Ajay Alloy (S) (P) Ltd. v. DCIT

Case Laws Analysis
REFERRED Pr CIT (Central) v Era Infrastructure (India) Ltd 2022 TaxPub(DT) 4907 (Del-HC)
REFERRED CIT v. Ansal Land Mark Township (P.) Ltd. 2015 TaxPub(DT) 3482 (Del-HC)
REFERRED Joint Investments (P) Ltd. v. CIT 2015 TaxPub(DT) 1375 (Del-HC)
REFERRED Rajeev Kumar Agarwal v. Addl. CIT 2014 TaxPub(DT) 2460 (Agra-Trib)
REFERRED CIT v. Rajinder Kumar 2013 TaxPub(DT) 1875 (Del-HC)

SUBSCRIBE FOR FULL CONTENT


The Tax Publishers2024 TaxPub(DT) 1724 (Del-Trib) IN THE ITAT DELHI BENCH CHALLA NAGENDRA PRASAD, J.M. & M BALAGANESH, A.M. Ajay Alloy (S) (P) Ltd. v. DCIT I.T.A. No. 5174/Del/2018 9 April, 2024 Assessee by: Shantanu Jain, Adv. Revenue by: Kanv Bali, Sr. DR ORDER *C.N. Prasad, J.M.* This appeal is filed by the assessee against the order of the learned Commissioner (Appeals)-1, New Delhi dated 2-5-2018 for the assessment year 2013-14. Assessee has raised the following grounds: - 1. That the learned Commissioner of Income Tax (Appeals)- 1, New Delhi has erred both in law and on facts in upholding the action of learned assessing officer in computing the total income of the appellant at Rs. 1,15,69,920 as against the returned income of Rs. 33,17,090 under section 143(3) of the Act. 2. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding a disallowance of a sum of Rs. 11,12,486 by incorrectly invoking section 14A of the Act read with Rule 8D of the Income Tax Rules 1962. 3. That the learned Commissioner of Income Tax (Appeals) has also erred both in law and on facts in upholding a disallowance of a sum of Rs. 71,40,344 representing interest paid by the assessee by invoking section 40(a)(ia) of the Act. 3.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that, provisions under section 40(a)(ia) of the Act read with section 194A of the Act were inapplicable and as such, disallowance so made and sustained is not in accordance with law. 3.2 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that, in any case since the payee had paid the taxes on the interest paid by the appellant company, no disallowance was warranted in view of second proviso to section 40(a)(ia) of the Act. 4. That both the authorities below have framed the impugned order without granting sufficient proper opportunity to the appellant company and therefore the same are contrary to principle of natural justice and hence vitiated. 5. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding the levy of interest under section 234A, 234B and 234C of the Act which are not leviable on the facts and circumstances of the case of the appellant company. 2. Ground no. 2 relates to disallowance of a sum of Rs. 11,12,486 under section 14A read with rule 8D of Income Tax Rules. 3. Learned Counsel for the assessee, at the outset, submits that the assessing officer made disallowance of Rs. 11,12,486 invoking rule 8D(2)(iii) of Income Tax Rules being 0.5% of average value of investments appearing in the balance sheet as expenditure incurred for earning dividend income of Rs. 930. Learned Counsel submits that the learned Commissioner (Appeals) sustained the disallowance. The learned Counsel placing reliance on the decision of the Honble Jurisdictional High Court in the case of Joint Investments Pvt. Ltd. v. CIT (2015) 372 ITR 694 (Del-HC) : 2015 TaxPub(DT) 1375 (Del-HC) submits that disallowance under section 14A read with Rule 8D cannot exceed exempt income. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2024 TaxPub(DT) 1724 (Del-Trib)

IN THE ITAT DELHI BENCH

CHALLA NAGENDRA PRASAD, J.M. & M BALAGANESH, A.M.

Ajay Alloy (S) (P) Ltd. v. DCIT

I.T.A. No. 5174/Del/2018

9 April, 2024

Assessee by: Shantanu Jain, Adv.

Revenue by: Kanv Bali, Sr. DR

ORDER

C.N. Prasad, J.M.

This appeal is filed by the assessee against the order of the learned Commissioner (Appeals)-1, New Delhi dated 2-5-2018 for the assessment year 2013-14. Assessee has raised the following grounds: -

1. That the learned Commissioner of Income Tax (Appeals)- 1, New Delhi has erred both in law and on facts in upholding the action of learned assessing officer in computing the total income of the appellant at Rs. 1,15,69,920 as against the returned income of Rs. 33,17,090 under section 143(3) of the Act.

2. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding a disallowance of a sum of Rs. 11,12,486 by incorrectly invoking section 14A of the Act read with Rule 8D of the Income Tax Rules 1962.

3. That the learned Commissioner of Income Tax (Appeals) has also erred both in law and on facts in upholding a disallowance of a sum of Rs. 71,40,344 representing interest paid by the assessee by invoking section 40(a)(ia) of the Act.

3.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that, provisions under section 40(a)(ia) of the Act read with section 194A of the Act were inapplicable and as such, disallowance so made and sustained is not in accordance with law.

3.2 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that, in any case since the payee had paid the taxes on the interest paid by the appellant company, no disallowance was warranted in view of second proviso to section 40(a)(ia) of the Act.

4. That both the authorities below have framed the impugned order without granting sufficient proper opportunity to the appellant company and therefore the same are contrary to principle of natural justice and hence vitiated.

5. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding the levy of interest under section 234A, 234B and 234C of the Act which are not leviable on the facts and circumstances of the case of the appellant company.

2. Ground no. 2 relates to disallowance of a sum of Rs. 11,12,486 under section 14A read with rule 8D of Income Tax Rules.

3. Learned Counsel for the assessee, at the outset, submits that the assessing officer made disallowance of Rs. 11,12,486 invoking rule 8D(2)(iii) of Income Tax Rules being 0.5% of average value of investments appearing in the balance sheet as expenditure incurred for earning dividend income of Rs. 930. Learned Counsel submits that the learned Commissioner (Appeals) sustained the disallowance. The learned Counsel placing reliance on the decision of the Honble Jurisdictional High Court in the case of Joint Investments Pvt. Ltd. v. CIT (2015) 372 ITR 694 (Del-HC) : 2015 TaxPub(DT) 1375 (Del-HC) submits that disallowance under section 14A read with Rule 8D cannot exceed exempt income.