M/s Padmavati Associates, Allahabad V. Incometax Officer, Allahabad

ITA 214/ALLD/2011

• Counselvise Citation: 21420714 RSA 2011
• Duration Of Justice: 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 02-11-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 11-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y P SRIVASTA VA
• Assessee Lawyers: ANAND GODBOLE
• Keywords: Opportunity of being heard
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ALLAHABAD BENCH, ALLAHABAD BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.214/ALLD/2011 ASSESSMENT YEAR: 2008-09 M/S. PADMAVATI ASSOCIATES, INCOME-TAX OFFICER, 28, HASTINGS ROAD, ALLAHABAD. RANGE 1(3), ALLAHA BAD. (PAN : AADFP 0868 L) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANAND GODBOLE, ADVOCATE RESPONDENT BY : SHRI Y.P. SRIVASTAVA, D.R. DATE OF HEARING : 02.11.2012 DATE OF PRONOUNCEMENT : 08.11.2012 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 26.07.2011 PASSED BY THE LD. CIT(A), ALLAHABAD FOR THE ASSESSM ENT YEAR 2008-09. 2. THE EFFECTIVE GROUND RAISED IN THIS APPEAL IS IN RESPECT OF ADDITION OF RS.3,32,177/- OUT OF INTEREST EXPENDITURE INVOKING SECTION 14A OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER). ITA NO.214/ALLD/2011 A.Y. 2008-09 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A SHARE SUB-BROKER FIRM ENGAGED IN SALE AND PURCHASE OF SHARES FOR ITS CLIE NTS. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLAIMED EXPENDITURE OF RS,8,74,363/- ON LOANS TAKEN FROM VA RIOUS PARTIES. THE ASSESSING OFFICER FURTHER NOTICED THAT THE ASSESSEE HAS INVES TED RS.43,17,202/- IN SHARES AND MUTUAL FUND. THE DIVIDEND RECEIVED IS EXEMPT INCOM E. THE ASSESSING OFFICER INVOKED SECTION 14A OF THE ACT AND CALCULATED THE A MOUNT OF DISALLOWANCE INVOKING RULE 8D(II) OF THE INCOME TAX RULES. THE A.O. MADE ADDITION OF RS.3,32,177/-. 4. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES. SECTION 14A OF THE ACT PROVIDES THAT FOR THE PURPOSE OF COMPUTING THE TOTAL INCOME, NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME. T HE ASSESSING OFFICER SHALL DETERMINE THE AMOUNT OF EXPENDITURE INCURRED IN REL ATION TO SUCH INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME IN ACCORDANCE WI TH SUCH METHOD AS MAY BE PRESCRIBED ON THE CONDITION THAT THE ASSESSING OFFI CER HAVING REGARD TO ACCOUNTS OF THE ASSESSEE IS NOT SATISFIED WITH THE CORRECTNESS OF THE INCOME OF THE ASSESSEE IN RESPECT OF SUCH EXPENDITURE IN RELATION TO INCOME W HICH DOES NOT FORM PART OF TOTAL INCOME. THE PRESCRIBED METHOD IS PROVIDED IN RULE 8D WHICH HAS BEEN INSERTED BY ITA NO.214/ALLD/2011 A.Y. 2008-09 3 THE INCOME TAX (5 TH AMENDMENT) RULES, 2008 W.E.F. 24.03.2008, APPLICAB LE FOR A.Y. 2008-09. ON PERUSAL OF ORDERS OF THE REVENUE AUTHORITIES, WE NOTICE THAT THE ASSESSING OFFICER DID NOT RECORD THE SATISFACTION A BOUT THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF INTEREST EXPENDITURE. THE ISSUE RELATING TO DISALLOWANCE OF INTEREST UNDER SECTION 14A READ WIT H SECTION 36(1)(III) OF THE ACT HAS BEEN CONSIDERED IN ONE OF THE ORDER OF I.T.A.T. , AGRA BENCH IN I.T.A. NOS.260/AGR/2011 AND 261/AGR/20011, ORDER DATED 08. 06.2012. THE FACTS OF THE CASE UNDER CONSIDERATION IS REQUIRED TO BE EXAMINED IN THE LIGHT OF THE SAID ORDER OF THE I.T.A.T. SINCE THE ORDERS OF ASSESSING OFFICER & CIT(A) ARE BASED ON INCOMPLETE FACTS, WE, THEREFORE, THINK IT PROPER TO SEND THE MATTER BACK TO THE FILE OF ASSESSING OFFICER WITH THE DIRECTION TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW, KEEPING IN VIEW THE ORDER OF I.T.A.T. AGRA BEN CH CITED SUPRA. THE ASSESSING OFFICER WILL DECIDE THE ISSUE AFRESH AFTER PROVIDIN G REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER ITA NO.214/ALLD/2011 A.Y. 2008-09 4 PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, ALLAHABAD BENCH, ALLAHABAD 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE T RIBUNAL, ALLAHABAD TRUE COPY