The Gujarat State Financial Services Ltd., Ahmedabad v. The ACIT-Circle-4, Ahmedabad

MA 329/AHD/2009 | misc
Pronouncement Date: 22-01-2010 | Result: Partly Allowed

Appeal Details

RSA Number 32920524 RSA 2009
Bench Ahmedabad
Appeal Number MA 329/AHD/2009
Duration Of Justice 3 month(s) 23 day(s)
Appellant The Gujarat State Financial Services Ltd., Ahmedabad
Respondent The ACIT-Circle-4, Ahmedabad
Appeal Type Miscellaneous Application
Pronouncement Date 22-01-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted Not Allotted
Tribunal Order Date 22-01-2010
Assessment Year misc
Appeal Filed On 29-09-2009
Judgment Text
- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE S/SHRI MAHAVIR SINGH JM AND D.C.AGRAWAL AM GUJARAT STATE FINANCIAL SERVICES LTD. WING B KHANIJ BHAVAN 132 FT. RING ROAD NEAR UNIVERSITY GROUND VASTRAPUR AHMEDABAD. V/S . ASSTT. CIT CIR.4 AHMEDABAD. PAN NO.AACG 5581 B (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI J. P. SHAH AR RESPONDENT BY:- SHRI C.K. MISHRA SR.DR O R D E R PER D.C.AGRAWAL ACCOUNTANT MEMBER . THIS MISCELLANEOUS APPLICATION IS ARISING OUT OF C OMMON ORDER IN ITA NO.229/AHD/2005 FOR ASST. YEAR 2001-02 (APPEAL OF ASSESSEE) AND IN ITA NO.403/AHD/2005 FOR ASST. YEAR 2001-02 (CROSS A PPEAL OF REVENUE) WHICH WERE DISPOSED OF BY THE TRIBUNAL VIDE ITS ORD ER DATED 10.7.2009. 2. THE ASSESSEE HAS NOW FILED MISC. APPLICATION POI NTING OUT THAT A MISTAKE HAS CREPT IN THE ORDER OF THE TRIBUNAL INAS MUCH AS IN GROUND NO.1 THE FIGURE MENTIONED IN RESPECT OF ADMINISTRA TIVE EXPENSES IS RS.99 11 062/- AND NOT RS.9 91 10 622/- AS TAKEN BY THE TRIBUNAL. M.A.NO.329/AHD/2009 ARISING OUT OF ITA NO.229/AHD/2005 ASST. YEAR :2001-02 2 THEREFORE CORRECT FIGURE OF ADMINISTRATIVE EXPENSE S SHOULD BE ADOPTED. FURTHER THE CIT(A) RESTRICTED THE DISALLOWANCE TO 10% OF RS.99 11 062 AT RS.9 91 106 WHEREAS TRIBUNAL WANTED TO RESTRICT THE DISALLOWANCE AT 1% WHICH COMES TO RS.99 110 ONLY. THE MISC. APPLICATIO N AND ALSO THE CIT(A) HAD VERIFIED THE FIGURE WHEN AT PAGE 2 PARA 3 OF HIS ORDER IT IS MENTIONED AS UNDER :- 3. THIS RELATES TO ADDITION OF RS.6 98 72 062/- U/ S 14A OF THE ACT. THIS HAS BEEN DISCUSSED BY THE AO IN PARA 4 PAGE 2 & 3 OF THE ASSESSMENT ORDER. IT WAS NOTED BY THE AO THAT THE ASSESSEE COM PANY HAS SHOWN EXEMPT INCOME OF RS.57 68 972/- U/S 10(23G) AND RS. 48 14 45 543/- RELATED TO DIVIDEND INCOME CLAIMED EXEMPT U/S 10(33 ). THE AO HAS THEREFORE GIVEN A FINDING THAT U/S 14A PROPORTIONAT E EXPENSES INCURRED FOR EARNING THE SAME ARE NOT DEDUCTIBLE AND ACCORDI NGLY MADE A DISALLOWANCE OF RS.6 98 72 062/- AS PER THE WORKING GIVEN AT PAGE 3 OF THE ASSESSMENT ORDER. IT WAS HELD BY HIM THAT OUT O F THE TOTAL FUNDS AVAILABLE WITH THE ASSESSEE COMPANY OF RS.42 19 94 346/- FUNDS DEPLOYED IN FIXED DEPOSITS ARE RS.55 04 29 557/- AND CURRENT LOANS AND ADVANCES ARE RS.4 43 84 98 981/-. THEREAFTER HE HAS MADE TH E DISALLOWANCE AS PER THE FOLLOWING WORKING:- (A) DISALLOWANCE OF INTEREST ON FUNDS INVESTED IN E XEMPTED ASSETS: (I) TOTAL INTEREST PAYMENT 286584922 (II) TOTAL FUNDS AVAILABLE 3220431041 (III) COST OF FUND (TAKING BOTH BORROWED FUND AND OWN FUND TOGETHER) (I) / (II) 0.088989 (IV) INVESTMENTS IN TAX FREE SECURITIES 680700000 (V) COST OF FUND IN MAKING THE INVESTMENT (IV) (II) X (IV) 00574812 (B) DISALLOWANCE OF ADMINISTRATIVE & OTHER EXPENSES (I) TOTAL INCOME 574739945 (II) EXEMPTED INCOME I.E. INTEREST/DIVIDEND (5768972 + 48145543) 53914515 (III) ADMINISTRATIVE AND OTHER EXPENSES 99110622 (IV) AMOUNT OF DISALLOWANCE OUT OF ABOVE (III) X (II)(I) 99297250 TOTAL DISALLOWANCE U/S 14A (A)(IV) + (B)(IV) 69872062 3 BEFORE ME ASSESSEES REPRESENTATIVE SHRI YOGESH SH AH C.A. IN THE FIRST PLACE HAS SUBMITTED THAT THE FIGURE OF RS.9 91 10 6 62/- IN RESPECT OF ADMINISTRATIVE EXPENSES IS NOT CORRECT AND THE CORR ECT FIGURE IS RS.99 10 000/-. AFTER VERIFYING THE SAME AT PAGE 16 OF THE BALANCE SHEET FOR THE PERIOD ENDING 31.03.2001 THIS CONTENTION O F THE ASSESSEES REPRESENTATIVE IS FOUND TO BE CORRECT. THE LD. AR REFERRING TO PARA 10 OF THE TRIBUNAL SUB MITTED THAT DISALLOWANCE OF RS.99 110/- ONLY IS CALLED FOR. 3. LD. DR ON THE OTHER HAND SUPPORTED THE ORDER OF THE TRIBUNAL. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. PARA 10 OF THE TRIBUNALS ORDER READS AS UNDER :- 10. WE HAVE HEARD LED. DR AND LD. AR. THIS IS UNDI SPUTED FACT THAT THE ADMINISTRATIVE EXPENSES HAVE BEEN INCURRED ON TAX F REE SECURITIES. THE AO DISALLOWED PRORATE EXPENSES AT RS.92.97 LAKHS AS PER THE WORKING GIVEN BY HIM AND REFERRED ABOVE. THE CLAIM OF ADMIN ISTRATIVE EXPENSES AND OTHER EXPENSES AMOUNTING TO RS.9 91 10 622/- AN D NOT RS.92 97 250. IF IT IS CONSIDERED THAT 10% DISALLOWANCE IS TO BE MADE OUT OF ADMINISTRATIVE AND OTHER EXPENSES THEN TOTAL DISAL LOWANCE WOULD AMOUNT TO RS.99 11 062. SINCE LD. CIT(A) HAS RESTRICTED TH E DISALLOWANCE TO RS.9.91 LAKHS WHICH IS ONLY ABOUT 1% OF THE TOTAL CLAIM AND NOT 10% AND REVENUE HAS NOT FILED ANY APPEAL AGAINST THIS WORKI NG THE DISALLOWANCE IS TO BE TREATED AS MOST REASONABLE AND NO INTERFEREN CE IS CALLED FOR IN THE IMPUGNED ORDER ON THIS ISSUE. THIS GROUND OF THE AS SESSEE IS REJECTED. THE TRIBUNAL CONSIDERED DISALLOWANCE OF RS.9.91 LAK HS AS MOST REASONABLE BUT THOUGHT IT TO BE 1% ON THE PRESUMPTI ON THAT TOTAL ADMINISTRATIVE EXPENSES ARE RS.9 91 10 622/- AS MEN TIONED BY THE AO THOUGH ERRONEOUSLY. IT IS CLEARLY THE INTENTION OF THE TRIBUNAL TO CONFIRM THE DISALLOWANCE TO RS.9.91 LACS OUT OF THE TOTAL A DMINISTRATIVE EXPENSES OF RS.9.91 CRORES AS RESTRICTED BY LD. CIT(A) WHICH WAS CONSIDERED BY THE TRIBUNAL TO BE 1% OF RS.9.91 CRORES. THAT DID NOT M EAN THAT IT INTENDED TO 4 RESTRICT IT TO 1% OF RS.99.10 LACS. THIS INTERPRETA TION OF LD. AR IS NOT CORRECT AND THEREFORE IS NOT ACCEPTABLE. THE TRIB UNAL HAS GIVEN FINDING THAT DISALLOWANCE AT RS.9.91 LACS IS TREATED AS MOS T REASONABLE AND THEREFORE CHANGING THIS FIGURE TO RS.99 100/- WOUL D BE A REVIEW OF THE ORDER OF THE TRIBUNAL. HOWEVER WE MODIFY PARA 10 O F THE ORDER OF THE TRIBUNAL TO THE EXTENT THAT CLAIM OF ADMINISTRATIVE EXPENSES AND OTHER EXPENSES ARE TAKEN AT RS.99 11 062/- AS VERIFIED AN D FOUND BY LD. CIT(A). ACCORDINGLY PARA 10 OF THE TRIBUNALS ORDER SHOULD BE READ AS UNDER :- 10. WE HAVE HEARD LED. DR AND LD. AR. THIS IS UNDI SPUTED FACT THAT THE ADMINISTRATIVE EXPENSES HAVE BEEN INCURRED ON TAX F REE SECURITIES. THE AO DISALLOWED PRORATE EXPENSES AT RS.92.97 LAKHS AS PER THE WORKING GIVEN BY HIM AND REFERRED ABOVE. THE CLAIM OF ADMIN ISTRATIVE EXPENSES AND OTHER EXPENSES AMOUNTED TO RS.99 11 062/-. SINC E LD. CIT(A) HAS RESTRICTED THE DISALLOWANCE TO RS.9.91 LAKHS WHICH IS ONLY ABOUT 10% AND REVENUE HAS NOT FILED ANY APPEAL AGAINST THIS WORKI NG THE DISALLOWANCE IS TO BE TREATED AS MOST REASONABLE AND NO INTERFEREN CE IS CALLED FOR IN THE IMPUGNED ORDER ON THIS ISSUE. THIS GROUND OF THE AS SESSEE IS REJECTED. WITH THE ABOVE MODIFICATION THE MISCELLANEOUS APPL ICATION OF THE ASSESSEE IS PARTLY ALLOWED. SD/- SD/- (MAHAVIR SINGH) (D.C.AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD DATED : 22/1/2010 MAHATA/- ORDER PRONOUNCED IN OPEN COURT ON 22/1/2010 5 COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD