TMI Blog2016 (10) TMI 319X X X X Extracts X X X X X X X X Extracts X X X X ..... he case alongwith the case law relied by the assessee in the case of UTI Bank Ltd (2013 (8) TMI 238 - GUJARAT HIGH COURT). Therefore, in the interest of substantial justice, we set aside this issue to the file of the ld. Assessing Officer with a direction to decide the same afresh in accordance with law, after providing due opportunity of being heard to the assessee. Thus, these grounds are allowed for statistical purposes. - ITA No. 2168/Ahd/2008, ITA No. 2281/Ahd/2008, ITA No. 2273/Ahd/2011 - - - Dated:- 12-8-2016 - SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER For The Assessee : Shri S.N. Soparkar, AR for Sr. No.1 2, Shri H.C. Shah, AR for Sr. No.3 For The Revenue : Shri R.I. Patel, CIT-DR ORDER PER R.P. TOLANI, JUDICIAL MEMBER:- ITA Nos. 2168 and 2281/Ahd/22008 are the cross appeals filed by the Revenue and assessee respectively against the order of the Commissioner of Income-tax (Appeals)-II, Ahmedabad dated 27.03.2008 for AY 2004-05. ITA No. 2273/Ahd/2011 is the appeal filed by the assessee against the order of the ld. Commissioner of Income-Tax (Appeals)-XI, Ahmedabad dated 17.06.2011 for AY 2002-03. Since all th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case and in law, the CIT (A) ought to have upheld the order of the A.O. 3.2 Assessee has taken following grounds:- 1. In law and in facts and circumstances of the Appellant's case, the learned Commissioner of Income-tax (Appeals) has grossly erred in points of law and facts. 2. In law and in facts and circumstances of the Appellant's case, the learned Commissioner of Income-tax (Appeals) has grossly erred in confirming disallowance of ₹ 2,86,937 u/s .14A of IT Act out of interest expenses. 3. In law and in facts and circumstances of the Appellant's case, the Commissioner or Income-tax (Appeals) has grossly erred in confirming disallowance of ₹ 37,37,962/- u/s 14A of IT Act out of administrative expense and payment to employees. 4. In law and in facts and circumstances of the Appellant's case, the learned Commissioner of Income-tax (Appeals) has grossly erred in confirming disallowance of interest expenses ₹ 1,02,74,427/-. 5. In law and in facts and circumstances of the Appellant's case, the learned Commissioner of Income-tax (Appeals) has grossly erred in directing to charge interest u/ss.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case as well as settled provisions of laws discussed hereinbefore, we are of the opinion that the assessee had right to adopt the changed system of accounting and by changing the system of accounting from mercantile to cash was a bona fide change. 5.4.2 In conformity with the findings of the co-ordinate Bench of this Tribunal (supra), this issue is decided in favour of the assessee. 4.4 We have heard the rival contentions, perused the material available on record and gone through the orders of the authorities below. We find force in the submissions of ld. Counsel for the assessee that the issue has been already decided by ITAT in assessee s own case for AY 2002-03 in ITA No.1244/Ahd/2006, wherein the Tribunal, following the decision in the case of Kishan Discretionary Family Trust vs. ACIT in ITA No. 1850/Ahd/2007 dated 02.11.2007, held that the assessee has right to adopt the changed system of accounting and by changing the system of accounting from mercantile to cash was a bona fide change. Respectfully following ITAT judgment in assessee s own case (supra), we uphold the order of the ld. CIT(A) in this regard. Accordingly grounds in this behalf and the appeal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... my view the administrative expenses do form part of expenses relating to investment in shares and tax free securities and hence the AO was justified in disallowing proportionate expenses. However, the AO is directed to verify the claim that the exempted income computed in the assessment order is not correct. The AO is directed to verify this claim after verification and if it is found to be in order, he may modify the disallowance. 6.3 Aggrieved, the assessee-company is in appeal before us. 6.4 The ld. Counsel for the assessee contends that the ld CIT(A) was not justified in confirming the disallowance u/s 14A of the IT Act as the company had share capital and reserves more than the tax free investments. Revised working of the interest expense of Nirman Soaps Detergents Pvt Ltd and Navin Detergent Pvt Ltd has already been submitted by the assessee at page No.27 of the paper-book. Reliance is placed on the judgment of Hon ble Gujarat High Court in the case of UTI Bank Ltd, reported in 32 taqxmann.com 370) (Guj.). Thus, the ld. Counsel for the assessee pleaded that the aforesaid disallowance should be deleted. 6.5 On the other hand, ld. Departmental Representative reli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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