ARUN JAIN, MUMBAI V. ASST CIT CIR 12(3), MUMBAI

ITA 368/MUM/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0066 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 09-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 15-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Opportunity of being heard
• Section: 142(1); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI R. C. SHARMA , AM AND SHRI AMARJIT SINGH , JM I.T.A. NO . 368 /M/ 20 1 4 ( ASSESSMENT YEAR : 2009 - 10 ) MR. ARUN JAIN 11 VIKAS PARK, JALPANKHI CHS LTD. JUHU TARA ROAD, JUHU, MUMBAI - 400049 . VS. ACIT, CIRCLE 12(3) AAYAKAR BHAWAN, 1 ST FLOOR, MAHARSHI KARVE MARG, MUMBAI - 400020. ./ ./ PAN/GIR NO. : AAFPJ 0335 G ( APPELLANT ) .. ( RESPONDENT ) DATE OF HEARING : 3 0 . 0 8 .2018 DATE OF PRONOUNCEMENT : 19.09 .201 8 O R D E R PER AMARJIT SINGH, JM: THE PRESENT APPEA L HA S BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 09 . 10 .201 3 PASSED BY THE COMMIS S IONER OF INCOME TAX (APPEALS) - 23 , MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE ASSESSMENT YEAR 20 09 - 10 . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1 I N THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING ADDITION OF RS.3,47,554/ - UNDER SECTION 14 A R.W. RULE 8 D WITHOUT CONSIDERING THE FACT THAT THE ASSESSES HIMSELF HAS DISALLOWED THE INTEREST EXPENDITURE AND NO ASSESSEE BY: SHRI ANIL THAKRAR (AR) DEPARTMENT BY: SHRI CHAITANYA ANJARIA (DR) ITA. NO. 368 /M/201 4 A.Y. 2009 - 10 2 EXPENSES WERE INCURRED FOR EARNING THE DIVIDEND INCOME. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.1,20.000/ - UNDER SECTION 40 (A) (IA) OF THE INCOME TAX ACT 1961. 3 IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF RS.8 ,61,929/ - ON ACCOUNT OF INTEREST FREE LOANS. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, AMEND, MODIFY, SUBSTITUTE, DELETE AND/OR RESCIND ALL OR ANY OF THE GROUND OF APPEAL ON OR BEFORE THE FINAL HEARING, IF NECESSITY SO ARISES . 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 30 . 09 .20 0 9 DECLARING TOTAL IN COME TO THE TUNE OF RS.26,76,970 / - FOR THE A.Y 2009 - 10 . THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT. THEREAFTER, THE CASE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES U/S 143(2) AND 142(1) OF THE ACT WERE ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN STEEL, FIN ANCE DERIVATIVES. AFTER CERTAIN DISALLOWANCE , THE ASSESSMENT OF THE ASSESSEE WAS COMPLETED ASSESSING THE TOTAL INCOME TO THE TUNE OF RS. 41,65,450/ - . THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO DISMISSED THE APPEAL OF THE ASSESSEE , THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NOS. 1 : - 4 . UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF THE DISALLOWANCE OF RS.3,47,554/ - U/S 14A R.W. RULE 8D OF THE ACT. THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED T HAT THE ASSESSEES ITA. NO. 368 /M/201 4 A.Y. 2009 - 10 3 OWN FUNDS ARE MORE THAN THE INVESTMENT, THEREFORE, NO DISALLOWANCE IS REQUIRED IN VIEW OF PROVISION U/S 14A R.W.RULE 8D OF THE ACT. IT IS ALSO ARGUED THAT THE AS SESSEE NOWHERE CLAIMED EXPENSES, T HEREFORE, IN THE SAID CIRCUMSTANCES, NO DI SALLOWANCE IS REQUIRED. HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS REFUTED THE SAID CONTENTION. ON APPRAISAL OF THE RECORD AVAILABLE ON THE FILE , WE NOTICED THAT THE ASSESSEE WAS ALSO THE PROPRIETOR OF TWO OR THREE CONCERN AND HIS OWN FUND REQUIRED VERIFICATION AT THE END OF THE AO AND THE CONTROVERSY IS REQUIRED TO BE ADJUDICATED IN VIEW OF THE LAW SETTLED IN CIT VS. RELIANCE UTILITIES (313 ITR 340). WE ALSO NOTICED THAT THE ASSESSEE NOWHERE CLAIMED EXPENSES IN HIS RETURN OF I NCOME. THEREFORE, WE ARE OF THE VIEW THAT THIS ASPECT IS ALSO REQUIRED TO BE EXAMINED AT THE END OF AO . BOTH THE POINTS HAVE NOT BEEN DISCUSSED BY THE AUTHORITY BELOW . IN THE SAID CIRCUMSTANCES, WE SET ASIDE THE FINDING OF CIT(A) IN QUESTION AND RESTORE THE MATTER BEFORE THE AO TO DECIDE THE ISSUE AFRESH BY GIVING THE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN ACCORDANCE WITH LAW ACCORDINGLY, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ISSUE NOS. 2 : - 5. THIS ISSUE HAS NOT BEEN PRESSED BY THE ASSESSEE, THEREFORE, THIS ISSUE IS BEING DECIDED IN FAVOUR OF THE REVENUE AGAINST THE ASSESSEE BEING NOT PRESSED. ITA. NO. 368 /M/201 4 A.Y. 2009 - 10 4 I SSUE NO 3 : - 6 . UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF INTEREST TO THE TUNE OF RS.8,61,929/ - . THE CON TENTION OF THE ASSESSEE IS THAT THE ASSESSEE TOOK THE LOAN W.E.F. 24.08.2008, THEREFORE, IN THE SAID CIRCUMSTANCES THE INTEREST IS LIABLE TO BE CALCULATED W.E.F. 21.08.2008 TO 31.03.2009, THEREFORE, THE INTEREST DISALLOWANCE TO THE EXTENT OF 8,61,929/ - IS NOT JUSTIFIABLE AND IS LIABLE TO BE CORRECTED ACCORDINGLY. HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS REFUTED THE SAID CONTENTION. THE ASSESSEE HAS REFLECTED THE LOAN GIVEN TO M/S. SUNALCO ALLOYS PVT. LTD. AS NON - INTEREST BEARI NG LOAN . THE LOAN WAS GIVEN TO THE SAID CONCERN ON 21.08.2008 TO 31.03 .2008 9 IN THE BOOKS OF ACCOUN T. THE ASSESSEE DID NOT RECEIVE ANY INTEREST AS ON 31.0 3.2009. THE LD. REPRESENTATIVE OF THE ASSESSEE NOWHERE ARGUED IN CONNECTION WITH THAT THE DISALLOWANCE OF RS.8,61,929/ - BUT IT IS SPECIFICALLY ARGUED THAT THE INTEREST SHOULD BE CALCULATED FOR THE PERIOD OF W.E.F. 21.08.2008 TO 31.03.2009. THIS FACT IS REQUIRED TO BE EXAMINED AT THE END OF THE AO . THE INTEREST IS REQUIRED TO BE CALCULATED ON THE DATE WHEN THE LOAN HAS GIVEN TO M/S. SUNALCO ALLOYS P. LTD. TO UPTO 31.03.2009, THEREFORE, IN THE SAID CIRCUMSTANCES, WE SET ASIDE THE FINDING OF THE C IT(A) ON THIS ISSUE AND RESTORE THIS ISSUE BEFORE THE AO TO DECIDE THE MATTER OF CONTROVERSY AFRESH TO THE CALCULATE THE INTEREST W.E.F 21.08.2008 TO 31.03.2009 IN ACCORDANCE ITA. NO. 368 /M/201 4 A.Y. 2009 - 10 5 WITH LAW. ACCORDINGLY, THIS ISSUE IS BEING DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. 7 . IN RESULT, APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE PARTLY ALLOWED . ORDER P RONOUNCED IN THE OPEN COURT ON 19.09.2 018 . SD/ - SD/ - ( R. C. SHARMA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 19.09. 2018 VIJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI