TMI Blog2022 (11) TMI 328X X X X Extracts X X X X X X X X Extracts X X X X ..... year for the same investment, We see no reasons to uphold the disallowance of expenses made under section 14A of the Act in the impugned year. The disallowance made therefore as directed to be deleted. Appeal of the assessee is allowed. - ITA No. 298/RJT/2018 - - - Dated:- 19-10-2022 - SMT. ANNAPURNA GUPTA , ACCOUNTANT MEMBER AND SHRI T. R. SENTHIL KUMAR , JUDICIAL MEMBER Assessee by : Shri D. S. Varia , AR Revenue by : Shri Shramdeep Sinha , Ld. CIT ( DR ) ORDER PER ANNAPURNA GUPTA , ACCOUNTANT MEMBER Present appeal has been filed by the assessee against order passed by the ld. Commissioner of Income-Tax(Appeals), Ahmedabad [hereinafter referred to as Ld.CIT(A) under section 250(6) of the Income Tax Act, 1961 ( the Act for short) dated 25.1.2019 pertaining to the Asst.Year 2014-15. 2. The assessee has raised the following grounds: 1. That the learned CIT(Appeals) Jamnagar ought to have deleted the addition of Rs. 6,30,455 made to total income by invoking the provisions of section 14A of the IT Act read with rule 8D of Income-Tax Rules made by the assessing officer on the facts and circumstances of the case. 2. That the learned CIT(Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he interest expenses claimed by the assessee can be safely attributed to relating to his business and having nothing to do with his investments earning exempt income. He contended that identical disallowance made in the preceding Asst.Year, i.e A.Y 2013-14, had been deleted by the ld.CIT(A) by confirming the facts as pleaded by the assessee that the investment had been made from personal funds and not business funds of the assessee. In this regard he first pointed out that the exempt income earned by the assessee related to the following: i) Dividend income Rs.54,425/- ii) PPF Interest Rs.1,50,348/- iii) Long term capital gains on shares On which STT paid Rs.26,088/- Total tax free exempt income Rs.2,22,333/- 5. He thereafter pointed out that he maintained two sets of books of accounts; one relating to his personal set of books, and other relating to his proprietary-concern in which he carried on business in the name of M/s.Sonil Builders. The ld.counsel for the assessee pointed out that in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 2,95,009/-. But at the same time are receipt of interest being capital interest from firms Rs.9136, plus interest form parites Rs. 1,85,566/- and other sources of head of income at Rs. 108215, thus total taxable interest in personal set of books comes to only Rs. 7,908/- [3,02,917 (9136 + 185566 + 108215) less paid Rs. 295009]. 4. Whereas direct expenses relating to tax free income Rs. 600+443 Rs. 1043 already disallowed by the appellant. 5. In the personal set of books of accounts opening capital is at Rs. 2,03,60,982/- and capital at the end of the year is at Rs. 1,74,92,733/- after current year loss at Rs. 24,34f348/-. Whereas investments in shares/PPF/ Insurance policies etc. Are as on 1st day of accounting year as on 01/04/2013 is at Rs. 97/23/493/-. Thus there is a decrease in such investment during the year by 10,96,700/-. Ail such investments are very old and the same is out of capital of the assessee. 6. Detailed facts have been mentioned in statement of facts and also detailed submissions have been made during the assessment proceedings and we rely on the same. Even otherwise the working of disallowance u/s. 14A of the Act is not proper and if at all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered the submission of the appellant and also gone through the discussion made by the AO in assessment order. So far as addition/disallowance u/s 14A of Rs. 37,53,707/- is concerned on going through the facts for the year under consideration most of the interest payment is in proprietary concerns of the appellant viz. M/s Sonil Ventil Fabric and M/s Sonil Builder. M/s Sonil Builders has just: started in A.Y. 2011-12. Whereas, total exempt income is in personal books.of the appellant. The AO has not pointed out any instance that the appellant has diverted his interest bearing fund front his proprietary concerns for investment in personal account from which exempt income has been earned and, appellant's own capital is much more in excess than such investments. Appellant has also pointed out with evidence that increase in public limited snares during the year at Rs. 32,66,281/- is out of sale proceeds of public limited shares. The issue is squarely covered by Hon. ITAT, Ahmedabad Bench's order in the case of Canton Laboratories and also Hon'ble Gujarat High Court decision in CIT v Gujarat Industrial Development Corporation Ltd and GIT vs. Gujarat Power Corporation L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s further mentioned in the assessment order that during the course of assessment proceedings, the did not furnish details of interest expenses directly related to exempted income. All these specific findings of the AO as given in the assessment order have not been rebutted or disputed by the AR of the appellant in his written submission as reproduced in earlier paragraphs of this appeal order. The AR of the appellant as per para 6 of his written submission has stated that detailed submission have been made during the assessment proceedings. However, there is no any evidence or proof to show that any detailed written submission along with proper records and evidences were ever submitted by the appellant to the AO during the course of assessment proceedings. Thus the AR of the appellant has merely submitted that detailed submission was made during the course of assessment proceedings which is not supported by any evidences. Considering all these facts it is held that the AO has correctly made addition of Rs. 6,30,455/- to the total income of the appellant by invoking the provisions of section 14A of the Act r.w.r. 8D of the IT Rule and therefore, such addition of Rs. 6,30,455/- is he ..... X X X X Extracts X X X X X X X X Extracts X X X X
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