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05-09-2019, Lakshmi Energy & Foods, Section 14A, 10(34), Tribunal Chandigarh

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4 months 1 week ago #10722 by amit
Section - 14A, 10(34)
Order Date - 05-09-2019
Favouring - Assessee Partly
Court - Tribunal Chandigarh
Appellant - Lakshmi Energy & Foods Ltd.
Respondent - DCIT
Citation - 919Taxpundit51
Appeal No. - ITA Nos. 133&134/CHD/2019
Asstt. Year - 2013-14 & 2014-15



Both these appeals have been filed by the assessee wherein the correctness of the separate orders dated 24.12.2018 of CIT(A)-5 Ludhiana pertaining to 2013-14 and 2014-15 assessment years is assailed.

2. It was common stand of the parties before the Bench that the facts, circumstances in both the appeals are identical.

3. The ld. AR in the context of the above facts invited attention to the grounds raised by the assessee and submitted that the effective grounds RAISED ARE GROUNDNos. 1 to 4. These are reproduced hereunder for ready reference :

1. That the Ld. CIT(A)-5, Ludhiana has erred in confirming the disallowance of Rs.87,63,341/- u/s 14A as made by the Assessing Officer, following the rule 8- D and, which is against the facts and circumstances of the case.

2. Notwithstanding the above said ground of appeal, the Ld. CIT (A) failed to appreciate that if at all, any addition u/s 14A was to be sustained, that would ave been upto the exempt income of Rs. 22,720/-, which was earned as dividend income and claimed as exempt u/s 10(34).

3. That the ld. CIT(A)-5 Ludhiana has failed to follow the judgment of jurisdictional Bench of the ITAT Chandigarh Bench Chandigarh and Hon'ble Punjab & Haryana High Court.

4. That the Ld. CIT(A) has erred in restricting the disallowance of expenditure under the head Office expenses to the tune extent of 1/10th of total expenditure against the disallowance of 1/6th as made by the Assessing Officer.

4. Inviting attention to the assessment order it was his submission that in the year under consideration the assessee had received dividend of Rs. 22,720/- which was claimed as exempt u/s 10(34) of the Income Tax Act as evident from para 3 of the assessment order itself. The disallowance made by the AO applying Rule 8D u/s 14A of the Act it was submitted, was challenged in appeal before the CIT(A). Inviting attention to the written submissions extracted in the order which have been reproduced at pages 3 to 9 it was his submission that though the CIT(A) has extracted the submission, however, without addressing these arguments on facts and law he has sustained the addition made by way of a disallowance at page 18. Referring to the submissions advanced, it was submitted, that the assessee had submitted that interest free funds were utilized by the assessee as the investment was made in the earlier year. These facts have not been assailed by the CIT(A). Accordingly, it was his prayer that considering the facts, entire addition be deleted. It was also his submission that infact agreeing with the settled legal position as addressed by the jurisdictional High Court in the case of CIT Vs Lakhani Marketing, he is under instruction to press for the alternate prayer that the addition be restricted to the exempt income received.

5. The ld. Sr.DR considering the facts nd the position of law relied upon the orders. No contrary argument opposing the alternate prayer of the assessee was made.

6. We have heard the rival submissions and perused the material available on record. On a consideration of the facts, circumstances and position of law as canvassed which has not been disputed by the ld. Sr.DR accepting the alternate argument of the ld. AR we restrict disallowance to the receipt of dividend income received by the assessee in the year under consideration which is Rs. 22,000/- evident from para 3 of the assessment order. Accordingly, ground No. 1, 2 and 3 of the assessee stands partly allowed.

7. Addressing the sole remaining issue raised by the assessee in the present appeal vide ground No. 4, attention was invited to page 6 para 7 of the assessment order. Reading therefrom, it was his submission that the addition has been proposed on whims and fancies ignoring the facts. Inviting attention to the impugned order it was submitted that the assessee has given a justification for increase in expenditure. It was his submission that the assessee has placed full facts before the AO and even before the CIT(A) explaining that expenditure was on account of meeting expenses in the nature of capital EGM expenditure, miscellaneous Office Expenditure and all these are fully vouched. The adhoc disallowance arbitrarily holding thatsome expenditure appeared to be not relatable to the business of the assessee, it was agitated, is contrary to facts as all expenses were vouched and have been made available as would be evident from para 1 of the assessment order. Without pointing out any specific expenditure, the action was contrary to aw and facts. Accordingly, it was his submission that in the circumstances, the part relief granted by the CIT(A) does not meet the ends of justice.

8. The ld. Sr.DR relies upon the impugned order.

9. We have heard the rival submissions and perused the material available on record. The relevant finding of the AO under challenge is reproduced hereunder for the sake of completeness :

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