Sunrise Fincap Ltd.,, Ahmedabad v. The Income tax Officer, Ward-4(1)(2),, Ahmedabad

ITA 1449/AHD/2016 | 2012-2013
Pronouncement Date: 30-11-2017 | Result: Allowed

Appeal Details

RSA Number 144920514 RSA 2016
Assessee PAN AACCS7346E
Bench Ahmedabad
Appeal Number ITA 1449/AHD/2016
Duration Of Justice 1 year(s) 5 month(s) 28 day(s)
Appellant Sunrise Fincap Ltd.,, Ahmedabad
Respondent The Income tax Officer, Ward-4(1)(2),, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2017
Appeal Filed By Assessee
Tags 1449-ahd-2016
Order Result Allowed
Bench Allotted SMC
Tribunal Order Date 30-11-2017
Assessment Year 2012-2013
Appeal Filed On 01-06-2016
Judgment Text
.. IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH AHMEDABAD .. BEFORE SHRI S.S. GODARA JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA ACCOUNTANT MEMBER ./ I.T.A. NO.1449/AHD/2016 ( / ASSESSMENT YEAR : 2012-13) SUNRISE FINCAP LTD. B-802 PREMIUM HOUSE OPP. GANDHIGRAM RAILWAY STATION ASHRAM ROAD AHMEDABAD 380 009 / VS. THE INCOME TAX OFFICER WARD-4(1)(2) AHMEDABAD-380 015 $ ./ ./ PAN/GIR NO. : AACCS 7346 E ( $' / APPELLANT ) .. ( ($' / RESPONDENT ) $') / APPELLANT BY : SHRI A.C. SHAH AR ($'*) / RESPONDENT BY : MS. RICHA RASTOGI DR + *- / DATE OF HEARING 09/11/2017 ./0*- / DATE OF PRONOUNCEMENT 30 / 11 /2017 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL FILED AT THE INSTANCE OF THE ASSESSEE IS AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS )-7 AHMEDABAD [CIT(A) IN SHORT] DATED 16/04/2016 IN THE MATTER OF ASSESSMENT ORDER UNDER S.143(3) OF THE INCOME TAX ACT 1961 (HEREINA FTER REFERRED TO AS 'THE ACT') DATED 13/03/2015 RELEVANT TO ASSESSMENT YEAR (AY) 2012-13. ITA NO.1449/AHD /2016 SUNRISE FINCAP LTD. VS. ITO ASST.YEAR 2012-13 - 2 - 2. THE GROUND OF APPEAL RAISED BY THE ASSESSEE RE AD AS UNDER:- THE LEARNED CIT(A) HAS ERRED IN CONFIRMING DISALLOW ANCE OF RS.26 34 619/- UNDER SECTION 14A IN AS MUCH AS THE PROVISIONS OF SECTION 14A ARE NOT APPLICABLE ON THE FACTS OF THE CASE AND THAT THE INVESTMENT IS OUT OF THE INTEREST FREE FUNDS AND TH AT THE ASSESSEE HAS NOT INCURRED ANY EXPENDITURE IN EARNING THE INC OME FROM LLP. 3. THE SOLITARY GRIEVANCE OF THE ASSESSEE IN THE CA PTIONED APPEAL IS TOWARDS DISALLOWANCE OF RS.26 34 619/- BY INVOKING SECTION 14A OF THE ACT. IT IS THE CASE OF THE ASSESSEE THAT IT IS INTER ALIA A DEALER IN SHARES AND SECURITIES AND THEREFORE SECTION 14A R.W.RULE 8 D OF THE INCOME TAX RULES 1962 IS NOT APPLICABLE TO IT. FOR THIS PROP OSITION THE LD.AR FOR THE ASSESSEE RELIED UPON FOLLOWING JUDICIAL PRECEDE NTS:- (I) PR.CIT VS. STATE BANK OF PATIALA (2017) 391 ITR 218 (P&H) (II) CIT VS. G.K.K CAPITAL MARKETS (P)LTD. (2017) 392 ITR 196 (CAL.) (III) CCI LTD. VS. JCIT (2012) 206 TAXMAN 563 ( KARN.). 4. IDENTICAL ISSUE AROSE BEFORE THE COORDINATE BENC H OF TRIBUNAL IN THE CASE OF ETHIO PLASTICS PVT.LTD. IN ITA NO.2699/ AHD/2014 ORDER DATED 29/11/2017 WHEREIN THE ISSUE HAS BEEN DEALT AS UNDE R:- ITA NO.1449/AHD /2016 SUNRISE FINCAP LTD. VS. ITO ASST.YEAR 2012-13 - 3 - 5. WE HAVE PERUSED THE CASE RECORDS AND CONSIDERE D THE RIVAL SUBMISSIONS. THE SOLITARY ISSUE IN CONTROVERSY IS TOWARDS MAINTA INABILITY OF DISALLOWANCE OF SECTION 14A WHERE THE ASSESSEE HAS EARNED TAX-FREE DIVIDEND INCOME IN THE COURSE OF CARRYING ON BUSINESS OF PURCHASE AND SALE OF SHARES AND SECURITIES AND WHERE SHARES AND SECURITIES IN QUESTION CONSTIT UTED ASSESSEES STOCK IN TRADE. IT IS THE CASE OF THE ASSESSEE THAT IT DID NOT HOLD SHARES AND SECURITIES WITH A VIEW TO EARN TAX-FREE DIVIDEND INCOME BUT T RADED IN SUCH SHARES. THE DIVIDEND INCOME AROSE TO THE ASSESSEE ON INVENTORIE S HELD FROM TIME TO TIME MERELY AS AN INCIDENCE OF SUCH HOLDING AND THUS IN THE NATURE OF PASSIVE BENEFIT. IT IS THE CASE OF THE ASSESSEE THAT EXPEN DITURE INCURRED IN RELATION TO INCOME (DIVIDEND) NOT INCLUDIBLE IN TOTAL INCOME CA N BE DISALLOWED ONLY IF IT IS INCURRED BY THE ASSESSEE IN RELATION TO INCOME EXEM PT FROM TAX. IT IS THE CASE OF THE ASSESSEE THAT EXPENDITURE HAVE BEEN INCURRED ON TRADING ACTIVITIES IN SHARES AND SECURITIES PER SE THE INCOME FROM WHICH IS CHARGEABLE TO TAX. THE DIVIDEND INCOME INCIDENTALLY ALSO ARISING IS ONLY A BY-PRODUCT AND EXPENDITURE INCURRED TOWARDS TRADING CANNOT BE SAID TO BE ATTRI BUTABLE TO SUCH TAX-FREE INCOME OF INCIDENTAL NATURE. 6. WE FIND THAT THE ISSUE IS NO LONGER RES INTEGRA . THE COORDINATE BENCH HAS EXAMINED THE ISSUE IN ASSESSEES OWN CASE IN AY 200 6-07 & 2008-09 AND ADJUDICATED IN FAVOUR OF ASSESSEE. WE ALSO TAKE NO TE OF THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF STATE BANK OF PATIALA (SUPRA) APPROVING THE VIEW OF THE TRIBUNAL. THEREF ORE WITHOUT ELABORATING FURTHER WE RESPECTFULLY FOLLOW THE JUDICIAL PRECED ENTS AVAILABLE ON THIS SCORE AND DIRECT THE AO TO DELETE THE DISALLOWANCE MADE UNDER S.14A OF THE ACT WITH RESPECT TO SHARES AND SECURITIES HELD AS BUSIN ESS ASSETS. 7. IN PARITY THE DISALLOWANCE MADE BY THE AO UNDER S.14A R.W.RULE 8D OF THE I.T.RULES AS ATTRIBUTABLE TO TAX-FREE INC OME ARISING FROM INVENTORIES HELD AS BUSINESS ASSET IS DELETED. ITA NO.1449/AHD /2016 SUNRISE FINCAP LTD. VS. ITO ASST.YEAR 2012-13 - 4 - 8. IN THE RESULT ASSESSEES APPEAL IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 30 / 11 /2017 SD/- SD/- (..) ( ) ( S.S. GODARA ) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 30/ 11 /2017 4..+ .+../ T.C. NAIR SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. $' / THE APPELLANT 2. ($' / THE RESPONDENT. 3. 567- 8- / CONCERNED CIT 4. 8- ( ) / THE CIT(A)-7 AHMEDABAD 5. 9:-+67 670 5 / DR ITAT AHMEDABAD 6. < / GUARD FILE. / BY ORDER (9-- //TRUE COPY// / ( DY./ASSTT.REGISTRAR) / ITAT AHMEDABAD 1. DATE OF DICTATION .. 29.11.17 (DICTATION-PAD 4-P AGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 29.11.17 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.30.11.17 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30.11.17 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER