S.Manivannan, Vellore V. DCIT, Vellore

ITA 1771/CHNY/2016

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 5990 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 08-06-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 13-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: T VASUDEVAN
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: CHENNAI , ! '!# $ , % & BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ! ./ ITA NO.1771/CHNY/2016 ' /ASSESSMENT YEAR: 2009-10 SHRI S. MANIVANNAN, NO.5, EAST CROSS STREET, GANDHI NAGAR, VELLORE 632 006. VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE-I, VELLORE. [PAN: AAIPM 0054C] ( ( /APPELLANT) ( )*( /RESPONDENT) ( + , / APPELLANT BY : SHRI T. VASUDEVAN, ADVOCATE )*( + , /RESPONDENT BY : SHRI ARV SREENIVASAN, JCIT - + .% /DATE OF HEARING : 20.12.2018 /0' + .% /DATE OF PRONOUNCEMENT : 04.01.2019 1 / O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AG AINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-13, CHE NNAI (CIT(A) FOR SHORT) DATED 08.03.2016 FOR THE ASSESSMENT YEAR (AY ) 2009-10. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APP EAL: 1. THE ORDER OF THE COMMISSIONER OF LNCOME-TAX(APPE ALS) DISMISSING THE APPEAL IS CONTRARY TO LAW, ERRONEOUS AND UNSUST AINABLE ON THE FACTS OF THE CASE. ITA NO.1771/CHNY/2016 (AY: 2009-10) SHRI S. MANIVANNAN :- 2 -: 2. THE CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS.890390 MADE UNDER SEC.14A READ WITH RULE 8D. 3. THE CIT(A) FAILED TO APPRECIATE THAT THE ASSESSE E HAD NEITHER MADE ANY INVESTMENTS IN THE COURSE OF THIS YEAR NOR HAD CLAIMED ANY EXPENDITURE IN RELATION TO ANY EXEMPT INCOME WARRAN TING THE DISALLOWANCE INVOKING SEC.14A AND RULE 8D. 4. THE CIT(A) FURTHER FAILED TO APPRECIATE THAT THE ASSESSEE HAD CONSIDERABLE OWN CAPITAL OR INTEREST-FREE FUNDS TO MAKE THE INVESTMENTS AND NO PART OF THE INTEREST- BEARING FUNDS WERE UTI LISED TO MAKE THE INVESTMENTS IN THOSE YEARS AND HENCE THERE WAS NO C ASE FOR MAKING THE DISALLOWANCE. 5. THE CIT(A) FURTHER FAILED TO APPRECIATE THAT THE PREMISE OF THE OFFICER THAT ASSESSEE HAD INCURRED EXPENSES TOWARDS PAYMENT OF INTEREST WHICH IS NOT DIRECTLY ATTRIBUTABLE TO ANY PARTICULA R INCOME OR RECEIPT AND THAT ASSESSEE HAS MADE INVESTMENT, INCOME FROM WHIC H DOES NOT OR SHALL NOT FORM PART OF TOTAL INCOME ARE FACTUALLY I NCORRECT AND HENCE CONFIRMING THE DISALLOWANCE IS WHOLLY UNJUSTIFIED A ND UNTENABLE IN LAW. 6. THE CIT(A), IN ANY EVENT, OUGHT TO HAVE APPRECIA TED THAT THE DISALLOWANCE CANNOT EXCEED THE EXEMPTED INCOME EARN ED AND HENCE MERELY APPLYING SEC.14A R.W. RULE 8D WITHOUT DUE RE GARD TO THE FACTS ON RECORD IS UNJUSTIFIED AND UNTENABLE IN LAW. 7. THE CIT(A), IN ANY VIEW OF THE MATTER, OUGHT TO HAVE DULY CONSIDERED THE CONTENTIONS OF ASSESSEE IN THE PROPER PERSPECTI VE AND HELD THAT THERE WAS NO CASE FOR INVOKING SEC.14A AND THUS DEL ETED THE DISALLOWANCE OF THE AMOUNT. 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE ASSESSEE IS AN INDIVIDUAL AND FILED HIS RETURN OF INCOME ON 24.03.2010 DECLARING TOTAL INCOME OF RS. 44,86,720/ -. AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT WAS COMPLETED BY T HE DY. CIT, CIRCLE-I, VELLORE VIDE ORDER DATED 26.12.2011 AFTER MAKING A DISALLOWANCE OF RS.8,90,390/- INVOKING THE PROVISIONS OF S. 14A R/W R. 8D OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). ITA NO.1771/CHNY/2016 (AY: 2009-10) SHRI S. MANIVANNAN :- 3 -: 4. BEING AGGRIEVED, AN APPEAL WAS PREFERRED BEFORE LD. CIT(A), WHO HAD CONFIRMED THE IMPUGNED ORDER AGAINST THE ORDER OF THE ASSESSING OFFICER (AO). BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US IN THE IN THE PRESENT CASE. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED ON RECORD. THE GROUNDS OF APPEAL CAN BE DIS POSED OFF WITH THE DIRECTION TO THE AO TO RESTRICT THE AMOUNT OF DISAL LOWANCE TO THE EXTENT OF THE EXEMPT INCOME EARNED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THE 04 TH DAY OF JANUARY, 2019 IN CHENNAI. SD/ SD/- ( ) (GEORGE MATHAN) /JUDICIAL MEMBER ( '!# $ ) (INTURI RAMA RAO) % /ACCOUNTANT MEMBER /CHENNAI, 2! /DATED: 04 TH JANUARY, 2019 . EDN, SR. P.S 1 + ).34 54'. /COPY TO: 1. ( /APPELLANT 4. - 6. /CIT 2. )*( /RESPONDENT 5. 4 78 ). /DR 3. - 6. ( )/CIT(A) 6. 89 : /GF