Forbes Finance Limited, CHENNAI V. ITO, CHENNAI

ITA 1274/CHNY/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2019 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 22-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS RUBY GEORGE
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.1274/CHNY/2017 ( )( / ASSESSMENT YEAR : 2008-09 M/S FORBES FINANCE LIMITED (MERGED INTO FORBES CAMPBELL FINANCE LIMITED), CATHOLIC CENTER, 108, ARMENIAN STREET, CHENNAI - 600 001. PAN : AAACF 8566 B V. THE INCOME TAX OFFICER, COMPANY WARD II(1), NOW CORPORATE WARD 2(2), CHENNAI - 600 034. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SH. SP. CHIDAMBARAM, ADVOCATE -.+, / 0 / RESPONDENT BY : SMT. RUBY GEORGE, CIT 1 / 2% / DATE OF HEARING : 23.10.2018 3') / 2% / DATE OF PRONOUNCEMENT : 16.11.2018 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -9, CHENNA I, DATED 27.03.2017 AND PERTAINS TO ASSESSMENT YEAR 2008-09. 2 I.T.A. NO.1274/CHNY/17 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS DISAL LOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 14A OF THE I NCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 3. SH. SP. CHIDAMBARAM, THE LD.COUNSEL FOR THE ASSE SSEE, SUBMITTED THAT THE INVESTMENTS IN THE SHARES WERE M ADE DURING THE ASSESSMENT YEARS 1991-92 AND 1992-93. THE LD.COUNS EL CLARIFIED THAT NO INVESTMENT WAS MADE DURING THE YEAR UNDER C ONSIDERATION. THE LOAN WAS BORROWED FOR THE PURPOSE OF BUSINESS D URING THE ASSESSMENT YEAR 2007-08. THEREFORE, ACCORDING TO T HE LD. COUNSEL, NO BORROWED FUNDS WERE INVESTED IN THE SHARES FOR E ARNING THE EXEMPTED INCOME. HENCE, ACCORDING TO THE LD. COUNS EL, THE PROVISIONS OF RULE 8D(2) OF THE INCOME-TAX RULES, 1 962 ARE NOT APPLICABLE. THE LD.COUNSEL SUBMITTED THAT WHEN THI S WAS BROUGHT TO THE NOTICE OF THE CIT(APPEALS), THE CIT(APPEALS) HA S NOT DISCUSSED ANYTHING IN THE APPELLATE ORDER. MOREOVER, THE ASS ESSING OFFICER ALSO HAS NOT BROUGHT ON RECORD THE DATES OF INVESTM ENTS AND THE DATE OF BORROWAL OF LOAN. THEREFORE, THE LD.COUNSE L SUBMITTED THAT THE MATTER MAY BE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. 4. WE HEARD SMT. RUBY GEORGE, THE LD. DEPARTMENTAL REPRESENTATIVE ALSO. THE ASSESSEE CLAIMS THAT THER E WAS NO 3 I.T.A. NO.1274/CHNY/17 EXPENDITURE FOR EARNING THE EXEMPTED INCOME. ACCORD ING TO THE LD. COUNSEL, THE FUNDS WERE BORROWED FOR BUSINESS DURIN G THE ASSESSMENT YEAR 2007-08 AND ACTUAL INVESTMENTS IN T HE SHARES FOR EARNING EXEMPTED INCOME WERE MADE DURING THE ASSESS MENT YEARS 1991-92 AND 1992-93. THESE FACTS WERE NOT BROUGHT ON RECORD EITHER BY THE ASSESSING OFFICER OR BY THE CIT(APPEA LS). THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RECONSIDERED. ACCORDINGLY, ORDERS OF BOTH THE AUTH ORITIES BELOW ARE SET ASIDE AND THE ENTIRE ISSUE WITH REGARD TO DISAL LOWANCE MADE UNDER SECTION 14A OF THE ACT IS REMITTED BACK TO TH E FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE- EXAMINE THE MATTER IN THE LIGHT OF THE MATERIAL THAT MAY BE FIL ED BY THE ASSESSEE AND BRING ON RECORD THE ACTUAL DATES ON WHICH THE I NVESTMENTS WERE MADE FOR EARNING EXEMPTED INCOME BY THE ASSESSEE AN D THE DATE OF BORROWAL OF LOAN. THE ASSESSING OFFICER ALSO NEEDS TO EXAMINE WHETHER DURING THE YEAR IN WHICH THE INVESTMENTS WE RE MADE, ANY LOAN WAS BORROWED BY THE ASSESSEE. THE ASSESSING O FFICER SHALL ALSO BRING ON RECORD THE NEXUS BETWEEN THE BORROWAL OF LOAN AND THE INVESTMENTS SAID TO BE MADE. THEREAFTER, THE ASSES SING OFFICER SHALL DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LA W, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 4 I.T.A. NO.1274/CHNY/17 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 16 TH NOVEMBER, 2018 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 16 TH NOVEMBER, 2018. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-9, CHENNAI-34 4. PRINCIPAL CIT-2, CHENNAI 5. 7: -2 /DR 6. ;( < /GF.