TMI Blog2021 (11) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... d:- 21-10-2021 - N.K. Saini, Vice President And R.L. Negi, Member (J) For the Appellant : Navdeep Sharma, Advocate For the Respondents : Ashok Khanna, Addl. CIT ORDER Per R. L. Negi, Judicial Member (J) The assessee has filed the captioned appeals against the separate orders both dated 01.08.2019 passed by Commissioner of Income Tax (Appeals)-3, Ludhiana [for short 'the CIT(A)'] for the assessment years 2011-12 2012-13, vide which the Ld. CIT(A) has partly allowed the appeals filed by the assessee against the assessment order passed u/s. 143(3) of the Income Tax Act, 1961 [for short 'the Act']. Since the assessee has taken common grounds in both the appeals, these appeals were clubbed, heard together and are being disposed of by this common order for the sake of convenience. ITA No. 1414/CHD/2019 AY 2011-12 2. Brief facts of the case pertaining to the assessment year 2011-12 are that the assessee filed its return for the assessment year under consideration declaring nil income under the normal provisions of the Act, declaring loss of ₹ 40,32,77,160 (to be carried forward). However, the tax was computed and paid under the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mit, on account of addition to fixed assets (building) in spite of the fact the Company had its own sufficient funds. Directions be given to delete the addition of ₹ 12,94,605/- made out of interest paid to bank on CC Account. 4. That the Worthy CIT(A)-3, Ludhiana erred in law and on facts in not deleting the addition of ₹ 2,01,282/-, being proportionate interest @ 3% less charged on loans advanced to Sister Concern. Directions be given to delete the disallowance of ₹ 2,01,282/- as the appellant had its sufficient owned funds in the shape of Capital Reserve. 5. That the appellant craves, leave to add, amend, alter, modify or substitute all or any of the above-mentioned Grounds of Appeal before the appeal is finally heard and disposed of. 4. Vide ground No. 1 2, the assessee has challenged the action of the Ld. CIT(A) in holding that section 14A read with Rule 8D is applicable in assessee's case. The Ld. counsel submitted before us that this issue is covered in favour of the assessee by the decision of the jurisdictional Tribunal in Group company case Oswal Woolen Mills Ltd. vs. ACIT, ITA No. 37/Chd/2015 pertaining to the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. Proportionate amount of disallowance of expensed to earn dividend 936183 Details of expenses a. Interest paid to others 21202161 b. Administrative expenses 130240267 c. Personal expenses and other allowances 405282110 556724538 7. None of the lower authorities have pointed out any defect in the computation of proportionate disallowance computed by the assessee except that certain part of the administrative expenses were not taken into consideration which has been taken into consideration in the computation made above. Even the assessee has claimed that it has not incurred any administrative expenses for earning of tax-exempt income. The Assessing Officer in this respect has not recorded any dissatisfaction taking into consideration the accounts of the assessee. The Hon'ble Bombay High Court in the case of 'Godrej Boyce Manufacturing Co.' 328 ITR 81 has held that under section 14A of the Act, resort can be made to Rule 8D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing given before us, as reproduced above, whereby, the proportionate amount of disallowance of expenditure to earn dividend income has been computed at ₹ 9,36,183/- by including the personnel expenditure and certain other expenses, as noted above. In view of this, the disallowance of administrative expenses is restricted to ₹ 9,36,183/-. However, the assessee will get the benefit/set off at the suo motu disallowance offered by the assessee in the return of income at ₹ 1,33,928/- and accordingly the addition is restricted to ₹ 8,02,255/-. 7. In the said case the AO had not recorded any dissatisfaction taking into consideration the accounts of the assessee. In the present case also the contention of the Ld. counsel is that since the AO had computed the disallowance in a mechanical manner, the Ld. CIT(A) ought to have deleted the addition made by the AO. Since the coordinate Bench has already dealt with the identical issue in the similar set of facts, we do not find any reason to take a different view. Hence, respectfully following the order dated 03.07.2019 passed by the coordinate Bench of the Tribunal in the case of Oswal Woolen Mills Ltd. vs. ACIT (sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch asset was first put to use, shall not be allowed as deduction. The judgment of various Courts in the case of Hero Cycles (P) Ltd. Vs. CIT, Ludhiana C.A. No. 514 of 2008 dt. 05/11/2015, Bright Enterprises Pvt. Ltd. Vs. CIT, Jalandhar (2016) 381 ITR 107 (P H) held that no disallowance of interest is called for where the assessee has got sufficient own funds. The Assessing Officer is directed to go through the fund position namely capital and interest free advances, reserves and surplus to determine whether any borrowed funds have been utilized more than available own funds and take a decision keeping in view the decisions rendered above. If sufficient own funds are available, no disallowance is called for. This ground may be treated as set aside to the file of Assessing Officer. 11. The coordinate Bench of the Tribunal has dealt with the identical issue in the similar facts of the case in group company case aforesaid. Hence, respectfully following the decision of the coordinate Bench, we set aside the findings of the Ld. CIT(A) and send the issue back to the AO for deciding the same in terms of order dated 12.10.2017 passed in the case of Monte Carlo Fashion (supra). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee by the decision of the coordinate Bench in assessee's own case ITA No. 1304/Chd/2016 (supra) we find no reason to take a different view. Hence, respectfully following the decision of the coordinate Bench, we allow this ground of appeal and set aside the findings of the Ld. CIT(A). ITA No. 1415/Chd/2019 AY 2012-13 In the present case the assessee filed its return for the assessment year under consideration declaring total income of ₹ 9,35,01,130/-. The case was selected for scrutiny and the AO completed assessment under section 143(3) of the Act and determined the total income at ₹ 9,80,25,690/- under the normal provisions of the Act inter alia making addition of ₹ 41,58,517/- u/s. 14A of the Act read with Rule 8D of the Income Tax Rules and ₹ 3,66,039/- u/s. 36(1)(iii) of the Act. In the first appeal the Ld. CIT(A) held that disallowance u/s. 14A read with rule 8D is applicable in this case, however, directed the AO to recompute the disallowance under rule 8D by considering only those investments from where the exempt income has been received. The Ld. CIT(A) further confirmed the addition made u/s. 36(1)(iii). The assessee is in appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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