K.P.Ramasamy, CHENNAI V. ACIT, CHENNAI

ITA 417/CHNY/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68914 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 19-12-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 08-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: S SRIDHAR
• Keywords: Gift
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NO.417/MDS/2013 (ASSESSMENT YEAR: 2009-10) MR. K.P. RAMASAMY, NO.5, AKS NAGAR, THADAGAM ROAD, COIMBATORE. PAN: AARPR1787J VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-I(3), COIMBATORE. (APPELLANT) (RESPONDENT) APPELLANT BY : MR. S.SRIDHAR, ADVOC ATE RESPONDENT BY : MR. S.DAS GUPTA, JCIT DATE OF HEARING : 19 TH DECEMBER, 2013 DATE OF PRONOUNCEMENT : 31 ST DECEMBER, 2013 O R D E R PER CHALLA NAGENDRA PRASAD, JM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, COIM BATORE DATED 11.01.2013 FOR THE ASSESSMENT YEAR 2009-10. THE ONLY ISSUE IN THE APPEAL OF THE ASSESSEE IS THAT CO MMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING DISALLO WANCE OF ` 9,81,582/- MADE INVOKING PROVISIONS OF SECTION 14A READ WITH RULE 8D OF THE INCOME TAX RULES. ITA NO.417/MDS/2013 2 2. THE ASSESSING OFFICER WHILE COMPLETING THE ASSES SMENT NOTICED THAT THE ASSESSEE DERIVED DIVIDEND INCOME O F ` 2,38,37,728/- AND THE PROVISIONS OF SECTION 14A AR E ATTRACTED. THE ASSESSEE SUBMITTED THAT INVESTMENT I N SHARES WERE MADE OUT OF INTEREST FREE LOANS, GIFTS RECEIV ED FROM FAMILY MEMBERS IN EARLIER YEARS AND INTEREST LIABIL ITY AROSE ON CC ACCOUNT SANCTIONED FOR BUSINESS PURPOSES CANNOT BE ATTRIBUTED TO DIVIDEND INCOME. IT WAS THE SUBMISSI ON THAT ASSESSEE HAS NOT INCURRED ANY EXPENDITURE FOR EARNI NG DIVIDEND INCOME, HOWEVER THE ASSESSING OFFICER INVO KED THE PROVISIONS OF SECTION 14A READ WITH RULE 8D AND DI SALLOWED ` 6,78,722/- TOWARDS INTEREST UNDER RULE 8D(2)(II) AN D ` 3,02,860/- UNDER RULE 8D(2)(III) TOTAL AMOUNTING TO ` 9,81,582/-. THE ASSESSEE BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) REITERATED THE SUBMISSIONS THA T NO EXPENDITURE WAS INCURRED AND INVESTMENT WAS MADE OU T OF INTEREST FREE LOANS AND INTEREST EXPENDITURE SHALL NOT ATTRIBUTABLE TO DIVIDEND INCOME SINCE THE SAID INTE REST WAS PAID FOR BUSINESS PURPOSES ON CC ACCOUNT. HOWEVER, THE ITA NO.417/MDS/2013 3 COMMISSIONER OF INCOME TAX (APPEALS) DID NOT REJECT THE PLEA OF THE ASSESSEE. 3. THE COUNSEL FOR THE ASSESSEE SUBMITS THAT ASSESS ING OFFICER MECHANICALLY INVOKED THE PROVISIONS OF SECT ION 14A READ WITH RULE 8D WITHOUT EXAMINING THE ISSUE PROP ERLY. HE SUBMITS THAT EVEN IN THE IMMEDIATELY PRECEDING YEAR I.E. ASSESSMENT YEAR 2008-09 IN ITA NO.1532/MDS/2011 DAT ED 12.01.2012 THE MATTER WAS RESTORED BY THE TRIBUNAL TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE ISSUE AFRES H. 4. THE DEPARTMENTAL REPRESENTATIVE RELIED ON THE O RDERS OF LOWER AUTHORITIES. 5. HEARD BOTH SIDES. PERUSED THE ORDERS OF LOWER AUTHORITIES. WE HAVE GONE THROUGH ORDERS OF ASSESSI NG OFFICER AS WELL AS COMMISSIONER OF INCOME TAX (APPE ALS) ON THE ISSUE AND FIND THAT THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT MECHANICALLY INVOKED THE PROVISIONS OF SECTION 14A READ WITH RULE 8D WITHOUT ANY FINDINGS ON THE SUBMISSIONS OF THE ASSESSEE THAT INVESTMENTS IN SH ARES WERE ITA NO.417/MDS/2013 4 MADE OUT OF INTEREST FREE LOANS FROM SREE RAMAKRISH NA TEXTILES, GIFTS RECEIVED FROM HIS FAMILY MEMBERS A ND BROTHERS IN EARLIER YEAR AND THE INTEREST LIABILITY AROSE O N CC ACCOUNT SANCTIONED FOR BUSINESS PURPOSES CANNOT BE ATTRIBU TED TO DIVIDEND INCOME. SINCE THE LOWER AUTHORITIES DID N OT CONSIDER THE ISSUE IN DETAIL, WE ARE OF THE VIEW THAT THE AS SESSING OFFICER SHOULD RE-EXAMINE THE WHOLE ISSUE AFRESH IN THE LIGHT OF THE SUBMISSIONS OF THE ASSESSEE. THEREFORE, WE SET ASIDE THE IMPUGNED ORDER AND RESTORE THE ISSUE BACK TO TH E FILE OF THE ASSESSING OFFICER TO EXAMINE THE ISSUE AFRESH A FTER PROVIDING ADEQUATE OPPORTUNITY TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON TUESDAY, THE 31 ST DAY OF DECEMBER, 2013 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY ) (CHALLA NAGENDRA PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI. DATED THE 31 ST DECEMBER, 2013. SOMU ITA NO.417/MDS/2013 5 COPY TO: (1) APPELLANT (4 ) CIT(A) (2) RESPONDENT (5 ) D.R. (3) CIT (6 ) G.F.