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Jyoti Ceramic Industries Pvt. Ltd., B-603, Parle Udyan Co-op Hsg. Soc. Ltd., Vs. Addl. Commissioner of Income Tax 5(2), 5th floor, Aayakar Bhavan, M.K. Road, Mumbai 20.
June, 16th 2015


             ./I.T.A. No. 3005/Mum/ 2013
           (     /      Assessment Year : 2008-2009

Jyoti Ceramic Industries       /       Addl. Commissioner of
Pvt. Ltd.,                             Income Tax ­ 5(2),
B-603, Parle Udyan Co-op               5 t h floor,
Hsg. Soc. Ltd.,                        Aayakar Bhavan,
25, Park Road,                         M.K. Road,
Vile Parle (East),                     Mumbai ­ 20.
Mumbai ­ 400 057.
     . / PAN : AAACJ0247P
 ( /Appellant)        ..                  (    / Respondent)

             ./I.T.A. No. 1981/Mum/ 2013
           (     /      Assessment Year : 2008-2009

Addl. Commissioner of          /       Jyoti Ceramic Industries
Income Tax ­ 5(2),                     Pvt. Ltd.,
5 t h floor,                           B-603, Parle Udyan Co-
Aayakar Bhavan,                        op Hsg. Soc. Ltd.,
M.K. Road,                             25, Park Road,
Mumbai ­ 20.                           Vile Parle (East),
                                       Mumbai ­ 400 057.
                                 . / PAN : AAACJ0247P
    ( /Appellant)            ..      (  / Respondent)

    Assessee by                Shri K. Gopal
    Revenue by :               Shri Pawan Kumar Birla
        / Date of Hearing                 : 15-06-2015
       /Date of Pronouncement : 15-06-2015
                                    2        ITA 3005 & 1981/M/13

                              / O R D E R


      These cross appeals are directed against the order dated 06-12-2012
passed by the ld. CIT(A) ­ 9, Mumbai and they relate to the A.Y. 2008-09.

2.    The common issue contested by both the parties relates to the
disallowance made u/s 14A of the Income Tax Act, 1961.

3.    The ld. Counsel appearing on behalf of the assessee submitted that the
assessee is having sufficient own funds and the investments have been made
out of own funds only. Hence, there was no requirement of making any
disallowance u/s 14A of the Act out of interest expenditure. Though these
factual aspects presented before the ld. CIT(A), yet the first appellate
authority granted only partial relief. Against this decision of ld. CIT(A), both
the parties have filed these appeals before the Tribunal.

4.   The ld. Counsel for the assessee further submitted that the contention of
the assessee is duly supported by the decision of Hon'ble jurisdictional High
Court in the case of HDFC Ltd. reported in 366 ITR 505.

5.    On the contrary, the ld. D.R. submitted that the submissions of the
assessee require verification.

6.    Having heard the rival submissions, we are of the view that the
disallowance made u/s 14A of the Act by the A.O. requires fresh examination
by duly considering the submissions of the assessee in the light of decision of
Hon'ble jurisdictional High Court rendered in the case of HDFC Ltd. (supra).
Accordingly, we set aside the order of ld. CIT(A) on this issue and restore the
                                    3        ITA 3005 & 1981/M/13

same to the file of the A.O. with a direction for fresh examination in the light
of the aforesaid discussion.

7.    The next issue contested by the assessee relates to the disallowance of
bonus expenditure made u/s 43B of the Act.

8.    The ld. Counsel appearing on behalf of the assessee submitted that the
A.O. disallowed a sum of Rs. 4,67,661/- u/s 43B of the Act being the bonus
not paid by the assessee before the date of completion of the tax audit. The ld.
Counsel submitted that the tax auditor had committed an error with regard to
the disallowance to be made u/s 43B of the Act. However, the tax auditor has
rectified the error by issuing a clarification. Further the books of accounts of
the assessee also support the clarification issued by the tax auditor. The Ld
A.R further submitted that the ld. CIT(A), however, refused to consider the
clarification issued by the tax auditor and accordingly confirmed the addition.
Accordingly, the ld. Counsel submitted that the assessee should be given an
opportunity to substantiate the claim with the books of account.

9.    We have heard the ld. D.R. and examined this issue. We notice that the
tax authorities have taken a decision against the assessee by considering the
tax audit report.   However, according to the assessee, the tax auditor has
issued a clarification letter and further it is submitted that the claim of the
assessee is supported by books of account. Under these set of facts, we are of
the view that the tax authorities are not justified in ignoring the books of
account as well as the clarification issued by the tax auditor. Accordingly, we
are of the view that this issue requires fresh examination and we set aside the
order of ld. CIT(A) on this issue and restore the same to the file of the A.O.
with a direction to examine this issue afresh by duly considering the books of
account and the clarification letter issued by the tax auditor.
                                            4       ITA 3005 & 1981/M/13

      4.      In the result, appeal of the assessee as well as appeal of the Revenue is
      treated as allowed for statistical purpose.

              Order pronounced in the open court on 15th June, 2015.

                                                    15th June, 2015    

                    Sd/-                                             sd/-
               (I.P. BANSAL)                                (B.R. BASKARAN)
             JUDICIAL MEMBER                              ACCOUNTANT MEMBER
                             Dated 15-06-2015
       . ../ RK , Sr. PS

                /Copy of the Order forwarded to :
1.    / The Appellant
2.     / The Respondent.
3.     () / The CIT, Concerned, Mumbai
4.      / Addl. CIT ­Concerned, ,Mumbai
5.             ,     ,   / DR, ITAT, Mumbai A Bench

6.     / Guard file.
                                                                          / BY ORDER,

                            //True Copy//
                                                         /  (Dy./Asstt.       Registrar)
                                                             ,  / ITAT, Mumbai
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