Sundaram Business Services Ltd., CHENNAI V. ACIT, CHENNAI

ITA 1866/CHNY/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7703 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 02-02-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 30-06-2014
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: R VIJAYARAGHAVAN
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D' BENCH : CHENNAI . . . , . !' , # $ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NO.1866/MDS/2014 / ASSESSMENT YEAR : 2009-10 M/S SUNDARAM BUSINESS SERVICES LTD 21, PATULLOS ROAD CHENNAI 600 002 VS. THE ASSTT. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE VI(4) CHENNAI [PAN AAJCS 9232 J] ( &' / APPELLANT) ( ()&' /RESPONDENT) / APPELLANT BY : SHRI R. VIJAYARAGHAVAN, ADVOCATE /RESPONDENT BY : DR. B. NISCHAL, JCIT / DATE OF HEARING : 02 - 0 2 - 2016 ! / DATE OF PRONOUNCEMENT : 18 - 03 - 2016 / 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)-VI, CHENN AI, DATED 31.3.2014 AND PERTAINS TO ASSESSMENT YEAR 2009-10. 2. SHRI R.VIJAYARAGHAVAN, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER DISALLOWED A S UM OF ` 3,82,241/- U/S 14A OF THE ACT. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE HAS NOT CLAIMED ANY INCOME AS EXEMPT U/S 14A OF THE ACT. HOWEVER, THE ITA NO. 1866/14 :- 2 -: ASSESSING OFFICER MADE A NOTIONAL DISALLOWANCE OF ` 3,82,241/-. THE LD. COUNSEL FURTHER SUBMITTED THAT THE ASSESSEE EA RNED DIVIDEND INCOME OF ` 21,085/- DURING THE YEAR AND THE SAME WAS OFFERED FOR TAXATION. 3. ON THE CONTRARY, DR.B.NISCHAL, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS INC URRED HUGE EXPENDITURE UNDER THE HEAD ESTABLISHMENT EXPENSES T O THE EXTENT OF ` 9,78,19,794/-. THE ASSESSEE HAS ALSO INCURRED ADM INISTRATIVE AND OTHER EXPENSES TO THE EXTENT OF ` 5,57,73,904/-. ACCORDING TO THE LD. DR, PART OF THE ABOVE EXPENSES WAS INCURRED FOR EAR NING THE DIVIDEND INCOME. THE ASSESSING OFFICER HAVING NOT SATISFIED ABOUT THE CLAIM OF THE ASSESSEE THAT NO EXPENDITURE WAS INCURRED TO E ARN THE DIVIDEND INCOME, COMPUTED THE DISALLOWANCE BY APPLYING RULE 8D OF INCOME-TAX RULES. ACCORDING TO THE LD. DR, THE PROVISIONS OF RULE 8D ARE MANDATORY WHEN THE ASSESSING OFFICER SATISFIED THA T THE EXPENDITURE CLAIMED BY THE ASSESSEE WAS NOT IN ACCORDANCE WITH LAW. THEREFORE, THE CIT(A) HAS RIGHTLY CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. TH E ASSESSEE CLAIMS THAT DIVIDEND INCOME OF ` 21,085/- RECEIVED DURING THE YEAR UNDER ITA NO. 1866/14 :- 3 -: CONSIDERATION WAS OFFERED FOR TAXATION AND THE ASS ESSEE HAS NOT CLAIMED ANY EXEMPTION. FROM THE ORDER OF THE ASSES SING OFFICER IT APPEARS THAT THE ASSESSEE CLAIMED THAT NO BORROWED FUNDS WERE USED FOR MAKING INVESTMENT FOR EARNING THE EXEMPTED INCO ME. EVEN THOUGH THE ASSESSING OFFICER REFERRED TO THE CLAIM OF THE ASSESSEE, NO DISCUSSION WAS MADE IN THE ASSESSMENT ORDER. THE A SSESSING OFFICER HAS NOT RECORDED ANY FINDING WHETHER THE ASSESSEE OFFERED THE DIVIDEND INCOME OF ` 21,085/- FOR TAXATION OR NOT. IT IS ALSO NOT DISCUSSED IN THE ASSESSMENT ORDER THAT WHETHER THE ASSESSEE HAS SUFFICIENT INTEREST FREE FUNDS FOR MAKING INVESTMEN T FOR EARNING THE DIVIDEND INCOME. IN THE ABSENCE OF ANY DISCUSSION, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RECONSIDERED BY THE ASSESSING OFFICER. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ISSUE OF DISALLOWANCE OF ` 3,82,241/- U/S 14A IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RECONSIDER THE ISSUE AFRESH IN THE LI GHT OF THE INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE AND FIND OUT WHE THER THE ASSESSEE OFFERED THE DIVIDEND INCOME FOR TAXATION AS CLAIMED . THEREAFTER, THE ASSESSING OFFICER SHALL DECIDE THE MATTER AFRESH IN ACCORDANCE WITH LAW AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSES SEE. ITA NO. 1866/14 :- 4 -: 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH MARCH, 2016, AT CHENNAI. SD/- SD/- ( . !' ) (A. MOHAN ALANKAMONY) # / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 18 TH MARCH, 2016 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF