VVVR. Sathiyam, Virudhunagar V. DCIT, Madurai

ITA 3090/CHNY/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5605 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 04-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: S SHANMUGAVEL
• Keywords: Salary income; Earning of tax free income
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D B ENCH, CHENNAI . , ! ' . #$ , % & BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A.NO.3090/MDS/2016 ( / ASSESSMENT YEAR: 2010-11) SHRI VVVR SATHIYAM, 443, MAIN BAZAAR, VIRUDHUNAGAR VS THE DCIT, CORPORATE CIRCLE - 2, MADURAI PAN: AHNPS9284N ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI S. SHANMUGAVEL, FCA /RESPONDENT BY : SMT. S. VIJAYAPRABHA, JCIT /DATE OF HEARING : 05.12.2017 !' /DATE OF PRONOUNCEMENT : 15.12.2017 / O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEA LS)-1, MADURAI DATED 24.08.2016 IN ITA NO.0114/2015-16 FOR THE ASSESSMENT YEAR 2010-11 PASSED U/S.250(6) R.W.S. 14 3(3) & 263 OF THE ACT. 2 ITA NOS.3090/MDS/2016 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN HIS APPEAL HOWEVER THE CRUX OF THE ISSUE IS THAT THE LD.CIT(A) HAS ERRED IN PARTLY CONFIRMING THE ORDER OF THE LD.AO BY SUSTAIN ING THE DISALLOWANCE U/S. 14A OF THE ACT, TO THE EXTENT OF DIVIDEND INCOME OF RS.73,062/-. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS AN INDIVIDUAL EARNING INCOME FROM SALARY AND OTHER SOU RCES, FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010-11 ON 28.02.2011 ADMITTING TOTAL INCOME OF RS.19,94,081/-. THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED U/S.143(3 ) R.W.S. 263 OF THE ACT ON 14.09.2015 WHEREIN THE LD.AO BASED ON THE DIRECTIONS OF THE LD.CIT INVOKED THE PROVISIONS OF SECTION 14A R.W.R. 8D(2) (III) & (II) OF THE RULES THEREBY MAKI NG DISALLOWANCE OF RS.11,41,407/- & RS.1,57,201/- RESPECTIVELY BECAUSE THE ASSESSEES INVESTMENT IN EQUITY SHARES STOOD AS ON 31.03.2009 AND 31.03.2010 RS.22,82,93,995/- AND RS.22,88,68,60 9/- RESPECTIVELY. 4. ON APPEAL THE LD.CIT(A) PLACING RELIANCE IN THE DECISION OF THE CHENNAI BENCHES OF THE TRIBUNAL IN THE CASE JCI T VS. BASKARAN 3 ITA NOS.3090/MDS/2016 REPORTED IN 152 ITD 844 WHEREIN IT WAS HELD THAT IN THE ABSENCE OF DIVIDEND INCOME NO DISALLOWANCE SHOULD BE MADE U/S. 14A OF THE ACT, SUSTAINED THE DISALLOWANCE OF RS.73,062/- BEIN G THE AMOUNT OF DIVIDEND INCOME EARNED BY THE ASSESSEE DURING THE R ELEVANT YEAR. 5. BEFORE US THE LD.AR SUBMITTED THAT THE ASSESSEE HAD NOT INCURRED ANY EXPENDITURE FOR EARNING EXEMPT INCOME WHICH WAS NOT CONSIDERED BY THE LD.AO WHILE INVOKING THE PROVISIO N OF SECTION 14A OF THE ACT. IT WAS THEREFORE PLEADED THAT THE ORDER OF THE LD.AO AS WELL AS THAT OF THE LD.CIT(A) IS ERRONEOUS AND HENCE THE ADDITION SUSTAINED BY THE LD.CIT(A) MAY BE DELETED. THE LD.DR ON THE OTHER HAND RELIED ON THE ORDER OF THE LD. CIT(A ). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND MERIT I N THE SUBMISSIONS OF THE LD.AR. PROVISIONS OF SECTION 14A OF THE ACT , MANDATES THE LD.AO TO MAKE A FINDING AS TO WHETHER THE ASSESSEE HAS ACTUALLY INCURRED ANY EXPENDITURE TOWARDS EARNING EXEMPT INC OME. IN THE CASE OF THE ASSESSEE SUCH FINDING IS NEITHER MADE B Y THE LD.AO NOR BY THE LD.CIT(A). MOREOVER THE FINANCIAL STATE MENTS OF THE ASSESSEE ARE NOT BEFORE US TO PROBE INTO THE MATTER . THEREFORE WE 4 ITA NOS.3090/MDS/2016 ARE OF THE CONSIDERED VIEW THAT THE MATTER HAS TO B E REMITTED BACK TO THE FILE OF LD.AO FOR FRESH CONSIDERATION. ACCOR DINGLY THE APPEAL OF THE ASSESSEE IS HEREBY REMITTED BACK TO THE FILE OF LD.AO FOR DE- NOVA CONSIDERATION WITH FURTHER DIRECTIONS TO TAKE NOTE OF OUR OBSERVATIONS MADE HEREIN ABOVE WHILE PASSING THE OR DER. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES AS INDICATED HEREIN ABOVE. ORDER PRONOUNCED ON 15 TH DECEMBER, 2017 AT CHENNAI. SD/- SD/- ( ! ' . #$ ) ( . ) ( DUVVURU RL REDDY ) ( A. MOHAN ALANKAMONY ) # $% /JUDICIAL MEMBER $% / ACCOUNTANT MEMBER &# /CHENNAI, '$ /DATED 15 TH DECEMBER, 2017 RSR $ )* +* /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. . ( )/CIT(A) 4. . /CIT 5. */0 1 /DR 6. 0 /GF