Krupa Trading Co., CHENNAI V. ITO, CHENNAI

ITA 3219/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4764 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 08-02-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 24-11-2016
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: T C A SANGEETHA
• Keywords: Earning of tax free income; Retrospective amendment; Question of law; Initiation of penalty proceedings; Accommodation entries
• Section: 133A; 14A

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO. 3 21 9 / MDS/2016 / ASSESSMENT YEAR :20 12 - 13 M/S. KRUPA TRADING CO., NEW NO. 9, OLD NO. 6, DHANAMMAL STREET, CHETPET, CHENNAI 600 031. [PAN: A A IFK5044J ] VS. THE INCOME TAX OFFICER , NON CO RPORATE WARD 3 ( 4 ) CHENNAI . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : MS. T.C.A. SANGEETHA, ADVOCATE / RESPONDENT BY : S HRI S HIVA SRINIVAS , J CIT / DATE OF HEARING : 0 8 . 0 2 .201 7 / DATE OF P RONOUNCEMENT : 26 . 0 4 .201 7 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : TH I S APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMIS SIONER OF INCOME TAX (APPEALS) 4 , C HENNAI DATED 1 2 . 0 9 .201 6 RELEVANT TO THE ASSESSMENT YEAR 20 12 - 13 . THE ASSESSEE HAS RAISED TWO EFFECTIVE GROUNDS, VIZ., (I) THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE MADE UNDER SECTION 35(1)(II) OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] AND (II) THE LD. CIT(A) ERRED I N CONFIRMING DISALLOWANCE MADE UNDER SECTION 14A OF THE ACT. I.T.A. NO . 3219 / M/ 1 6 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM AND IN THE BUSINESS OF SHARE TRADING. THE ASSESSEE HAS FILED ITS R ETURN OF INCOME ON 29 . 09 . 2012 ADMITTING TOTAL INCOME OF . 3,83,360 / - . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY . NOTICE UNDER SECTION 143(2) DATED 0 8 . 08 . 2 0 13 WAS ISSUED AND DULY SERVED ON THE ASSESSEE. DURING THE YEAR UNDER CONSIDERATION , AN A M OUNT OF .1 , 00 ,000/ - ON WHICH WEI G HTED DEDUCTIO N OF . 1,7 5, 000/ - UNDER SECTION 35(1)(II) OF THE ACT WAS CLAIMED TO HAVE BEEN DONATED BY THE ASSESSEE TO M/S. HERBICURE HEA L THCARE B IO - HERBAL RESEARCH FOUNDATION [ HERBICURE IN SHORT], KO L KATA . THE ASSOCIATION WAS APPROVED UNDER SECTION 35(1) (II) OF THE ACT AND NOT I FICATION TO T HI S EF F EC T HELD ALSO BEEN PASSED IN THE GA ZE T T E OF INDIA IN ORDER TO CONFIRM THE DONATION CON TRIBUTED, THE DEPARTMENT HAS SENT A LETTER TO THE M/S. HERBICURE AND VIDE THEIR LETTER DATED 26.12.2014 M/S. HERBICURE CONFIRMED THE VOLUNTARY DONATIO N OF .1 ,00,000 LAKHS FROM THE ASSESSEE. A COPY OF THE TRUST S CORPORATION BANK STATEMENT IN WHICH THE DONATION RECEIVED WAS ALSO SENT BY THE TRUST. 2.1 AS PER THE INFORMATION RECEIVED FROM THE ACIT, NON CORPORATE CIRCLE 3, CHENNAI ALONG WITH COPY OF THE SWORN STATEMENT RECORDED FROM SHRI SWAPAN RANJAN DAS GUPTA, FOUNDER DIRECTOR OF M/S HERBICURE BY THE OFFICE OF THE DIRECTOR OF INCOME TAX (INV.), KOLKATA DURING THE COURSE OF SURVEY UNDER SECTION 133A OF THE ACT ON 27.01.2015 AT M/S. HERBICURE. IN THE SWO RN STATEMENT, THE FOUNDER DIRECTOR SHRI SWAPAN RANJAN DAS GUPTA OF M/S. I.T.A. NO . 3219 / M/ 1 6 3 HERBICURE HAS ADMITTED THAT HIS ORGANIZATION ACCEPT THE DONATION AND GIVING BACK OF THE SAME TO THE DONOR AFTER DEDUCTING A COMMISSION @ 5% ON THE DONATION AMOUNT. IN VIEW OF THE ABOVE , THE ASSESSEE WAS SHOW - CAUSED AS TO WHY THE CLAIM MADE UNDER SECTION 35(1)(II) OF THE ACT SHOULD NOT BE DISALLOWED ALONG WITH COPY OF AFFIDAVIT. THE ASSESSEE HAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE ASSESSEE HAS MADE DONATION DIRECTLY TO THE DO NE BY CHEQUE AND NOT RECEIVED BACK ANY CASH OR CHEQUES FROM THE DONEE. WITH REGARD TO THE APPROACH OF SHRI KISHAN BHAWASINGKA TO ADOPT THE PREVALENT PRACTICE OF SCIENTIFIC AND RESEARCH ORGANISATIONS OF GIVING ACCOMMODATION ENTRIES ON COMMISSION TO DIFFEREN T BENEFICIARIES IN THE GARB OF DONATION, THE ASSESSEE HAS STRONGLY CONTENDED THAT THE DONATION WAS GIVEN DIRECTLY TO THE DONOR THROUGH CHEQUE AND THE ASSESSEE WAS NOT ONE OF THE BENEFICIARY AS MENTIONED IN THAT SWORN STATEMENT. HOWEVER, THE ASSESSING OFFIC ER HAS NOT ACCEPTED THE SUBMISSIONS OF THE ASSESSEE, THE DONATION MADE AND EXEMPTION CLAIMED OF . 1 , 7 5,000/ - UNDER SECTION 35(1)(II) OF THE ACT WAS DISALLOWED AND BROUGHT TO TAX. 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) CONFIRMED THE DISALLOWANCE MADE ON T HIS ACCOUNT. 4. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED THAT THE DONEE M/S. I.T.A. NO . 3219 / M/ 1 6 4 HERBICURE HAS CONFIRMED HAVING RECEIPT OF DONATION MADE BY THE ASSESSEE THROUGH ACCOUNT PAYEE CHEQU E. FURTHER, THE INSTITUTION HAS CONFIRMED THE RECEIPT OF DONATION BY FILING THE TRUST S CORPORATION BANK STATEMENT. ONCE M/S. HERBICURE IS ENJOYING THE APPROVED UNDER SECTION 35(1)(II) OF THE ACT AS ON THE DATE OF DONATION GIVEN BY THE ASSESSEE, THE ASSESS EE HAS RIGHTLY CLAIMED EXEMPTION FOR THE DONATION MADE BY HER. ONCE THE REVENUE HAS NOT PROVED THAT THE ASSESSEE WAS REPAID BACK THE DONATION BY THE DONEE, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER CANNOT BE SUSTAINED UNDER LAW AND PRAYED THAT THE DIS ALLOWANCE MADE ON THIS COUNT MAY BE DELETED. IT WAS ALSO ARGUED THAT IT MAY BE A FACT THAT THE NOTIFICATION GRANTING APPROVAL UNDER SECTION 35(1)(II) OF THE ACT HAS BEEN WITHDRAWN WITH RETROSPECTIVE EFFECT VIDE S.O.2882(E) DATED 06.09.2016, BUT AS ON THE D ATE OF DONATION GIVEN BY THE ASSESSEE, THE ORGANISATION HAS BEEN APPROVED UNDER SECTION 35(1)(II) OF THE ACT AND THEREFORE, SHE PRAYED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) SHOULD BE DELETED. 5. ON THE OTHER HAND , THE LD. DR STRONGLY SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 6. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. FIRST WE SHALL ADJUDICATE THE ISSUE AS TO WHETHER WITHDRAWAL OF APP ROVAL UNDER SECTION 35(1)(II) OF INCOME TAX ACT APPLY RETROSPECTIVELY FOR EXEMPTION CLAIMED BY THE ASSESSEE. I.T.A. NO . 3219 / M/ 1 6 5 VIDE NOTIFICATION NO. 35/2008 DATED 14.03.2008, THE ORGANIZATION HERBICURE HEALTHCARE BIO - HERBAL RESEARCH FOUNDATION, KOLKATA HAS BEEN APPROVED BY THE CENTRAL GOVERNMENT FOR THE PURPOSE OF CLAUSE (II) OF SUB - SECTION (1) OF SECTION 35 OF THE ACT WITH EFFECT FROM 01.04.2007. IN VIEW OF THE ABOVE NOTIFICATION, DONATION OFFERED TO THE ABOVE INSTITUTION IS EXEMPTED TO CLAIM DEDUCTION UNDER SECTION 35(1)(I I) OF THE ACT. THUS, THE ASSESSEE PAID DONATION OF .1 , 00 ,000 LAKHS TO THE ABOVE INSTITUTION. THIS FACT WAS NOT UNDER DISPUTE. SINCE THE ASSESSEE AS GIVEN DONATION, CLAIMED DEDUCTION OF 175% AS EXEMPT AS ADMISSIBLE UNDER THE PROVISIONS OF SECTION 35(1)(II) OF THE ACT. 7. THE ASSESSING OFFICER DENIED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ABOVE APPROVAL OF THE CENTRAL GOVERNMENT HAS BEEN WITHDRAWN RETROSPECTIVELY VIDE S.O. 2882(E) DATED 06.09.2016 AND THE LD. CIT(A) CONFIRMED THE SAME. THE INST ITUTION WAS ENJOYING THE APPROVAL OF THE PRESCRIBED AUTHORITY AT THAT TIME AND THE ASSESSEE MADE DONATION WAS ALSO NOT UNDER DISPUTE, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER CANNOT BE SUSTAINED UNDER LAW. OUR OBSERVATION IS DULY FORTIFIED BY THE DEC ISION OF HON BLE BOMBAY HIGH COURT IN THE CASE OF SEKSARIA BISWAN SUGAR FACTORY 184 ITR 123. THE PURPORT OF THE DECISION OF HON BLE BOMBAY HIGH COURT WAS THAT WHEN THE INSTITUTION WAS ENJOYING THE APPROVAL WITHIN THE MEANING OF SECTION 35(1)(II) OF THE ACT AS ON THE DATE OF RECEIPT OF DONATION AND RETROSPECTIVE CANCELLATION OF APPROVAL OF THE CONCERNED INSTITUTION, THE I.T.A. NO . 3219 / M/ 1 6 6 DEDUCTION CLAIMED IN RESPECT OF DONATION CANNOT BE DENIED. UNDER THE ABOVE FACTS AND CIRCUMSTANCES, DENIAL OF EXEMPTION CLAIMED IN RESPECT O F DONATION CANNOT BE SUSTAINED. 8. WITH REGARD TO THE DONATION, M/S. HERBICURE CONFIRMED THE VOLUNTARY DONATION OF .1 LAKHS FROM THE ASSESSEE. A COPY OF THE TRUST S CORPORATION BANK STATEMENT IN WHICH THE DONATION RECEIVED WAS ALSO SENT BY THE TRUST. B ASED ON THE SWORN STATEMENT OF THE FOUNDER DIRECTOR SHRI SWAPAN RANJAN DAS GUPTA OF M/S. HERBICURE, WHEREIN, HE HAS ADMITTED THAT HIS ORGANIZATION ACCEPT THE DONATION AND GIVING BACK OF THE SAME TO THE DONOR AFTER DEDUCTING A COMMISSION @ 5% ON THE DONATIO N AMOUNT. HOWEVER, THE DEPARTMENT HAS NOT MADE ANY EFFECT TO GET ANY VALID EVIDENCE THAT THE ORGANIZATION HAS GIVEN BACK THE DONATION TO THE DONOR AFTER DEDUCTING A COMMISSION @ 5% ON THE DONATION AMOUNT. UNDER THE ABOVE FACTS AND CIRCUMSTANCES, THE ASSESS ING OFFICER IS DIRECTED TO ASCERTAIN THE MEANS AS WELL AS ACTUAL AMOUNT REPAID BY THE DONEE TO THE ASSESSEE AND DECIDE THE ISSUE AFRESH AFTER GIVING SUFFICIENT OPPORTUNITIES OF HEARING TO THE ASSESSEE. THUS, THE GROUND RAISED BY THE ASSESSEE IS PARTLY ALLO WED FOR STATISTICAL PURPOSES. 9. WITH REGARD TO DISALLOWANCE UNDER SECTION 14A OF THE ACT, THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAD SHOWN AN AMOUNT OF . 1,78,833 / - AS DIVIDEND RECEIVED FROM SHARES AND MUTUAL FUNDS AND CLAIMED EXEMPTION UNDER SECTION 10(38) OF THE ACT. THE ASSESSING OFFICER DISALLOWED I.T.A. NO . 3219 / M/ 1 6 7 A SUM OF . 2,89,666 / - BEING THE EXPENSES INCURRED TOWARDS EARNING THE EXEMPT INCOME. IN THE ASSESSMENT OR DER, THE ASSESSING OFFICER HAS NOT GIVEN ANY BASIS AND DETAILS OF DISALLOWANCE MADE UNDER SECTION 14A OF THE ACT, SUCH AS TOTAL INVESTMENT MADE BY THE ASSESSEE, APPLICATION OF RELEVANT PROVISIONS OF INCOME TAX RULES, ETC. MOREOVER, ASSESSING OFFICER HAS MA DE THE DISALLOWANCE OVER AND ABOVE THE DIVIDEND INCOME EARNED BY THE ASSESSEE. AGAINST THE DIVIDEND INCOME OF .1,78,833/ - , THE ASSESSING OFFICER DISALLOWED THE EXPENDITURE TO THE EXTENT OF .2,89,666/ - . AS PER THE CASE LAW FILED BY THE ASSESSEE, IN CASE OF JOINT INVESTMENTS PVT. LTD. V. CIT 372 ITR 694, THE HON BLE DELHI HIGH COURT HAS OBSERVED AND THE HEAD - NOTES ARE AS UNDER: INCOME - EXPENDITURE INCURRED IN RELATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME - DISALLOWANCE - ASSESSEE WAS ENGAGED IN DIVERSE INVESTMENT ACTIVITIES AND IN THE COURSE OF ITS BUSINESS DERIVED INCOME FROM RENT, SALE OF INVESTMENTS, DIVIDEND AND INTEREST - FOR AY 2009 - 10, ASSESSEE HAD REPORTED A LOSS OF SPECIFIED AMOUNT - ASSESSEE DECLARED TAX EXEMPT INCOME IN THE FORM OF DIVIDEND TO THE TUNE OF RS.4 8 ,90,000 - ASSESSEE VOLUNTEERED RS.2,97,440 AS ATTRIBUTABLE U/S14A FOR THE PURPOSE OF DISALLOWANCE - AO ON THE BASIS OF HIS OWN UNDERSTANDING OF RULE 8 D OF THE INCOME TAX RULES DISALLOWED THE SUM U/S 14A READ WITH RULE 8 D - ASSESSEE CLAIMED THAT THE ENTIRE TAX EXEMPT INCOME OF RS.48,90,000 WAS LOWER THAN THE DISALLOWANCE - CIT(A) AND ITAT UPHELD AO'S ORDER - HELD, I N CASE OF CIT(A) V. TAIKISHA ENGINEERING INDIA LTD., IT WAS HELD BY PRESENT COURT THAT IN VIEW OF THE PECULIAR WORDING OF SECTION 14A (2) THAT COMPUTATION OR DISALLOWANCE OF THE ASSESSEE, OR CLAIM THAT NO EXPENDITURE WAS INCURRED FOR EARNING EXEMPT INCOME SHOULD BE EXAMINED WITH REFERENCE TO THE ACCOUNTS AND ONLY IF THE ASSESSEE'S EXPLANATION WAS UNSATISFACTORY, CAN THE AO PROCEED FURTHER - IN THE PRESENT CASE, FIRSTLY IT WAS NOT DISCLOSED BY THE AO THAT THE APPELLANT/ASSESSEE'S CLAIM FOR ATTRIBUTING RS.2,97, 440 AS A DISALLOWANCE U/S 14A HAD TO BE REJECTED - SECONDLY, THERE APPEARS TO HAVE BEEN NO SCRUTINY OF THE ACCOUNTS BY THE AO AN ASPECT WHICH WAS I.T.A. NO . 3219 / M/ 1 6 8 COMPLETELY UNNOTICED BY THE CIT(A) AND THE ITAT - THIRDLY, AN IMPORTANT ANOMALY WHICH INSTANT COURT CANNOT BE UNMI NDFUL OF WAS THAT WHEREAS THE ENTIRE TAX EXEMPT INCOME WAS RS.48,90,000, THE DISALLOWANCE ULTIMATELY DIRECTED WORKS OUT TO NEARLY 110 PERCENT OF THAT SUM, THAT IS RS.52,56,197 - BY NO STRETCH OF IMAGINATION CAN SECTION 14A OR RULE 8D BE INTERPRETED SO AS TO MEAN THAT THE ENTIRE TAX EXEMPT INCOME WAS TO BE DISALLOWED - THE WINDOW FOR DISALLOWANCE WAS INDICATED IN SECTION 14A, AND WAS ONLY TO THE EXTENT OF DISALLOWING EXPENDITURE 'INCURRED BY THE ASSESSEE IN RELATION TO THE TAX EXEMPT INCOME' - THIS PROPORTION OR PORTION OF THE TAX EXEMPT INCOME SURELY CANNOT SWALLOW THE ENTIRE AMOUNT AS HAS HAPPENED IN THIS CASE - ITAT AS WELL AS THE AO AND CIT(A) HAD ESCAPED THE MANDATE OF SECTION 14A(2) - IMPUGNED ORDER OF THE ITAT WAS SET ASIDE - QUESTION OF LAW WAS ANSWERED IN FAVOU R OF THE ASSESSEE - ORDER OF THE AO WAS SET ASIDE - INITIATION OF PENALTY PROCEEDINGS ALSO WAS SET ASIDE - MATTER WAS REMITTED TO THE AO FOR FRESH CONSIDERATION IN ACCORDANCE WITH THE ABOVE DIRECTIONS ASSESSEE S APPEAL ALLOWED. 9.1 FURTHER, THE HON BLE HIG H COURT OF KARNATAKA IN THE CASE OF UNITED BREWERIES LTD. VS. DCIT IN [2016] 72 TAXMANN.COM (KARNATAKA) WHEREIN HELD THAT: - 8. SO FAR AS SECOND QUESTION OF APPLICABILITY OF SEC. 14A OF THE ACT TO THE EXPENSES INCURRED BY THE APPELLANT TOWARDS INTEREST AN D OTHERS ON THE LOAN BORROWED IS CONCERNED, THE FINDING OF THE TRIBUNAL IS AT PARAGRAPH 11 WHICH READS AS UNDER: 11. THE REVENUE IS IN APPEAL AND WE HAVE CONSIDERED THE RIVAL CONTENTIONS. IN OUR VIEW, THE RECENT JUDGMENT OF THE SPECIAL BENCH IN BOMBAY IN ITO V. DAGA CAPITAL MANAGEMENT PVT. LTD (2009) 312 ITR (AT) 1, IS APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THIS ORDER, IT HAS BEEN HELD THAT SECTION 1 4A IS APPLICABLE EVEN WHERE THE MOTIVE IN ACQUIRING THE SHARES WAS TO OBTAIN CONTROLLING INTEREST IN THE COMPANIES. THE FINDING OF THE COMMISSIONER OF INCOME - TAX (APPEALS) CANNOT, THEREFORE, BE UPHELD AS IT IS CONTRARY TO THE DECISION OF THE SPECIAL BENCH. WE, ACCORDINGLY, UPHOLD IN PRINCIPLE THE APPLICABILITY OF SECTION 14A. HOWEVER, IT IS FOR THE AS SESSING OFFICER TO ASCERTAIN FROM THE FACTS OF THE CASE AS TO HOW MUCH INTEREST BEARING BORROWINGS WAS UTILIZED TO ACQUIRE SHARES IN THE COMPANIES. IT IS ALSO NECESSARY TO SEE AS TO WHETHER ANY INTEREST BEARING BORROWED I.T.A. NO . 3219 / M/ 1 6 9 FUNDS WERE USED IN MAKING THE ADVANC ES AND EXPENDITURE IN THE CASE OF CASTLE BREWERIES. THIS FACTUAL EXERCISE HAS TO BE CARRIED OUT BY THE ASSESSING OFFICER AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. THE ASSESSING OFFICER MAY MAKE THE DISALLOWANCE OF INTEREST U/S. 1 4A ONLY IF IT IS FOUND THAT INTEREST BEARING BORROWED FUNDS WERE USED TO ACQUIRE SHARES IN THE COMPANIES OR FOR MAKING ADVANCES TO CASTLE BREWERIES. WE, THEREFORE, RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH THE ABOVE DIRECTIONS. THE GROUN D IS TREATED AS PARTLY ALLOWED. 9. THE AFORESAID SHOWS THAT THE TRIBUNAL AFTER HOLDING IN PRINCIPLE THE APPLICABILITY OF SEC. 14A, HAS FURTHER DIRECTED THE ASSESSING OFFICER TO ASCERTAIN FROM THE FACTS OF THE CASE AS TO HOW MUCH INTEREST BEARING BORROWIN GS WAS UTILIZED TO ACQUIRE SHARES IN THE COMPANIES AND THE MATTER IS RELEGATED TO THE ASSESSING OFFICER. AS PER THE LANGUAGE IN SEC. 14A, THE ENQUIRY HAS TO BE UNDERTAKEN BY THE ASSESSING OFFICER WHICH HAS BEEN SO ORDERED BY THE TRIBUNAL. HENCE, IT CAN BE SAID THAT THE TRIBUNAL HAS EXERCISED THE DISCRETION WHERE RIGHTS OF BOTH SIDES ARE KEPT OPEN FOR ADMISSIBLE DEDUCTION UNDER SEC. 14A. WHEN SUCH A DISCRETION IS EXERCISED AND THE RIGHTS OF THE APPELLANT - ASSESSEE IS ALSO KEPT OPEN TO SATISFY THE ASSESSING OF FICER, IT CANNOT BE SAID THAT ANY SUBSTANTIAL QUESTIONS OF LAW WOULD ARISE FOR CONSIDERATION, AS SOUGHT TO BE CANVASSED. IN OUR VIEW, AT THE STAGE OF ENQUIRY UNDER SEC. 14A, IT IS OPEN TO THE ASSESSING OFFICER TO INDEPENDENTLY CONSIDER THE MATTER FOR ADMIS SIBILITY OF THE INTEREST ON BORROWINGS AND IF YES TO WHAT EXTENT. HENCE, WHEN THE QUESTION AT LARGE IS FURTHER TO BE CONSIDERED BY THE ASSESSING OFFICER, WE DO NOT FIND D R FURTHER OBSERVATIONS ARE REQUIRED TO BE MADE IN THIS REGARD. IN ANY CASE, THE QUEST ION OF LAW AS SOUGHT TO BE CANVASSED WOULD NOT ARISE FOR CONSIDERATION AT THIS STAGE ON THE SAID ASPECTS BE CANVASSED. 9.2 FURTHER, THERE IS A RECENT JUDGEMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. CHETTINAD LOGISTICS P LTD. IN TC(A) NO.24 OF 2017 DATED 13.03.2017. BEING SO, IN OUR OPINION IT IS APPROPRIATE TO REMIT THE ISSUE TO THE FILE OF A SSESSING O FFICER TO CONSIDER THE DISALLOWANCE U NDER SECTION 14A R.W. RULES 8D TO FIND OUT WHETHER INTEREST BEARINGS BORROWED FUND S WERE USED FOR I.T.A. NO . 3219 / M/ 1 6 10 MAKING INVESTMENTS IN SHARES AND MUTUAL FUNDS . WITH THIS OBSERVATION, WE RESTORE THE ISSUE TO THE FILE OF A SSESSING O FFICER FOR FRESH CONSIDERATION. 10 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNC ED ON THE 26 TH APRIL , 201 7 AT CHENNAI. SD/ - SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 26 . 0 4 .201 7 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.