Case Number: ITA 885/DEL/2021
Appellant: DCIT, Circle-1, New Delhi
Respondent: Indian Farmers Fertiliser Cooperative Limited, New Delhi
Assessment Year: 2016-17
Result: Appeal Dismissed
Case Filed on: 2021-07-20
Order Type: Final Tribunal Order
Date of Order: 2023-02-10
Pronounced on: 2023-02-10
The case ITA No. 885/DEL/2021 involves an appeal filed by the Deputy Commissioner of Income Tax (DCIT), Circle-1, New Delhi, against Indian Farmers Fertiliser Cooperative Limited (IFFCO), New Delhi. The primary issue at hand was the disallowance of interest expenses under Rule 8D of the Income Tax Act for the assessment year 2016-17. The DCIT challenged the order of the Commissioner of Income Tax (Appeals) [CIT(A)], which granted partial relief to IFFCO. This appeal highlights the application of Rule 8D and the determination of allowable interest expenses.
IFFCO, a multi-state cooperative society engaged in the manufacturing and trading of chemical fertilizers, filed its return of income for the assessment year 2016-17, declaring an income of Rs.8,68,94,12,520/-. The case was selected for scrutiny, and the assessment was framed under Section 143(3) of the Income Tax Act, determining the total income at Rs.962,72,12,520/-. Aggrieved by the assessment order, IFFCO appealed to the CIT(A), which provided partial relief by reducing the disallowance made by the Assessing Officer (AO).
The Tribunal, comprising Accountant Member Anil Chaturvedi and Judicial Member Anubhav Sharma, reviewed the submissions and facts presented by both parties. The key findings are as follows:
In conclusion, the Tribunal dismissed the Revenue’s appeal, affirming that interest-bearing funds were not used for exempt income investments. The Tribunal allowed IFFCO’s appeal for statistical purposes, directing the AO to reassess the disallowance under Rule 8D(2)(iii) based on investments yielding exempt income. This case underscores the importance of proper application of Rule 8D and careful consideration of the actual use of borrowed funds for investments.
Order pronounced in the open court on 10th February, 2023.
Sd/- (Anubhav Sharma)
JUDICIAL MEMBER
Sd/- (Anil Chaturvedi)
ACCOUNTANT MEMBER
Date: 10th February, 2023
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
Assistant Registrar, ITAT, New Delhi
DCIT vs. Indian Farmers Fertiliser Cooperative: Appeal on Interest Disallowance and Rule 8D
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