M/s Sharmila Sriram, Bangalore V. Deputy Commissioner of Income Tax Circle-5(2)(1), Bangalore

ITA 1328/BANG/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7064 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 12-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH SMC-C, BANGALORE BEFORE SHRI A.K.GARODIA, ACCOUNANT MEMBER ITA NO.1328 (BANG) 2017 (ASSESSMENT YEAR : 2011 12) SMT. SHARMILA SRIRAM, APPELLANT KRUSHI BUILDING, # 456, RAMAIYENGAR ROAD, V.V. PURAM, BANGALORE 560 004. PAN. ADXPS7650J VS THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 5 (2) (1), BENGALURU RESPONDENT ASSESSEE BY : SHRI MUKESH KUMAR JAIN, C. A. REVENUE BY : SHRI P. V. PRADEEPKUMAR, ADDL. CIT DATE OF HEARING : 05-12-2017 DATE OF PRONOUNCEMENT : 0 8-12-2017 O R D E R PER A. K. GARODIA, A.M.: THIS APPEAL IS FILED BY THE ASSESSEE WHICH IS DIREC TED AGAINST THE ORDER OF CIT (A) 5, BANGALORE DATED 29.03.2017 FOR A. Y. 2 011 12. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS BUT THE GRI EVANCES ARE THREE. FIRST GRIEVANCE IS ABOUT DISALLOWANCE OF RS. 87,177 /- U/S 14A. THE SECOND GRIEVANCE IS ABOUT DISALLOWANCE OF RS. 159,2 40/- OUT OF INTEREST EXPENDITURE AND THE THIRD GRIEVANCE IS ABOUT DISALL OWANCE OF RS. 746,358/- ALSO OUT OF INTEREST EXPENDITURE. 3. HEARD BOTH SIDES. THE MAIN THRUST OF THE ARGUMENTS OF THE LEARNED AR OF THE ASSESSEE WAS ON THIS THAT SEVERAL ARGUMENTS OF THE ASSESSEE WERE CONSIDERED BY CIT (A) BEFORE DECIDING VARIOUS ISSUE S RAISED BEFORE HIM. FOR EXAMPLE, HE POINTED OUT THAT THIS CONTENTION WA S RAISED BEFORE CIT (A) THAT THE AO HAS MADE DISALLOWANCE U/S 14A WITHO UT RECORDING ANY ITA NO. 1328(BANG)2017 2 SATISFACTION AND WITHOUT REJECTING THE CLAIM OF THE ASSESSEE BEFORE THE AO THAT NO EXPENDITURE WAS INCURRED FOR EARNING DIVIDE ND INCOME BUT IN SPITE OF A SPECIFIC QUERY OF THE BENCH, HE COULD NO T BRING ANY EVIDENCE ON RECORD THAT ANY SUCH CLAIM WAS MADE BY THE ASSESSEE BEFORE THE AO THAT EXPENDITURE WAS INCURRED FOR EARNING DIVIDEND INCOM E. FROM THE ORDERS OF THE AUTHORITIES BELOW ALSO, THIS IS NOT COMING O UT THAT ANY SUCH CLAIM WAS MADE BY THE ASSESSEE BEFORE THE AO. THIS WAS AL SO SUBMITTED BY HIM THAT THE WORKING OF AVERAGE INVESTMENT IS ALSO INCO RRECT. HE ALSO SUBMITTED THAT SOME INVESTMENTS ARE IN CO OPERATIVE SOCIETIES AND THE DIVIDEND FROM THEM IS NOT EXEMPT AND THEREFORE, THE SAME HAS TO BE EXCLUDED. HENCE, IN MY CONSIDERED OPINION, UNDER TH ESE FACTS, THE ISSUE HAS TO GO BACK TO CIT (A) FOR A FRESH DECISION BY W AY OF A SPEAKING AND REASONED ORDER AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES AND AFTER CONSIDERING THE ENTIRE SUBMISS IONS OF BOTH SIDES. I ORDER ACCORDINGLY. 4. SIMILARLY, IN RESPECT OF DISALLOWANCES OUT OF INTER EST EXPENDITURE, IT WAS SUBMITTED THAT THE FIRST SUCH DISALLOWANCE OF RS. 1 59,240/- IN RESPECT OF ADVANCES FOR SOME AGRICULTURAL LANDS, LEARNED AR OF THE ASSESSEE SUBMITTED THAT SUCH ADVANCES WERE GIVEN ON 24.12.20 05 AS NOTED BY CIT (A) ALSO IN PARA 7 OF HIS ORDER. HE ALSO SUBMITTED THAT ON PAGE 7 OF HIS ORDER, LEARNED CIT (A) HAS REPRODUCED THE SUBMISSIO NS OF THE ASSESSEE IN THIS REGARD, AS PER WHICH, THIS WAS ALSO A SUBMISSI ON THAT THESE ADVANCES WERE GIVEN IN F. Y. 2005 06 OUT OF INTEREST FREE FUNDS AND SEVERAL JUDGMENTS WERE CITED IN SUPPORT OF THIS CONTENTION THAT UNDER THESE FACTS, NO DISALLOWANCE SHOULD BE MADE OUT OF INTERE ST EXPENDITURE BECAUSE THE ASSESSEE HAD SUFFICIENT INTEREST FREE F UNDS IN EXCESS OF SUCH ADVANCES. HE SUBMITTED THAT LEARNED CIT (A) HAS NOT MADE ANY DECISION ON THIS ASPECT ALSO. ITA NO. 1328(BANG)2017 3 5. REGARDING THE SECOND DISALLOWANCE OUT OF INTEREST E XPENDITURE IN RESPECT OF ADVANCES TO SOME RELATIVES, IT WAS POINTED OUT B Y THE LEARNED AR OF THE ASSESSEE THAT THIS CONTENTION WAS ALSO RAISED BEFOR E CIT (A) THAT NO SUCH DISALLOWANCE IS CALLED FOR IN VIEW OF AVAILABILITY OF INTEREST FREE FUNDS AND EVEN IF SOME DISALLOWANCE IS TO BE MADE, THE SAME S HOULD BE IN RESPECT OF NET DEBIT BALANCE AFTER SETTING OF THE CREDIT BA LANCE OF THE SAME PARTY BUT THERE IS NO DECISION BY CIT (A) ON THESE ASPECT S ALSO. UNDER THESE FACTS, I FEEL THAT THE ISSUES REGARDING BOTH THESE DISALLOWANCES OUT OF INTEREST EXPENDITURE ALSO, THE MATTER HAS TO GO BAC K TO CIT (A) FOR A FRESH DECISION BY WAY OF A SPEAKING AND REASONED ORDER AF TER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES A ND AFTER CONSIDERING THE ENTIRE SUBMISSIONS OF BOTH SIDES. I ORDER ACCOR DINGLY. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- (ARUN KUMAR GARODIA) ACCOUNTANT MEMBER BANGALORE, DATED, THE 8 TH DECEMBER, 2017. /MS/ COPY TO: 1. APP ELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.