ACIT, Ludhiana v. M/s Vardhman Textile Limited, Ludhiana

ITA 1174/CHANDI/2013 | 2001-2002
Pronouncement Date: 16-04-2014 | Result: Dismissed

Appeal Details

RSA Number 117421514 RSA 2013
Assessee PAN AABCM4692E
Bench Chandigarh
Appeal Number ITA 1174/CHANDI/2013
Duration Of Justice 3 month(s) 29 day(s)
Appellant ACIT, Ludhiana
Respondent M/s Vardhman Textile Limited, Ludhiana
Appeal Type Income Tax Appeal
Pronouncement Date 16-04-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 16-04-2014
Date Of Final Hearing 09-04-2014
Next Hearing Date 09-04-2014
Assessment Year 2001-2002
Appeal Filed On 18-12-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA JUDICIAL MEMBER ITA NO.1174/CHD/2013 ASSESSMENT YEAR : 2001-02 THE A.C.I.T. VS. M/S VARDHMAN TEXTILE LIMITED CIRCLE 1 CHANDIGARH ROAD LUDHIANA. LUDHIANA. PAN: AABCM4692E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI J.S.NAGAR DR RESPONDENT BY : SHRI SUBHASH AGGARWAL DATE OF HEARING : 09.04.2014 DATE OF PRONOUNCEMENT : 16.04.2014 O R D E R PER SUSHMA CHOWLA J.M. : THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II LUDHIANA D ATED 14.10.2013 RELATING TO ASSESSMENT YEAR 2001-02 AGAINST THE ORD ER PASSED UNDER SECTION 143(3) OF INCOME TAX ACT 1961 (IN SHORT T HE ACT). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN ALLOCATING THE EXPENSES OF RS.1 LAC ONLY AS AGAINST OF RS.31 21 953/- ALLOCATED BY THE AO IN EARNING THE EXEMPTED INCOME. 2. THAT THE ORDER OF THE LD.CIT(A) BE SET ASIDE AND THAT OF A.O. BE RESTORED. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUND OF APPEAL BEFORE IT IS FINALLY DISPOSED OFF. 2 3. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS A GAINST THE ALLOCATION OF EXPENSES OF RS.1 LAC TO EARN OUT TAX FREE INCOME BY THE CIT (APPEALS) AS AGAINST DISALLOWANCE OF RS.31 21 953/- MADE BY T HE ASSESSING OFFICER. 4. THE LEARNED A.R. FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT THE YEAR UNDER CONSIDERATION IS ASSESSMENT YEAR 2001-02 IN WHICH YEAR THE PROVISIONS OF RULE 8D OF THE INCOME TAX RULES WERE NOT APPLICABLE. FURTHER IT WAS POINTED OUT BY THE LEARNED A.R. FOR THE ASSESSEE THAT IN THE IMMEDIATELY PRECEDING YEAR SIMILAR DISALLOWANCE HAS BEEN UPHELD BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN ASSESSEE OWN CASE IN ITA NO.141 OF 2012 DECIDED ON 31.7.2013. 5. THE LEARNED D.R. FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF THE ASSESSING OFFICER. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS AGAINST THE DISALLOWANCE OF EXPENSES BEING ATTRIBUTABLE TO THE EARNING OF EXEMP T INCOME. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD EA RNED DIVIDEND INCOME WHICH WAS EXEMPT FROM TAX. THE ASSESSING OFFICER I N VIEW OF THE FACT THAT THE ASSESSEE HAD BORROWED FUNDS DISALLOWED SUM OF RS.31 21 953/- AS RELATABLE TO THE EXEMPT INCOME. THE CIT (APPEAL S) RESTRICTED THE SAID DISALLOWANCE TO RS.1 LAC AS THE PROVISIONS OF RULE 8D OF THE INCOME TAX RULES WERE NOT APPLICABLE TO THE CONCERNED YEAR. W E FIND MERIT IN THE SUBMISSIONS MADE BY THE ASSESSEE THAT IN VIEW OF NO N APPLICATION OF THE PROVISIONS OF RULE 8-D OF THE INCOME TAX RULES TO T HE CONCERNED ASSESSMENT YEAR THERE IS NO MERIT IN DISALLOWANCE MADE BY THE ASSESSING OFFICER ON THE SURMISES THAT THE ASSESSEE HAD BORRO WED FUNDS IN ONE HAND AND HAD INVESTED IN TAX FREE ASSETS ON THE OTHER HA ND. HOWEVER WE 3 UPHOLD THE ORDER OF THE CIT (APPEALS) IN DISALLOWIN G RS.1 LAC ON ACCOUNT OF ADMINISTRATIVE EXPENSES AS BEING ATTRIBUTABLE TO THE EARNING OF TAX FREE INCOME. WE FURTHER FIND THAT SIMILAR DISALLOW ANCE OF RS.1 LAC IN ASSESSEES HANDS WAS MADE IN THE PRECEDING YEAR AND THE ORDER OF THE TRIBUNAL HAS BEEN UPHELD BY THE HON'BLE PUNJAB & HA RYANA HIGH COURT IN CIT-I LUDHIANA VS. M/S VARDHMAN TEXTILES LTD. LUDHIANA IN ITA NO.141 OF 2012 DECIDED ON 31.7.2013. FOLLOWING THE SAME WE UPHOLD THE ORDER OF THE CIT (APPEALS) AND DISMISS THE GROU NDS OF APPEAL RAISED BY THE REVENUE. 7. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 TH DAY OF APRIL 2014. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 16 TH APRIL 2014 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR ITAT CHANDIGARH 4