IN THE INCOME TAX APPELLATE TRIBUNAL “J” BENCH, MUMBAI
BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND
SHRI B.R. BASKARAN, ACCOUNTANT MEMBER

I .T.A. No. 3005/1981/Mum/2013
Assessment Year : 2008-2009

Jyoti Ceramic Industries Pvt. Ltd (Appellant/Respondent) vs Addl. Commissioner of Income Tax (Respondent/Appellant)
Date of Order: 15-06-2015

ORDER

PER B.R. BASKARAN, A.M.
These cross appeals are directed against the order dated 06-12-2012 passed by the ld. CIT(A) – 9, Mumbai and they relate to the A.Y. 2008-09.

2. The common issue contested by both the parties relates to the disallowance made u/s 14A of the Income Tax Act, 1961.

3. The ld. Counsel appearing on behalf of the assessee submitted that the assessee is having sufficient own funds and the investments have been made out of own funds only. Hence, there was no requirement of making any disallowance u/s 14A of the Act out of interest expenditure. Though these factual aspects presented before the ld. CIT(A), yet the first appellate authority granted only partial relief. Against this decision of ld. CIT(A), both the parties have filed these appeals before the Tribunal.

4. The ld. Counsel for the assessee further submitted that the contention of the assessee is duly supported by the decision of Hon’ble jurisdictional High Court in the case of HDFC Ltd. reported in 366 ITR 505.

5. On the contrary, the ld. D.R. submitted that the submissions of the assessee require verification.

6. Having heard the rival submissions, we are of the view that the disallowance made u/s 14A of the Act by the A.O. requires fresh examination by duly considering the submissions of the assessee in the light of decision of Hon’ble jurisdictional High Court rendered in the case of HDFC Ltd. (supra). Accordingly, we set aside the order of ld. CIT(A) on this issue and restore the same to the file of the A.O. with a direction for fresh examination in the light of the aforesaid discussion.

7. The next issue contested by the assessee relates to the disallowance of bonus expenditure made u/s 43B of the Act.

8. The ld. Counsel appearing on behalf of the assessee submitted that the A.O. disallowed a sum of Rs. 4,67,661/- u/s 43B of the Act being the bonus not paid by the assessee before the date of completion of the tax audit. The ld. Counsel submitted that the tax auditor had committed an error with regard to the disallowance to be made u/s 43B of the Act. However, the tax auditor has rectified the error by issuing a clarification. Further the books of accounts of the assessee also support the clarification issued by the tax auditor. The Ld A.R further submitted that the ld. CIT(A), however, refused to consider the clarification issued by the tax auditor and accordingly confirmed the addition. Accordingly, the ld. Counsel submitted that the assessee should be given an opportunity to substantiate the claim with the books of account.

9. We have heard the ld. D.R. and examined this issue. We notice that the tax authorities have taken a decision against the assessee by considering the tax audit report. However, according to the assessee, the tax auditor has issued a clarification letter and further it is submitted that the claim of the assessee is supported by books of account. Under these set of facts, we are of the view that the tax authorities are not justified in ignoring the books of account as well as the clarification issued by the tax auditor. Accordingly, we are of the view that this issue requires fresh examination and we set aside the order of ld. CIT(A) on this issue and restore the same to the file of the A.O. with a direction to examine this issue afresh by duly considering the books of account and the clarification letter issued by the tax auditor.

4. In the result, appeal of the assessee as well as appeal of the Revenue is treated as allowed for statistical purpose.

Order pronounced in the open court on 15th June, 2015.

15th June, 2015

Sd/-                                                     Sd/-
(I.P. BANSAL)                        (B.R. BASKARAN)
JUDICIAL MEMBER             ACCOUNTANT MEMBER
Dated 15-06-2015