Micro Abrasives (India) Pvt. Ltd., New ... vs Department Of Income Tax

ACIT, Circle 6(1), New Delhi Vs. M/s. Micro Abrasives (India) Pvt. Ltd. Room No.413, C.R. Building Flat No.511,5th Floor, Mecantile House I.P. Estate, New Delhi 15-K.G. Marg, New Delhi-110001

(PAN AAACM 0341 H)

(Appellant) (Respondent)

Date of hearing : 24.02.2015 Date of Pronouncement : 25.02.2015

Appellant by : Shri Sameer Kapoor, CA. Respondent by: Shri P. Dam Kanunjna, Sr. D.R.

ORDER

PER SHRI GEORGE GEORGE K, JM:

1. This appeal, at the instance of the Revenue, is directed against the CIT(A)'s

order dated 29.07.2013. The relevant assessment year is 2009-10.

2. The solitary issue that arises for our consideration is whether the CIT(A) is

justified in restricting the disallowance to Rs.20,86,836/-, out of total disallowance

of Rs.1,17,48,112/- made by the AO on account of expenditure not relatable to the

business income.

ITA No.5394/Del /2013 2

3. Briefly stated the facts of the case are as follows.

The assessee is a company. The return of income was filed on 29.09.2009,

declaring total income of Rs.1,13,05,370/-. The scrutiny assessment year was

completed by order dated 07.12.2011 u/s 143(3) of the Act. The Assessing Officer

made disallowance u/s 14A of the Act r.w.r. 8D of the I.T. Rules amounting to

Rs.14,97,765/-. Further, AO disallowed expenditure of Rs.1,17,48,112/-, out of the

aggregate expenditure of Rs.1,54,58,043/- claimed by the assessee.

4. Aggrieved by the assessment order, assessee preferred an appeal before the

CIT(A). The CIT(A) deleted the disallowance u/s 14A and reduced the disallowance

of expenditure made by the AO from Rs.1,17,48,112/- to Rs.20,86,836/-.

5. The Revenue being aggrieved by reduction of disallowance of expenditure by

the CIT(A) is in appeal before us. At the very outset, the Ld. counsel for the

assessee submitted that the CIT(A) has adopted the particular formula and reduced

the disallowance made by the AO to Rs.20,86,836/-. It was submitted that the

principle for reducing the disallowance of expenditure by the CIT(A) was adopted

by the Assessing Officer in the subsequent assessment orders for the AYs. 2011-12

and 2012-13. The copies of the assessment orders for A.Ys. 2011-12 and 2012-13,

were placed on record.

6. The Ld. DR present was unable to controvert the submissions made by the

Ld. AR.

ITA No.5394/Del /2013 3

7. We have heard rival submissions and perused the material on record. The

CIT(A) had adopted the percentage of average investment of fixed assets to the

average funds available and accordingly had reduced the disallowance of

expenditure made by the AO from Rs.1,17,48,112/- to Rs.20,86,836/-. We are not

examining or dwelling upon the correctness of the method adopted by the CIT(A),

because for the AYs. 2011-12 and 2012-13, we notice that the Assessing Officer had

adopted the same principle followed by the CIT(A) for the current assessment year

and accordingly has made the disallowance in respect of those assessment years.

Since Revenue itself has adopted the method adopted by the CIT(A) for the current

year in the subsequent assessment years, we see no reason to interfere with the order

of the CIT(A) and we uphold the same. It is ordered accordingly.

8. In the result, the appeal filed by the Revenue is dismissed.

The decision was pronounced in the open Court on 25th February, 2015.

Sd/- Sd/- (B.C. MEENA) (GEORGE GEORGE K.) Accountant Member Judicial Member

Dated: 25th February, 2015. Aks/-

Copy forwarded to 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi ITA No.5394/Del /2013 4

Date 1. Draft dictated on 25.02.2015 PS 2. Draft placed before author 25.02.2015 PS 3. Draft proposed & placed before the JM/AM second member 4. Draft discussed/approved by Second JM/AM Member. 5. Approved Draft comes to the Sr.PS/PS PS/PS 6. Kept for pronouncement on PS 7. File sent to the Bench Clerk PS 8. Date on which file goes to the AR 9. Date on which file goes to the Head Clerk. 10. Date of dispatch of Order.