken a decision against the assessee by considering the tax audit report. However, according to the assessee, the tax auditor has issued a clarification letter and further it is submitted that the claim of the assessee is supported by books of account. Under these set of facts, we are of the view that the tax authorities are not justified in ignoring the books of account as well as the clarification issued by the tax auditor. Accordingly, we are of the view that this issue requires fresh examination and we set aside the order of ld. CIT(A) on this issue and restore the same to the file of the A.O. with a direction to examine this issue afresh by duly considering the books of account and the clarification letter issued by the tax auditor.
4 ITA 3005 & 1981/M/13
4. In the result, appeal of the assessee as well as appeal of the Revenue is treated as allowed for statistical purpose.
Order pronounced in the open court on 15th June, 2015.
आदे श क घोषणा खल ु े #यायालय म% &दनांकः 15th June, 2015 को क गई ।
Sd/- sd/- (I.P. BANSAL) (B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER मंब ु ई Mumbai; &दनांक Dated 15-06-2015 [ व.6न.स./ RK , Sr. PS
आदे श क! " त$ल%प अ&े%षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. आयकर आयु7त(अपील) / The CIT, Concerned, Mumbai
4. आयकर आयु7त / Addl. CIT -Concerned, ,Mumbai
5. :वभागीय 6त6न<ध, आयकर अपील य अ<धकरण, मंब ु ई / DR, ITAT, Mumbai A Bench
6. गाड@ फाईल / Guard file.
ु ार/ BY ORDER, आदे शानस
स या:पत 6त //True Copy// उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील य अ धकरण, मुंबई / ITAT, Mumbai
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