R. Jegathambal, Virudhunagar V. DCIT, Madurai

ITA 3435/CHNY/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1385 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 24-12-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R ANITHA
• Assessee Lawyers: S SHANMUGAVEL
• Keywords: Opportunity of being heard; Earning of tax free income; Rule 8D
• Section: 14A; 201; 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A (SMC) BENCH: CHENNAI , BEFORE SH RI GEORGE MATHAN, JUDICIAL MEMBER ./ ITA NO. 3435 /CHNY/ 201 9 / ASSESSMENT YEAR: 20 1 1 - 12 SMT. R. JEGATHAMBAL , NO.443, MAIN BAZAAR, VIRUDHUNAGAR 626 001. [PAN: A DEPJ 0074A ] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1, MADURAI 625 002. ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. S. SHANMUGAVEL, C.A. /RESPONDENT BY : M S . R. ANITHA, JCIT / DATE OF HEARING : 1 8 .03.2020 / DATE OF PRONOUNCEMENT : 1 8 .03 .20 20 / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 19 , C HENNAI IN APPEAL NO. I.T.A. NO. 159/18 - 19 DATED 13.08.2019 FOR THE ASSESSMENT YEAR 201 1 - 12. ITA NO. 3435 / CHNY / 201 9 : - 2 - : 2. MR. S. SHANMUGAVEL, CHARTERED ACCOUNTANT REPRESENTED ON BEHALF OF THE ASSESSEE AND MS. R. ANITHA, JCIT REPRE SENTED ON BEHALF OF THE R EVENUE . 3. IT WAS SUBMITTED BY THE LEARNED AUTHORIZED REPRE SENTATIVE THAT THE ASSESSEE IS AN INDIVIDUAL WHO IS ALSO HAVING INCOME FROM PARTNERSHIP FIRM S . IT WAS A SUBMISSION THAT IN THE COURSE OF ASSESSMENT, IT WAS NOTICED THAT THE ASSESSEE WAS HAVING EXEMPT INCOME AND CONSEQUENTLY THE ASSESSING OFFICER HAD INVO KED THE PROVIS IONS OF SECTION 14A R.W.RULE - 8D AND HAD DISALLOWED AN AMOUNT OF RS.11,90,082/ - AS EXPENDITURE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME. IT WAS A SUBMISSION THAT THE DIVIDEND INCOME EARNED BY THE ASSESSEE WAS ONLY R S.46,950/ - . IT WAS A SUBMISSION THAT IF AT ALL , THE DISALLOWANCE U/S.14A R.W.RULE 8D MUST BE RESTRICTED TO THE EXEMPT INCOME. 4. IN REPLY, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE IS DERIVING SHARE O F INCOME FROM PARTNERSHIP FI RM S . IT WAS A SUBMISSION THAT EVEN THE SAME HAS ITA NO. 3435 / CHNY / 201 9 : - 3 - : TO BE CONSIDERED FOR THE PURPOSE OF COMPUTING THE DISALLOWANCE U/S.14A R.W.RULE - 8D OF THE INCOME TAX ACT, 1961. FOR THIS PURPOSE, THE LEARNED DEPARTMENTAL REPRESENTATIVE PLACED BEFORE ME A COPY OF THE ORDER OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL , MUMBAI BENCH IN THE CASE OF DHARMASINGH M. POPAT VS. ASSISTANT COMMISSIONER OF INCOME T AX REPORTED IN [2010] 127 TTJ 61 (MUMBAI), AS ALSO THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL, PUNE BENCH IN THE CASE OF PARAS BHOMRAJ OSWAL VS. ASSISTANT COMMISSIONER OF INCOME TAX, KOHLAPUR REPORTED IN [2017] 88 TAXMANN.COM 41 (PUNE TRIB.) . 5 . I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. 6. ADMITTEDLY, THE DISALLOWANCE U/S.14A, R.W.RULE - 8D IS IN RESPECT OF THE EXPENDITURE INCURRED IN RESPECT OF SUCH INCOMES WHICH ARE NOT INCLUDABLE IN THE TOTAL INCOME OF THE ASSESSEE. THE SHARE OF INCOME FROM THE PARTNERSHIP FIRM AS ALSO THE DIVIDEND INCOME, ADMITTEDLY, IS NOT INCLUDABL E IN THE TOTAL INCOME OF THE ASSESSEE, AS THE SAME IS EXEMPT U/S.10 OF THE ITA NO. 3435 / CHNY / 201 9 : - 4 - : INCOME TAX ACT, 1961. A PERUSAL OF THE ASSESSMENT ORDER DOES NOT SHOW AS TO HOW THE ASSESSING OFFICER HAS DETERMINED THE DISALLOWANCE U/S.14A R.W.RULE - 8D. THIS BEING SO, IN THE INTEREST OF JUSTICE, THE ISSUE OF THE DISALLOWANCE U/S.14A R.W.RULE - 8D IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR RE - ADJUDICATION AND FOR RE - COMPUTING AFTER GRANTING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD. 7 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IN I.T.A. NO. 3435 /CHNY/2019 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 1 8 TH MARCH , 20 20 IN CHENNAI. SD/ - ( ) (GEORGE MATHAN) /JUDICIAL MEMBER / CHENNAI, / DATED: 1 8 TH MARCH , 2020 IA, SR. PS / COPY TO: 1. / APPELLANT 2. / RESPONDENT 3. ( ) / CIT(A) 4. / CIT 5. / DR 6. / GF