M.Chandra, CHENNAI V. ACIT, CHENNAI

ITA 3437/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4516 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 17-05-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 22-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V NANDAKUMAR IRS
• Assessee Lawyers: SRIDHAR
• Keywords: Earning of tax free income
• Section: 14A; 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C (SMC) BENCH : CHENNAI . , [BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER ] ./I.T.A. NO. 3437/MDS/2016 / ASSESSMENT YEAR : 2012-2013. SMT. M. CHANDRA, NO.14, PETERS ROAD, ROYAPETTAH, CHENNAI 600 014. [PAN ADEPC 9042R] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, NON CORPORATE CIRCLE 11, CHENNAI. ( !' / APPELLANT) ( #$!' /RESPONDENT) / APPELLANT BY : SHRI. SRIDHAR, ADVOCATE /RESPONDENT BY : SHRI. V.NANDAKUMAR, IRS, JCIT. /DATE OF HEARING : 17-05-2017 ! /DATE OF PRONOUNCEMENT : 17-05-2017 % / O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-13, CH ENNAI, IN APPEAL NO.36/CIT(A)-13/AY 2012-13, DATED 27.10.2016 FOR TH E ASSESSMENT YEAR 2012-2013. ITA NO.3437/MDS/2016. :- 2 -: 2. SHRI. S. SRIDHAR REPRESENTED ON BEHALF OF THE ASSES SEE AND SHRI. V. NANDAKUMAR REPRESENTED ON BEHALF OF THE RE VENUE. 3. THE ONLY ISSUE IN ASSESSEES APPEAL WAS AGAINST THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF TH E INTEREST PAID TO THE CREDITORS BY THE APPELLANT BY INVOKING THE PROVISIO NS OF SEC. 14A R.W.R 8D. IT WAS SUBMITTED THAT ASSESSEE IS AN INDIVIDUA L, WHO IS DERIVING INCOME AS PARTNER IN A FIRM AND INCOME FROM OTHER S OURCES. THE ASSESSEE HAD CLAIMED THE PROFIT FROM THE FIRM AS EX EMPT U/S.10(2A) OF THE ACT. ASSESSEE HAD ALSO OUT OF THE BUSINESS INC OME CLAIMED DEDUCTION IN RESPECT OF THE INTEREST PAID TO THE LO AN CREDITORS. IT WAS SUBMITTED THAT IN PARA 7 OF THE ASSESSMENT ORDER, L D. ASSESSING OFFICER HAS DISALLOWED THE ENTIRE INTEREST PAYMENTS TO THE LOAN CREDITOR BY INVOKING THE PROVISIONS OF SEC. 14A OF THE ACT. IT WAS SUBMITTED THAT NO SATISFACTION HAS BEEN RECORDED BY THE LD. ASSES SING OFFICER BEFORE INVOKING THE PROVISIONS OF SEC. 14A R.W.R. 8D OF THE ACT. LD. AUTHORISED REPRESENTATIVE PLACED RELIANCE UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING COMPANY LTD VS. DCIT IN CIVIL APPEAL NO.7020 OF 201 1, DATED 8 TH MAY, 2017 , WHEREIN PARA 37 THE HONBLE SUPREME COURT HAD HEL D THAT WHETHER SUCH DETERMINATION IS TO BE MADE ON APPLI CATION OF THE FORMULA PRESCRIBED UNDER RULE 8D OR IN THE BEST JUD GMENT OF THE ITA NO.3437/MDS/2016. :- 3 -: ASSESSING OFFICER, WHAT THE LAW POSTULATES IS THE R EQUIREMENT OF A SATISFACTION IN THE ASSESSING OFFICER THAT HAVING R EGARD TO THE ACCOUNTS OF THE ASSESSEE, AS PLACED BEFORE HIM, IT IS NOT PO SSIBLE TO GENERATE THE REQUISITE SATISFACTION WITH REGARD TO THE CORRECTNE SS OF THE CLAIM OF THE ASSESSEE. IT IS ONLY THEREAFTER THAT THE PROVISION S OF SECTION 14A(2) AND (3) READ WITH RULE 8D OF THE RULES OR A BEST JU DGMENT DETERMINATION, AS EARLIER PREVAILING, WOULD BECOME APPLICABLE. 4. IN REPLY, THE LD. DEPARTMENTAL REPRESENTATIVE VEH EMENTLY SUPPORTED THE ORDERS OF THE LD. ASSESSING OFFICER A ND THE LD. COMMISSIONER OF INCOME TAX (APPEALS). IT WAS SUBMIT TED THAT ASSESSEE HAD EXEMPT INCOME AND CONSEQUENTLY THE PRO VISIONS OF SEC. 14A R.W.R. 8D APPLIED. 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERUSAL OF THE PARA 7 OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT N O SATISFACTION HAS BEEN RECORDED BY THE LD. ASSESSING OFFICER FOR THE PURPOSE OF MAKING A DISALLOWANCE U/S. 14A R.W.R. 8D. FURTHER, THOUGH T HE LD. ASSESSING OFFICER HAD INVOKED THE PROVISIONS OF SEC. 14A OF T HE ACT, THE DETERMINATION OF THE DISALLOWANCE IS NOT AS PER CAL CULATION OR THE FORMULA PROVIDED IN SEC. 14A R.W.R 8D. IN THE CIRCU MSTANCES, RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING COMPANY LTD REFERRED TO SUPRA, ITA NO.3437/MDS/2016. :- 4 -: IN THE ABSENCE OF RECORDING OF SATISFACTION AND IN THE ABSENCE OF PROPER DETERMINATION OF THE DISALLOWANCE, THE ADDIT ION MADE BY THE LD. ASSESSING OFFICER AND CONFIRMED BY THE LD. COMMISSI ONER OF INCOME TAX (APPEALS) U/S. 14A OF THE ACT STANDS DELETED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON WEDNESDAY, THE 17 TH DAY OF MAY , 2017, AT CHENNAI. SD/- ( GEORGE MATHAN) ( / JUDICIAL MEMBER '# / CHENNAI $% / DATED:17 TH MAY, 2017 KV %& '()( / COPY TO: 1 . / APPELLANT 3. *+, / CIT(A) 5. (-. / / DR 2. / RESPONDENT 4. * / CIT 6. .01 / GF