Amin Equipments Pvt. Ltd. v. The DCIT, Circle-1, Ahmedabad
[Citation -2016-LL-0929-30]

Citation 2016-LL-0929-30
Appellant Name Amin Equipments Pvt. Ltd.
Respondent Name The DCIT, Circle-1, Ahmedabad
Court ITAT-Ahmedabad
Relevant Act Income-tax
Date of Order 29/09/2016
Assessment Year 2009-10
Judgment View Judgment
Keyword Tags share capital • mutual fund
Bot Summary: The assessee is aggrieved by the disallowance made u/s. During the course of the scrutiny assessment proceedings, the A.O. noticed that the assessee has earned dividend income of Rs. 13,09,529/- which it claimed to be exempt from tax. The assessee strongly objected to this proposition of the A.O. stating that it has not made any investment from borrowed funds. The claim of the assessee did not find any favour with the A.O. who proceeded by computing the disallowance as per the formula given in Rule 8D and computed the disallowance at Rs. 1,43,724/-. Counsel for the assessee reiterated what has been stated before the lower authorities. Since, the interest free funds are in excess of the investment; the presumption is that the investment is made out of interest free funds. In the result, the appeal filed by the Assessee is partly allowed.


IN INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. No: 620/AHD/2014 (Assessment Year: 2009-10) Amin Equipments Pvt. V/S DCIT, Circle-1, Ltd. Plot No. 222, Ahmedabad Makarba Nr. Sarkhej Sanand Cross Road, Ahmedabad-382210 (Appellant) (Respondent) PAN: AABCA5995J Appellant by : Shri S.N. Divetia, AR Respondent by : Shri Prasoon Kabra, Sr. D.R. ORDER Date of hearing : 27 -09-2016 Date of Pronouncement : 29 -09-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. This appeal by Assessee is preferred against order of Ld. CIT(A)-6, Ahmedabad dated 13.12.2013 pertaining to A.Y. 2009-10. 2 ITA No. 620/Ahd/2014 . A.Y. 2009-10 2. assessee is aggrieved by disallowance made u/s. 14A of Act at Rs. 1,43,724/- confirmed by ld. CIT(A). 3. During course of scrutiny assessment proceedings, A.O. noticed that assessee has earned dividend income of Rs. 13,09,529/- which it claimed to be exempt from tax. A.O. was of firm belief that provisions of Section 14A read with Rule 8D are attracted on facts of case and accordingly proposed to make disallowance u/s. 14A read with Rule 8D of Act. 4. assessee strongly objected to this proposition of A.O. stating that it has not made any investment from borrowed funds. It was further explained that interest free funds with assessee are far more in excess of investment; therefore, no disallowance should be made. claim of assessee did not find any favour with A.O. who proceeded by computing disallowance as per formula given in Rule 8D and computed disallowance at Rs. 1,43,724/-. 5. Assessee carried matter before ld. CIT(A) but without any success. 6. Before us, ld. counsel for assessee reiterated what has been stated before lower authorities. Per contra, ld. D.R. strongly supported findings of revenue authorities. 7. We have carefully considered orders and rival contentions. We find that share capital and free reserves of assessee is at Rs. 8.99 crores whereas investment made in mutual fund is 59.03 lacs. This clearly shows that assessee was having sufficient own funds for 3 ITA No. 620/Ahd/2014 . A.Y. 2009-10 making investment. Since, interest free funds are in excess of investment; presumption is that investment is made out of interest free funds. For this proposition, we draw support from decision of Hon ble Bombay High Court in case of Reliance Utilities and Power 313 ITR 340 followed in case of HDFC Ltd. 366 ITR 505. 8. Respectfully following ratio laid down by Hon ble High Court, we do not find any reason for making disallowance of Rs. 95,480/- on account of interest under Rule 8D(2)(ii). Insofar as disallowance of administrative expense of Rs. 48,244/- under Rule 8D(2)(iii) is concerned, we decline to interfere. A.O. is directed to delete addition of Rs. 95,480/-. Addition of Rs. 48,244/- is sustained. 9. In result, appeal filed by Assessee is partly allowed. Order pronounced in Open Court on 29 - 09- 2016. Sd/- Sd/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad: True Copy Rajesh Copy of Order forwarded to:- 1. Appellant. 2. Respondent. 3. CIT (Appeals) 4. CIT concerned. 5. DR., ITAT, Ahmedabad. 6. Guard File. By ORDER Deputy/Asstt.Registrar ITAT,Ahmedabad Amin Equipments Pvt. Ltd. v. DCIT, Circle-1, Ahmedabad
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