Feedback   New User   Login      
Tax Management India. Com TMI - Tax Management India. Com
Acts / Rules Notifications Circulars Tariff/ ITC HSN Forms Case Laws Manuals Short Notes Articles SMS News Highlights
        Home        
Extracts
Home List
← Previous Next →

Chudgar Ranchodlal Jethalal Trade Pvt. Ltd. Versus The DCIT

2015 (4) TMI 437 - ITAT AHMEDABAD

Disallowance of weight shortage expenses - Held that:- We find that the AO as well as the Id.CIT(A) has disallowed the expenditure on the basis that in earlier year the assessee has not claimed such kind of expenditure. In our considered view, since the assessee has placed on record the debit notes raised by various parties to whom the material was supplied, therefore the authorities below were not justified in disallowing the expenses claimed by the assessee. We therefore direct the AO to delet .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

facts and in view of the fact that the provisions of Rule 8D are applicable for the year under consideration and in the light of the decision of Joint Investments Pvt Ltd Versus CIT [2015 (3) TMI 155 - DELHI HIGH COURT] and in view of the fact that the disallowance worked out by A.O u/s. 14A is more than the exempt income and considering the alternate submission of ld. A.R. to make a reasonable disallowance u/s. 14A as deemed fit, we are of the view that disallowance of ₹ 5,000/- if made i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s under. 3. Assessee is a company stated to be engaged in the business of trading of Ready Cotton Bales and Investment. Assessee filed its return of income for A.Y. 08-09 on 23.09.2008 declaring total income of ₹ 94,51,250/-. The case was selected for scrutiny and thereafter the assessment was framed under section 143(3) vide order dated 09.12.2010 and the total income was determined at ₹ 98,95,455/-. Aggrieved by the order of A.O., Assessee carried the matter before CIT(A) who vide .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e independently adjudicated the issue rather than relying on earlier appellate order for confirming disallowance. 2. Ld. CIT (A) erred in law and in facts confirming disallowance made by AO of ₹ 1,02,007/- by invoking provisions of section 14A r.w. rule 8D of the Act. Both the lower authorities erred in ignoring the fact that the appellant had sufficient own funds to invest in tax free dividend earning investment. Ld. CIT (A) ought to have deleted such disproportionate disallowance of expe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Assessee carried the matter before CIT(A). CIT(A) noted that identical issue arose in A.Y. 07-08 and his predecessor had disallowed the expenditure. He therefore following the order of his predecessor upheld the order of A.O by holding as under:- 3.1 Identical issue arose in the immediately preceding A.Y. 2007-08. Vide order dated 09.02.2011 in appeal No. CIT(A)-VI/DCIT.Cir.1/415/09-10, my predecessor held as under:- "3.3.1 have considered the facts of the case and assessment order and appe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

first time, cannot be allowed as genuine business expense. The decisions relied upon by the appellant are on the issue of levy of penalty and hence not applicable to the facts of the case. Accordingly the disallowance made by the AO is confirmed. " As seen from para-2 of the assessment order, no explanation was given on the issue. Following the order of my predecessor, impugned disallowance of ₹ 3,42,128/- is upheld. These grounds of appeal are dismissed. 5. Aggrieved by the order of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

g the appeal against the Assessee and now since the issue for A.Y. 07-08 has been decided in favour of the Assessee by the Tribunal, the ground be decided in favour of the Assessee. She also placed on record, the copy of the aforesaid Tribunal order. The ld. D.R. on the other hand supported the order of A.O and ld. CIT(A). 7. We have heard the rival submissions and perused the material on record. We find that the claim of weight shortage expenses was disallowed by the A.O and the disallowance wa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

wer authorities erred in ignoring the evidences produced by the appellant in the form of correspondences with the parties and debit notes issued by the parties. Ld. CIT(A) ought to have deleted the disallowance. 3. Apropos to ground No.l, the Id.counsel for the assessee submitted that the assessee is engaged in trading of ready cotton bales since last more than 21 years and the debit notes were raised by the concerned parties. The Id.counsel for the assessee further submitted that there is no di .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

m that there was loss of weight. 3.2. In rejoinder, the ld.counsel for the assessee submitted that the evidences were placed on record; namely, the ledger account of weight shortage expenses, the debit notes raised by the concerned parties. The ld.counsel for the assessee submitted that merely because the assessee has claimed this kind of expenditure for the first time and it cannot be the sole ground for making disallowance. 4. We have heard the rival submissions, perused the material available .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

O to delete this addition. Accordingly, ground raised by the assessee is allowed. 8. Before us, Revenue has not brought on record any material to demonstrate as to how the decision of Hon ble Tribunal for A.Y. 07-08 in Assessee s own case would not be applicable to the facts of the case for the year under appeal more so when ld. CIT(A) himself has noted that identical issue arose in A.Y. 07-08 and had followed the order of his predecessor. In view of the aforesaid facts and respectfully followin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the Assessee to show cause as to why no disallowance u/s. 14A be made to which Assessee interalia submitted that the investments were made out of free reserves of the company and no interest bearing funds have been used by the Assessee. The submission of the Assessee was not found acceptable to the A.O for the reasons that Assessee had not submitted proof of availability of interest free funds on the date of investments and the investment activity of the Assessee was on indivisible activity and .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

under:- 4.3. 1 have considered the facts of the case anfi assessment order and appellant's submission. It is not in dispute that appellant incurred interest expense to the extent of ₹ 12. 92 lakhs on the borrowings ofRs. 266. 779 Lacs. Appellant did not have separate bank account for exempt investment. Common funds are used for earning both exempt and non-exempt income. Appellant could not establish that investment in exempt asset was made out of non-interest bearing funds only. Theref .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

to the total asset and therefore it is quite reasonable and disallows interest only at the average cost of borrowing by the company including all the funds. Similarly the disallowance of other expenses is just ₹ 5137 which is quite reasonable. Accordingly the disallowance made by the assessing Office is confirmed. As seen from para-3 of the assessment order, no explanation was given on the issue. Following the order of my predecessor, impugned disallowance of ₹ 1,02,077/- is upheld. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nvestments and therefore no disallowance of interest can be made. With respect to the disallowance of administrative expenses, she submitted that no disallowance is called for as the Assessee has not incurred any administrative expenses for earning tax free income. She further submitted that the disallowance made u/s. 14A is far in excess of the tax free income. He further placed reliance on the decision of Chandigarh Tribunal in the case of ACIT vs. Punjab State Co-Op. and Marketing Fed. Ltd. i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

re of disallowance u/s. 14A as the year involved is A.Y. 08-09. The ld. D.R. on the other hand submitted that A.O was fully justified in disallowing the expenses in view of the fact that rule 8D is applicable from A.Y. 08-09. He thus supported the order of A.O and CIT(A). 12. We have heard the rival submissions and perused the material on record. On perusing the Balance sheet, we find that there is no change in investments at the year under as at 31st March, 2007 and as at 31st March 2008 meanin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of other income placed on record, it is seen that during the year dividend earned by the Assessee is of ₹ 20,498/- and the disallowance made by A.O u/s 14A is of ₹ 1,02,007/- and thus the disallowance u/s. 14A worked out by A.O is more than the tax free income. Before us, ld. D.R. has not brought any decision of Tribunal or High Court on record to controvert the submissions made by ld. A.R that disallowance u/s. 14A cannot be more than tax free income. On the other hand, while dicta .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Discussion Forum
what is new what is new
 


Share:            

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version