Shri Hari Poddar, Erode V. DCIT, Coimbatore

ITA 142/CHNY/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1882 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 10-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R ANITA
• Assessee Lawyers: K RAGHU
• Section: 14A; 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: CHENNAI . , . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.142/CHNY/2018 /ASSESSMENT YEAR: 2013-14 SHRI HARI PODDAR, 32, OTTUKKARA CHINNAIAH STREET, ERODE-638 008. V. THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, COIMBATORE. [PAN: AATPH 7611 P] ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR.K.RAGHU, CA /RESPONDENT BY : MS.R. ANITA, JCIT /DATE OF HEARING : 25.11.2020 /DT. OF PRONOUNCEMENT : 04.12.2020 / O R D E R PER SHRI S. JAYARAMAN, ACCOUNTANT MEMBER: THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS)-18, CHENNAI, IN ITA NO.27/1 6-17 DATED 14.11.2017 FOR THE AY 2013-14. 2. SHRI HARI PODDAR, THE ASSESSEE, PROPRIETOR OF AD ITYA TRADING CO., DERIVES INCOME FROM HOUSE PROPERTY, BUSINESS AND OT HER SOURCES. WHILE MAKING THE ASSESSMENT FOR THE AY 2013-14, THE AO FO UND THAT THE ASSESSEE RECEIVED DIVIDEND OF RS.2,22,374/- BUT HAS NOT MADE ANY DISALLOWANCE U/S.14A R.W.R.8D. THEREFORE, HE MADE A DISALLOWANC E OF RS.1,68,189/- ITA NO.142/CHNY/2018 :- 2 -: U/S.14A R.W.R.8D(II) & (III) AND COMPLETED THE ASSE SSMENT. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) DISMISSED THE APPEAL. AGGRIEVED AGAINST THAT ORDER, THE ASSESSEE FILED THIS APPEAL. 3. THE CASE WAS HEARD THROUGH VIDEO CONFERENCING. THE LD.AR SUBMITTED THAT THE ASSESSEE HAD AN OPENING CAPITAL AS ON 01.0 4.2012 AT RS.7.13 CRS. THE CLOSING CAPITAL AS ON 31.03.2013 WAS AT RS.13.2 3 CRS. AND ADMITTED A TOTAL INCOME OF RS.2.70 CRS. WHICH INCLUDED NET INT EREST INCOME OF RS.17.51 LAKHS. AS AGAINST INTEREST RECEIPT OF RS.29.68 LAK HS, THE ASSESSEE PAID INTEREST OF RS.12.17 LAKHS ONLY. THEREFORE, THERE I S NO INTEREST OUTGO. AS AGAINST ASSESSEES CAPITAL OF RS.13.23 CRS. THE TOT AL INVESTMENTS IN SHARES AND MUTUAL FUNDS WERE AT RS.2.19 CRS. ONLY WHICH WE RE FULLY SOURCED THROUGH INTERNAL ACCRUALS/SHARES TRANSFERRED FROM P RATIBHA PODDAR. THE DISALLOWANCE UNDER SUB-RULE (III) IS NOT WARRANTED AS THE INVESTMENTS WERE MADE THROUGH A MEMBER OF STOCK EXCHANGE AND THE COS T OF BROKERAGE IS NOT CLAIMED AS AN EXPENDITURE, BUT FORMED PART OF THE V ALUE OF INVESTMENT. THEREFORE, THE ASSESSEE HAS NOT INCURRED ANY EXPEND ITURE IN RELATION TO THE IMPUGNED INCOME. THE AO WITHOUT RECORDING DUE SATI SFACTION AS REQUIRED U/S.14A AS WELL AS ELUCIDATED IN THE DECISION OF TH E HONBLE APEX COURT IN THE CASE OF MAXOPP INVESTMENT LTD. V. CIT REPORTED IN 402 ITR 640 AND WITHOUT ANY MATERIAL, MERELY, DISALLOWED RS.1,68,18 9/- AND HENCE PLEADED TO ALLOW THE APPEAL. PER CONTRA, THE LD.DR SUBMITT ED THAT SINCE THE ASSESSEE HAS NOT MADE ANY DISALLOWANCE U/S.14A, THE ORDERS O F THE LOWER AUTHORITIES ARE JUSTIFIED AND THUS SUPPORTED THEM. ITA NO.142/CHNY/2018 :- 3 -: 4. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE RELEVANT MATERIALS. WHILE INVOKING THE PROVISIONS OF SECTIO N 14A R.W.R.8D, THE AO IS REQUIRED TO RECORD HIS SATISFACTION HAVING REGARD T O THE KIND OF ASSESSEES FINANCIAL AFFAIRS, HOW THE ASSESSEES CLAIM IS NOT CORRECT AND THEN PROCEED FOR APPROPRIATE APPORTIONMENT. IT IS CLEAR FROM TH E ASSESSEES SUBMISSIONS, SUPRA, AND FROM THE ASSESSMENT ORDER THAT THERE IS NO SUCH SATISFACTION RECORDED. THEREFORE, THE DISALLOWANCE MADE BY THE AO IS NOT JUSTIFIED AND HENCE, WE DIRECT THE AO TO DELETE IT. THE CORRESPO NDING GROUNDS OF THE ASSESSEES APPEAL ARE ALLOWED. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THE 04 TH DAY OF DECEMBER, 2020, IN CHENNAI. SD/- SD/- ( . ) ( V. DURGA RAO ) /JUDICIAL MEMBER ( . ) (S. JAYARAMAN) /ACCOUNTANT MEMBER /CHENNAI, /DATED: 04 TH DECEMBER, 2020. TLN /COPY TO: 1. /APPELLANT 4. ' /CIT 2. /RESPONDENT 5. /DR 3. ' ( ) /CIT(A) 6. /GF