Granting Credit for TDS under the Income Tax Act

This Income Tax Appellate Tribunal ruling concerns appeals by both the revenue and the assessee, Arvind Products Ltd. (now merged with Arvind Ltd.), for assessment years 2009-10 to 2011-12. The core issue revolves around the disallowance of expenses related to dividend income under Section 14A of the Income Tax Act. The Assessing Officer made disallowances based on Rule 8D, which the assessee contested, arguing that investments were made from own funds and did not require day-to-day monitoring.

IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD “D” BENCH
(Conducted Through Virtual Court)
 Before: Shri Mahavir Prasad, Judicial Member
 And Shri Amarjit Singh, Accountant Member

ITA Nos. 2107, 2108 & 2816 /Ahd/2015
 Assessment Years 2009-10, 2010-11 & 2011-12

DCIT,
Circle-1(1)(1),
Ahmedabad
(Appellant)

Vs

M/s. Arvind Products Ltd.
(Now merged with Arvind
Ltd.), Arvind Mills
Premises, Naroda Road,
Ahmedabad-380025
PAN: AABCA2391L
(Respondent)

Cross Objection Nos. 159, 160 & 191/Ahd/2015
 (in ITA Nos. 2107, 2108 & 2816 /Ahd/2015)
 Assessment Years 2009-10, 2010-11 & 2011-12 

M/s. Arvind Products Ltd.
(Now merged with Arvind
Ltd.), Arvind Mills
Premises, Naroda Road,
Ahmedabad-380025
PAN: AABCA2391L
(Appellant)

Vs

DCIT,
Circle-1(1)(1),
Ahmedabad
(Respondent)

 Revenue by: Dr. Shyam Prasad, Sr. D.R.
 Assessee by: Shri Vartik Chokshi, A.R.

 Date of hearing : 27-04-2021
 Date of pronouncement : 30-06-2021 

ORDER

PER : AMARJIT SINGH, ACCOUNTANT MEMBER:-

These three appeals filed by revenue and three cross objections filed by assessee for A.Y. 2009-10 to 2011-12, arise from order of the CIT(A)-1, Ahmedabad dated 06-04-2015, in proceedings under section 143(3) of the Income Tax Act, 1961; in short “the Act”.

2. The brief fact of the case is that return of income declaring total loss of Rs. -13,59,35,856/- was filed on 24th Sep, 2009. The case was subject to scrutiny assessment and notice u/s. 143(2) of the Act was issued on 23rd August, 2010. Assessment u/s. 143(3) of the Act was finalized on 28th December, 2011 and total loss of the assessee was assessed at Rs. - 11,49,38,164/- after making various additions by the Assessing Officer. The assessee filed appeal before the ld. CIT(A) against the disallowance and additions made by the Assessing Officer. The ld. CIT(A) has partly allowed the appeal of the assessee. Further facts of the case are discussed while adjudicating the grounds of appeals filed by revenue as under.

ITA No. 2107/Ahd/2015 A.Y. 2009-10 filed by revenue & C.O.
159/Ahd/2015 filed A.Y. 2009-10 filed by assessee

Ground No. 1(Disallowance deleted by CIT(A) u/s. 14A of Rs. 20,381/- & Ground No. 1 of C.O. (Disallowance confirmed by CIT(A) u/s. 14A of Rs. 2,58,478/-))

3. During the course of assessment, the Assessing Officer noticed that assessee earned dividend income to the amount of Rs. 1,92,663/-. The Assessing Officer further noticed that assessee has earned dividend income  from the investment of Rs. 36,24,000/- made in the equity shares of M/s Atul Limited. On query, the assessee explained that it had not made any new investment in the years under consideration and investment was made from its own funds. It was also submitted that no administration expenditure should be disallowed since the assessee company has made long term investment in the group companies which did not require day to day monitoring of the investment. The Assessing Officer has not accepted the explanation of the assessee and computed the disallowance as per provisionof section 14A and Rule 8D of the I.T. Rule, 1962 to the amount of Rs. 2,78,859/-. 

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