R. Jegathambal, Virudhunagar V. DCIT, Madurai

ITA 3091/CHNY/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5604 (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: 2011-2012
• Appeal Filed On: 04-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: S SHANMUGAVEL
• Keywords: 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.3091/MDS/2016 ( / ASSESSMENT YEAR: 2011-12) SMT. R. JEGATHAMBAL, 443, MAIN BAZAAR, VIRUDHUNAGAR 626 001. VS THE DCIT, CORPORATE CIRCLE - 2, MADURAI PAN: ADEPJ0074A ( /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.0113/2015-16 FOR THE ASSESSMENT YEAR 2011-12 PASSED U/S.250(6) R.W.S. 14 3(3) & 263 OF THE ACT. 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 2 ITA NOS.3091/MDS/2016 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.46,950/-. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF MONEY LENDING BUSINESS, FILED HER RETURN OF INCOME FOR THE ASSESSMENT YEAR 2011-1 2 ON 29.09.2011 ADMITTING TOTAL INCOME OF RS.3,89,970/-. THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED U/S.143(3) R.W.S. 263 OF THE ACT ON 21.08.2015 WHEREIN THE LD. AO BASED ON THE DIRECTION OF THE LD.CIT INVOKED THE PROVISIONS OF SECTION 14A R.W.R. 8D OF THE RULES THEREBY MAKING DISALLOWANCE OF RS.3,05,910/- BECAUSE THE ASSESSEES INVESTMENTS IN EQUITY SHARES STOOD AS ON 31.03.2010 AND 31.03.2011 RS.6,11,81,91 0/- AND RS.6,11,81,910/- 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 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.46,950/- BEIN G THE AMOUNT OF 3 ITA NOS.3091/MDS/2016 DIVIDEND INCOME EARNED BY THE ASSESSEE DURING THE R ELEVANT ASSESSMENT 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 ORDERS 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 DURING THE RELEVANT ASSESSMENT YEAR. IN THE CASE OF THE A SSESSEE SUCH FINDING IS NEITHER MADE BY THE LD.AO NOR BY THE LD. CIT(A). MOREOVER THE FINANCIAL STATEMENTS OF THE ASSESSEE A RE NOT BEFORE US TO PROBE INTO THE MATTER. THEREFORE WE ARE OF T HE CONSIDERED VIEW THAT THE MATTER HAS TO BE REMITTED BACK TO THE FILE OF LD.AO FOR FRESH CONSIDERATION. ACCORDINGLY THE APPEAL OF THE ASSESSEE IS 4 ITA NOS.3091/MDS/2016 HEREBY REMITTED BACK TO THE FILE OF LD.AO FOR DE-NO VA CONSIDERATION WITH FURTHER DIRECTION TO TAKE NOTE OF OUR OBSERVAT IONS MADE HEREIN ABOVE WHILE PASSING THE ORDER. 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