Referred Sections:
Section 14A r/w
Referred Cases / Judgments:
Resurgere Mines & Minerals India Ltd. Vs. Additional CIT vide ITA No.6601/Del/2014
PCIT Vs. Sintex Industries Ltd. 2018 TIOL-104-SC-IT
Maxopp Investment Ltd. Vs, CIT [2018] 91 taxmann.com 154 (SC)
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH `SMC', NEW DELHI
BEFORE SH. R. K. PANDA, ACCOUNTANT MEMBER
ITA No.5107/Del/2018
Assessment Year: 2015-16
Dalmia Finance Ltd. Addl. CIT
C/o. Vinod Kumar Bindal & Vs Special Range-3
Co. Chartered Accountants, New Delhi
D-219, Vivek Vihar, Phase-I,
New Delhi-110095
PAN No. AABCD5533H
(APPELLANT) (RESPONDENT)
Appellant by Shri Vinod Kumar Bindal, CA
Ms. Rinky Sharma, ITP
Respondent by Sh. S. L. Anuragi, Sr. DR
Date of hearing: 09/05/2019
Date of Pronouncement: 13/06/2019
ORDER
PER R.K. PANDA, AM:
This appeal filed by the assessee is directed against the
order dated 15.05.2018 of the CIT(A)-34, New Delhi relating to A.
Y. 2015-16.
2. The only effective ground raised by the assessee reads as
under :-
"1. The learned CIT(A) erred in law and on facts in confirming an
addition of Rs.1,35,696/- u/s. 14 A of the Act by applying Rule 8D
though actually no expenses as such were incurred to earn the tax
exempt income on very old investments as against the amount of
Rs.31,780/- disallowed voluntarily by the assessee while ignoring
the judgment of the Apex Court, facts, written submissions and
evidences placed on record and rejecting the bonafide explanation of
the assessee. Thus, the addition should be deleted."
3. Facts of the case, in brief are that the assessee is a non
banking finance company registered with RBI. It filed its return
of income on 29.05.2015 declaring loss of Rs.1,06,067/-. The
Assessing officer during the course of assessment proceedings
compared the balance sheet as on 31.03.2014 and 31.03.2015
and noted that the company has shown to have invested its funds
in equity shares, which stood at Rs.3,18,47,955/- as at the
beginning of the year and at Rs.3,51,42,432/- as at the end of the
year. However, the assessee has disallowed Rs.31,780/- as
expenses which have been incurred to carry out the activity of
investments and earning of exempt income. He, therefore, asked
the assesee to explain as to why disallowance u/s. 14A r/w Rule
8D should not be made.
4. Rejecting the various explanation given by the assessee, the
Assessing Officer made disallowance of Rs.1,35,696/-. While
doing so, he computed the disallowance u/s. 14A r/w Rule 8 D at
Rs. 1,67,476/-. After deducting the amount of Rs.31,780/-
already disallowance by the assessee itself, the Assessing Officer
made the disallowance of Rs.1,35,656/-.
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5. In appeal the Ld. CIT(A) upheld the action of the Assessing
Officer.
6. Aggrieved with such order of the CIT(A) the assessee is in
appeal before the Tribunal.
7. The Ld. Counsel for the assessee submitted that no
borrowed funds have been utilized for investment in share the
income of which is exempt. He submitted that sine no interest
expenditure has been incurred for investment in the shares and
assessee has already suo moto disallowed an amount
ofRs.31,780/- towards administrative expenses which is in
consonance with preceedings years disallowance, therefore, no
further disallowance is called for.
8. He relied upon the following decisions :-
1. Resurgere Mines & Minerals India Ltd. Vs. Additional
CIT vide ITA No.6601/Del/2014
2. PCIT Vs. Sintex Industries Ltd. 2018 TIOL-104-SC-IT
3. PCIT Vs. Sintex Industries Ltd. 2017-TIOL-104-SC-IT
4. PCTI Vs. Sintex Industries Ltd. 2017-TIOL-1025-HC-
AHM-IT
5. Maxopp Investment Ltd. Vs, CIT [2018] 91
taxmann.com 154 (SC)
Page | 3
9. The Ld. DR on the other hand heavily relied on the order of
the CIT(A).
10. I have considered the rival arguments made by both the
sides and perused the material available on record. I have also
considered the various decisions cited before me. I find the
Assessing Officer invoking the provisions of section 14A r/w
Rule 8D computed the disallowance of Rs.1,67,476/- as the
expenses incurred in relation to earning tax free income. After
deducting the disallowance of Rs.31,780/- made by the
assessee itself, the Assessing Officer made addition of
Rs.1,35,696/- to the total income of the assessee u/s. 14A rule
8D which has been confirmed by the CIT(A). I find the
Assessing Officer while making the disallowance has given a
finding that investment in shares and securities have been
made out of borrowed funds. It is the submission of the Ld.
Counsel for the assessee that no borrowed funds have been
utilized for making the investment and no new investments
have been made during the year. Considering the totality of the
facts of the case and in the interest of justice I deem it proper to
restore the issue to the files of the Assessing Officer with a
direction to verify the records properly and decide the issue as
per fact and law after giving a reasonable opportunity of being
heard to the assessee. I hold and direct accordingly. The
ground raised by the assessee is allowed for statistical purpose.
Page | 4
11. In the result, the appeal filed by the assessee is allowed for
statistical purpose.
Order pronounced in the open court on 13.06.2019.
Sd/-
(R.K PANDA)
ACCOUNTANT MEMBER
*Neha*
Date:- 13.06.2019
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT NEW DELHI
Date of dictation
Date on which the typed draft is placed before the dictating
Member
Date on which the approved draft comes to the Sr.PS/PS
Date on which the fair order is placed before the Dictating
Member for Pronouncement
Date on which the fair order comes back to the Sr. PS/ PS
Date on which the final order is uploaded on the website of 13.06.2019
ITAT
Date on which the file goes to the Bench Clerk
Date on which file goes to the Head Clerk.
The date on which file goes to the Assistant Registrar for
signature on the order
Date of dispatch of the Order
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