Aquagel Chemicals (Bhavnagar) Pvt. Ltd. v. DCIT, Circle – 1, Bhavnagar
[Citation -2019-LL-1001-72]

Citation 2019-LL-1001-72
Appellant Name Aquagel Chemicals (Bhavnagar) Pvt. Ltd.
Respondent Name DCIT, Circle – 1, Bhavnagar
Court ITAT-Ahmedabad
Relevant Act Income-tax
Date of Order 01/10/2019
Assessment Year 2014-15
Judgment View Judgment
Keyword Tags principles of natural justice • scrutiny assessment • interest free fund • levying interest • disallowance of expenses • sufficiency of fund
Bot Summary: The learned CIT(A) has erred both in law and on the facts of the case in confirming the action of the AO of invoking the provisions of Rule 8D without recording any dissatisfaction to the claim of appellant. The learned CIT(A) has erred both in law and on the facts of the case in confirming disallowance made by the AO U/S.14A of the Act r.w.r. 8D of the Income-tax Rules, 1962 of Rs.11,08,135/-. The learned CIT(A) has erred both in law and on the facts of the case in not following the binding decisions of Hon'ble Gujarat High Court allowing credit of owned funds while computing the disallowance u/s 14A r w Rule 8D. 4. The learned CIT(A) has erred in law and on facts of the case in confirming action of the Ld. AO in levying interest u/s.234A/B/C of the Act. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal. The facts giving rise to the present appeal are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s 143(3) of the Act was framed vide order dated 11.11.2016. At the outset, the Learned Counsel for the assessee contended that so far disallowance qua interest is concerned authorities below are not justified in making the addition as the assessee has sufficient interest free fund of its own per contra the Learned DR opposed the submission.


IN INCOME TAX APPELLATE TRIBUNAL BENCH, AHMEDABAD BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA No. 424/Ahd/2018 (Assessment Year 2014-15) Aquagel Chemicals Vs. DCIT, (Bhavnagar) Pvt. Ltd., Circle 1, 251, Navagam, Kardej, Bhavnagar. Dist. Bhavnagar 364 060. [PAN No. AAKCA 9462 B] (Appellant) (Respondent) Appellant by Shri Parimal B. Parmar, A.R. Respondent by Shri Satish Solanki, Sr. D.R. Date of Hearing 30/09/2019 Date of P ronouncement 01/10/2019 ORDER PER SHRI KUL BHARAT, JUDICIAL MEMBER This appeal by Assessee pertaining to Assessment Year (A.Y.) 2014-15 is directed against order of Ld. Commissioner of Income Tax (Appeals) - 6, Ahmedabad ( CIT for short) dated 16.01.2018. assessee has raised following grounds of appeal- 1. learned CIT(A) has erred both in law and on facts of case in confirming action of AO of invoking provisions of Rule 8D without recording any dissatisfaction to claim of appellant. 2. learned CIT(A) has erred both in law and on facts of case in confirming disallowance made by AO U/S.14A of Act r.w.r. 8D of Income-tax Rules, 1962 of Rs.11,08,135/-. -2- ITA No.424/Ahd/2018 Aquagel Chemicals vs. DCIT Asst.Year 2014-15 3. learned CIT(A) has erred both in law and on facts of case in not following binding decisions of Hon'ble Gujarat High Court allowing credit of owned funds while computing disallowance u/s 14A r w Rule 8D. 4. Both lower authorities have passed orders without properly appreciating facts and they further erred in grossly ignoring various submissions, explanations and information submitted by appellant from time to time which ought to have been considered before passing impugned order. This action of lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 5. learned CIT(A) has erred in law and on facts of case in confirming action of Ld. AO in levying interest u/s.234A/B/C of Act. appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of grounds of appeal at time of or before hearing of appeal. 2. only effective ground of this appeal is against disallowance made u/s 14A r.w.r. 8D of Income Tax Act, 1961 (hereinafter referred as to Act ). 3. facts giving rise to present appeal are that case of assessee was picked up for scrutiny assessment and assessment u/s 143(3) of Act was framed vide order dated 11.11.2016. While framing assessment Assessing Officer made disallowance by invoking provision of section 14A and applying Rule 8D of Income Tax Rules, 1962 (hereinafter referred as to Rule ) amounting to Rs.11,08,135/- thus Assessing Officer assessed income at Rs.1,18,39,508/- against income declared at Rs.1,07,31,373/-. Aggrieved by this assessee preferred appeal before Learned CIT(A) who after contending submission sustained addition. Now assessee is in appeal before Tribunal. -3- ITA No.424/Ahd/2018 Aquagel Chemicals vs. DCIT Asst.Year 2014-15 4. At outset, Learned Counsel for assessee contended that so far disallowance qua interest is concerned authorities below are not justified in making addition as assessee has sufficient interest free fund of its own per contra Learned DR opposed submission. Learned Counsel placed reliance in following cases: CIT vs. Reliance Industries Ltd. - 410 ITR 466 (SC); CIT vs. Torrent Power Ltd. - 363 ITR 474 (Guj); CIT vs. Suzlon Energy Ltd. - 354 ITR 630 (Guj); CIT vs. Gujarat Power Corporation Ltd. - 352 ITR 583 (Guj); CIT vs. Hitachi Home & Life Solutions (I). Ltd. - (2014) 41 taxmann.com 540 (Guj); CIT vs. Reliance Utilities & Power Ltd. - 313 ITR 340 (Bom); Munjal Sales Corporation vs. CIT - 298 ITR 298 (SC); In rejoinder, Learned Counsel for assessee placed reliance working made in chart. assessee has stated in chart as under: Particulars Balance as at Balance as at 31.03.2014 (Rs.) 31.03.2013 (Rs.) (A) Interest free funds : Share capital 22,00,00,000 22,00,00,000 Research & Surplus 1,06,49,675 -53,090 23,06,49,675 21,99,46,910 (B) Investments 6,84,11,238 19,89,87,795 (C) Ratio of interest 3.37 times 1.11 times free funds & Investments (A/B * 100) 5. We have heard rival submissions, perused materials available on records and gone through orders of authorities below. fact that assessee has sufficient free funds is not rebutted by Revenue by placing any contrary material on record, therefore, we direct Assessing Officer to delete addition related to interest -4- ITA No.424/Ahd/2018 Aquagel Chemicals vs. DCIT Asst.Year 2014-15 component and rest of addition is sustained. Ground raised in this appeal is partly allowed. 6. In result, appeal of assessee in ITA No.424/Ahd/2018 for A.Y. 2014-15 is partly allowed. This Order pronounced in Open Court on 01/10/2019 Sd/- Sd/- ( WASEEM AHMED ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 01/10/2019 Priti Yadav, Sr.PS /Copy of Order forwarded to 1. Appellant 2. Respondent. 3. Concerned CIT 4. CIT(A)-6, Ahmedabad. 5. DR, ITAT, Ahmedabad 6. Guard file. BY ORDER, True Copy (Dy./Asstt. Registrar), ITAT, Ahmedabad 1. Date of dictation 30.09.2019 01.10.2019 (Covered case 3) 2. Date on which typed draft is placed before Dictating Member 01.10.2019 3. Other Member . 4. Date on which approved draft comes to Sr.P.S./P.S 01.10.2019 5. Date on which fair order is placed before Dictating Member for pronouncement 6. Date on which fair order comes back to Sr.P.S./P.S . 7. Date on which file goes to Bench Clerk 8. Date on which file goes to Head Clerk 9. date on which file goes to Assistant Registrar for signature on order .. 10. Date of Despatch of Order Aquagel Chemicals (Bhavnagar) Pvt. Ltd. v. DCIT, Circle 1, Bhavnagar
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