Vijay Commercial Co. Op. Bank Ltd., RAJKOT-GUJARAT v. The Income Tax Officer, Ward-2(2), RAJKOT-GUJARAT

ITA 127/RJT/2014 | 2010-2011
Pronouncement Date: 11-04-2014 | Result: Allowed

Appeal Details

RSA Number 12724914 RSA 2014
Assessee PAN AAAAV3799C
Bench Rajkot
Appeal Number ITA 127/RJT/2014
Duration Of Justice 1 month(s) 22 day(s)
Appellant Vijay Commercial Co. Op. Bank Ltd., RAJKOT-GUJARAT
Respondent The Income Tax Officer, Ward-2(2), RAJKOT-GUJARAT
Appeal Type Income Tax Appeal
Pronouncement Date 11-04-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted SMC
Tribunal Order Date 11-04-2014
Date Of Final Hearing 08-04-2014
Next Hearing Date 08-04-2014
Assessment Year 2010-2011
Appeal Filed On 19-02-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBULAL SMC BENCH RAJKOT BEFORE SHRI T. K. SHARMA JM ITA NO.127/RJT/2014 ASSESSMENT YEAR : 2010-11 VIJAY COMMERCIAL CO. OP. BANK LTD. VIJAY BHAVAN KANAK ROAD RAJKOT PAN : AAAAV 3799 C ( / APPELLANT) THE INCOME TAX OFFICER WARD-2(2) RAJKOT / RESPONDENT / ASSESSEE BY SHRI D.M. RINDANI CA / REVENUE BY SHRI J.B. JHAVERI DR / DATE OF HEARING 08.04.2014 !'# / DATE OF PRONOUNCEMENT 11.04.2014 / ORDER THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DA TED 18.12.2013 OF CIT(A)-III RAJKOT CONFIRMING THE DISALLOWANCE OF INTEREST OF RS.1 67 400/- U/S 14A OF THE INCOME-TAX ACT 1961 FOR THE ASSESSMENT YEAR 20 10-11. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A REGISTERED AND LICENSED CO- OPERATIVE BANK CARRYING ON BANKING BUSINESS. FOR TH E ASSESSMENT YEAR UNDER APPEAL IT FILED THE RETURN OF INCOME ON 25.09.2010 DECLARING TOTAL INCOME OF RS.NIL. THE ASSESSING OFFICER FRAMED ASSESSMENT U/S 143(3) OF THE INCOME-TAX ACT ON 04.12.2012 WHEREIN HE DISALLOWED RS.1 67 400/- U/S 14A OF THE ACT BEING 8.37% OF DIVIDEND INCOME OF RS.20 LACS FROM UTI-MF. ON APPEA L BEFORE THE LD. CIT(A) THE ASSESSEE CONTENDED THAT THE INVESTMENTS WERE MADE T O MEET THE STATUTORY OBLIGATION WITHOUT ANY INTENTION TO EARN TAX-FREE INCOME; THER EFORE THE PROVISIONS OF SECTION 14A ARE NOT APPLICABLE. THE LD. CIT(A) ACCORDINGLY CONF IRMED THE DISALLOWANCE OF RS.1 67 400/- U/S 14A OF THE ACT IN PARAGRAPH 3 OF THE IMPUGNED ORDER WHICH READS AS UNDER:- 3. I HAVE CONSIDERED CAREFULLY SUBMISSIONS MADE B Y THE APPELLANT AND THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER. T HE CRUX OF THE ARGUMENT OF THE AUTHORIZED REPRESENTATIVE IS THAT THE INVEST MENTS ARE MADE TO MEET THE STATUTORY OBLIGATION AND THAT THE INVESTMENTS ARE M ADE WITH AN INTENTION TO DERIVE SOME OTHER BENEFIT AND NOT TO EARN TAX FREE INCOME THEREFORE THE PROVISIONS OF SECTION 14A ARE NOT APPLICABLE. HOWEV ER THERE IS NO FORCE IN THE ARGUMENT OF THE AUTHORIZED REPRESENTATIVE AS THE P ROVISIONS OF SECTION 14A ARE APPLICABLE TO EVERY ASSESSEE. THEREFORE THERE IS NO INFIRMITY IN THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING INTEREST EX PENDITURE TO THE EXTENT OF 2 127-RJT-2014 - VIJAY COMMERCIAL CO-OP. BANK LTD (SM C) RS.1 67 400 BEING 8.37% OF RS.20 00 000/- OF INVES TMENT IN UTI MUTUAL FUND. THE ADDITION MADE AT RS.1 67 400/- STANDS CONFIRMED . AGGRIEVED WITH THE ORDER OF LD. CIT(A) CONFIRMING THE DISALLOWANCE OF RS.1 67 400/- U/S 14A OF THE ACT THE ASSESSEE IS I N APPEAL BEFORE THIS TRIBUNAL. 3. AT THE TIME OF HEARING ON BEHALF OF THE ASSESSE E SHRI D.M. RINDANI CA APPEARED AND RELYING ON THE JUDGMENT OF HONBLE GUJ ARAT HIGH COURT IN THE CASE OF CIT V. GUJARAT STATE FERTILIZERS & CHEMICAL LTD. ( 2013) 217 TAXMAN 343 (GUJ.) CONTENDED THAT THE ASSESSEE HAD SUFFICIENT INTEREST FREE FUNDS AVAILABLE WITH IT WHICH WAS MORE THAN AMOUNT IT INVESTED FOR EARNING DIVIDE ND INCOME; NO DISALLOWANCE U/S 14A CAN BE MADE. 4. AS AGAINST THE AFORESAID SUBMISSION OF LD. AR OF THE ASSESSEE; LD. DEPARTMENTAL REPRESENTATIVE APPEARED FOR THE REVEN UE POINTED OUT THAT THIS DECISION PERTAINED TO THE ASSESSMENT YEAR 2004-05 W HEN RULE 8D WHICH WAS INSERTED BY THE IT (FIFTH AMDT.) RULES 2008 W.E.F . 24.03.2008 WAS NOT AVAILABLE; THEREFORE THE RATIO OF SAID DECISION IS NOT APPLICA BLE IN THE ASSESSMENT YEAR UNDER APPEAL. HE ACCORDINGLY SUGGESTED THAT THE MATTER B E REMANDED TO THE FILE OF THE ASSESSING OFFICER FOR WORKING OUT THE CORRECT DISAL LOWANCE U/S 14A OF THE ACT ON THE BASIS OF RULE 8D OF THE INCOME-TAX RULES 1962. 5. IN REJOINDER THE LD. COUNSEL OF THE ASSESSEE SU BMITTED THAT HE HAS NO OBJECTION IF THE MATTER IS REMANDED TO THE FILE OF THE ASSESSING OFFICER FOR WORKING OUT THE CORRECT DISALLOWANCE U/S 14A OF THE ACT KEEPING IN VIEW THE RATIO OF ALL THE AVAILABLE DECISIONS ON THIS ISSUE. 6. HAVING HEARD BOTH THE SIDES I HAVE CAREFULLY GO NE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. RULE 8D OF THE INCOME-TAX RULES 1962 WAS INSERTED BY THE IT (FIFTH AMDT.) RULES 2008 W.E.F. 24.03.2008. ACCOR DINGLY DISALLOWANCE U/S 14A FOR THE ASSESSMENT YEAR UNDER APPEAL WAS REQUIRED TO BE WORKED OUT AS PRESCRIBED UNDER RULE 8D OF THE INCOME-TAX RULES. ADMITTEDLY THIS IS NOT APPLIED BY THE ASSESSING OFFICER. I THEREFORE IN THE INTEREST OF JUSTICE SET ASIDE THE ORDER OF LD. 3 127-RJT-2014 - VIJAY COMMERCIAL CO-OP. BANK LTD (SM C) CIT(A) AND DIRECT THE ASSESSING OFFICER TO RE-WORK OUT THE DISALLOWANCE ON THE BASIS OF WORKING PRESCRIBED UNDER RULE 8D OF THE INCOME-T AX RULES 1962. THE ASSESSING OFFICER IS AT LIBERTY TO CONSIDER ALL THE DECISIONS ON THIS ISSUE WHICH THE ASSESSEE MAY RELY AND THEREAFTER RE-WORK OUT THE DISALLOWANCE AF RESH IN ACCORDANCE WITH LAW. 7. IN THE RESULT FOR STATISTICAL PURPOSES THE APP EAL OF THE ASSESSEE IS TREATED AS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MEN TIONED HEREINABOVE. SD/- ( $.. &' / T. K. SHARMA) ( ) /JUDICIAL MEMBER *)& +) / ORDER DATE: 11.04.2014 !$ /RAJKOT *BT / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT- VIJAY COMMERCIAL CO. OP. BANK LTD. K ANAK ROAD RAJKOT 2. / RESPONDENT- THE INCOME TAX OFFICER WARD-2(2) R AJKOT 3. 0 1 * * 2 / CONCERNED CIT-II RAJKOT 4. * * 2- / CIT (A)-III RAJKOT 5 . 567 1 * 1# !$ / DR ITAT RAJKOT 6 . 79 :; / GUARD FILE *)& / BY ORDER TRUE COPY PRIVATE SECRETARY ITAT RAJKOT