K.Vinoth Kumar, Vellore V. DCIT, Vellore

ITA 1200/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8637 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 17-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 02-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Section: 14A

Judgement Text

, / , IN THE INCOME TAX APPELLATE TRIBUNAL B SMC BENCH, CHENNAI ... , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER !./ ITA NO.1200/MDS/2016 # $%# / ASSESSMENT YEAR : 2009-10 SHRI K. VINOTH KUMAR, NO.89, SANTHAPET, GUDIYATTAM, VELLORE 632 602. PAN : AACPV 4537 B V. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE -1, VELLORE. ('(/ APPELLANT) ()*'(/ RESPONDENT) '( + , / APPELLANT BY : NONE )*'( + , / RESPONDENT BY : SHRI SUPRIYO PAL, JCIT - $ + ./ / DATE OF HEARING : 17.06.2016 01% + ./ / DATE OF PRONOUNCEMENT : 18.08.2016 / O R D E R THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 13, CHENNAI, DATED 28.01.2016 AND PERTAINS TO ASSESSMENT YEAR 2009-10. 2. NO ONE APPEARED FOR THE ASSESSEE INSPITE OF SERV ICE OF NOTICE. THEREFORE, I HEARD THE LD. DEPARTMENTAL REPRESENTAT IVE AND PROCEED TO DISPOSE OF THE APPEAL ON MERIT. 2 I.T.A.NO.1200/MDS/16 3. SHRI SUPRIYO PAL, THE LD. DEPARTMENTAL REPRESENT ATIVE, SUBMITTED THAT THE ONLY ISSUE RAISED BY THE ASSESSE E IS WITH REGARD TO DISALLOWANCE UNDER SECTION 14A OF THE INCOME-TAX AC T, 1961 (IN SHORT 'THE ACT'). REFERRING TO THE ORDER OF THE ASSESSIN G OFFICER, THE LD. D.R. SUBMITTED THAT THE ASSESSEE INCURRED INTEREST EXPEN DITURE OF ` 9,46,084/- DURING THE YEAR UNDER CONSIDERATION. TH E ASSESSEE HAS INVESTED A SUM OF ` 1,05,24,839/-, WHICH GENERATED INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME. THEREFORE, THE ASSE SSING OFFICER BY APPLYING RULE 8D(2)(III) AND 8D(2)(II) OF THE INCOM E-TAX RULES, 1962 COMPUTED THE DISALLOWANCE AT ` 6,23,526/-. THEREFORE, THE CIT(APPEALS) HAS RIGHTLY CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 4. I HAVE CONSIDERED THE SUBMISSION OF THE LD. DEPA RTMENTAL REPRESENTATIVE AND PERUSED THE RELEVANT MATERIAL AV AILABLE ON RECORD. ADMITTEDLY, THE ASSESSEE PAID INTEREST TO THE EXTEN T OF ` 9,46,084/-. THE ASSESSEE MADE INVESTMENTS IN SHARES, GOLD JEWEL LERY, MUTUAL FUNDS, IMMOVABLE PROPERTIES AND LANDS. NO MATERIAL IS AVAILABLE ON RECORD TO SUGGEST THAT BORROWED FUNDS WERE INVESTED IN AGRICULTURAL LANDS AND SHARES. THE TOTAL VALUE OF INVESTMENT AS ON 01,04,2008 IS ` 92,95,135/-. THE AVAILABILITY OF ASSESSEES OWN FU NDS AND BORROWED 3 I.T.A.NO.1200/MDS/16 FUNDS ARE NOT AVAILABLE ON RECORD. THE ASSESSING O FFICER COMPUTED THE DISALLOWANCE UNDER RULE 8D(2) OF THE INCOME-TAX RULES, 1962 TO THE EXTENT OF ` 6,23,526/-. THE CIT(APPEALS) CONFIRMED THE ORDER O F THE ASSESSING OFFICER ON THE GROUND THAT THE CIRCULAR O F CBDT WAS NOT BROUGHT TO THE NOTICE OF THE HIGH COURT. THIS TRIB UNAL IS OF THE CONSIDERED OPINION THAT WHEN THERE WAS CONFLICT BET WEEN THE JUDGEMENT OF HIGH COURT AND NOTIFICATION ISSUED BY THE CBDT, THE JUDGEMENT OF HIGH COURT, BEING THE CONSTITUTIONAL F ORUM, HAS TO BE PREVALENT. THE OPINION EXPRESSED BY THE HIGH COURT IN A JUDICIAL PROCEEDING CANNOT BE OVERTURNED BY THE ADMINISTRATI VE INSTRUCTION ISSUED BY THE CBDT. THESE ASPECTS WERE NOT CONSIDE RED BY THE CIT(APPEALS). HENCE, THIS TRIBUNAL IS OF THE CONSI DERED OPINION THAT THAT THE MATTER NEEDS TO BE RECONSIDERED. ACCORDIN GLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ENTIRE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSIN G OFFICER SHALL BRING ON RECORD THE AVAILABILITY OF FUNDS ON THE DATE OF INVESTMENT AND BORROWED FUNDS AND THE NEXUS BETWEEN THE BORROWED F UNDS AND INVESTMENT AND THEREAFTER DECIDE THE ISSUE IN ACCOR DANCE WITH LAW AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESS EE. 4 I.T.A.NO.1200/MDS/16 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 18 TH AUGUST, 2016 AT CHENNAI. SD/- ( ... ) (N.R.S. GANESAN) /JUDICIAL MEMBER /CHENNAI, 3! /DATED, THE 18 TH AUGUST, 2016. KRI. + ).45 65%. /COPY TO: 1. '( /APPELLANT 2. )*'( /RESPONDENT 3. - 7. () /CIT(A)-13, CHENNAI 4. PRINCIPAL CIT-8, CHENNAI-34 5. 5$8 ). /DR 6. 9# : /GF.