Smt. Sangita Chordia, Indore V. THE ITO WARD 5(3), Indore

ITA 438/IND/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5828 (ITAT-INDORE)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 03-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Assessee Lawyers: P D NAGAR
• Keywords: Opportunity of being heard; Earning of tax free income; Question of law
• Section: 14A

Judgement Text

SMT. SANGITA CHOURADIA PAN ACWPC 4829R 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JM & SHRI O.P. MEENA, AM ITA NO.438/IND/2016 A.Y.2012-13 SMT. SANGITA CHORDIA INDORE PAN ACWPC 4829R ::: APPELLANT VS INCOME TAX OFFICER 5(3) INDORE ::: RESPONDENT APPELLANT BY SHRI P.D.NAGAR RESPONDENT BY SHRI MOHD. JAVED DATE OF HEARING 17.8.2016 DATE OF PRONOUNCEMENT 17.8.2016 O R D E R PER SHRI D.T. GARASIA, JM THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A)-II, INDORE, DATED 31.3.2 016. 2. IN THIS CASE THE ASSESSING OFFICER APPLYING THE PROVISIONS OF SECTION 14A OF THE ACT AND RULE 8D OF THE INCOME TAX RULES, MADE THE DISALLOWANCE OF RS.4,65,748 /-. SMT. SANGITA CHOURADIA PAN ACWPC 4829R 2 ON APPEAL, THE LEARNED CIT(A) RESTRICTED THE DISALLOWANC E IN RELATION TO INTEREST PAID FOR EARNING EXEMPTED INCOME TO THE EXTENT OF RS.3,35,750/- AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. WE HAVE HEARD BOTH THE SIDES. WE FIND THAT THIS BEN CH OF THE TRIBUNAL HAD AN OCCASION TO CONSIDER THE IDENTIC AL ISSUE IN THE CASE OF KAMAL KUMAR JAGDISH PRASAD LATH IN ITA NO.264/IND/2016 AND VIDE ORDER DATED 21 ST JUNE, 2016 THE TRIBUNAL HAS HELD AS UNDER :- 6. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES. HON'BLE HIGH COURT OF DELHI IN THE CASE OF J OINT INVESTMENT PVT. LTD. (SUPRA) HAS HELD AS UNDER :- 9. IN THE PRESENT CASE, THE AO HAS NOT FIRSTLY DISCLOSED WHY THE APPELLANT/ASSESSEES CLAIM FOR ATTRIBUTING RS.2,97, 440/-AS A DISALLOWANCE UNDER SECTION 14A HAD TO BE REJECTED. T AIKISHA SAYS THAT THE JURISDICTION TO PROCEED FURTHER AND DETERMINE AM OUNTS IS DERIVED AFTER EXAMINATION OF THE ACCOUNTS AND REJECTION IF A NY OF THE ASSESSEES CLAIM OR EXPLANATION. THE SECOND ASPECT IS THERE APPEARS TO HAVE BEEN NO SCRUTINY OF THE ACCOUNTS BY THE AO -AN ASPECT WHICH IS COMPLETELY UNNOTICED BY THE CIT (A) AND THE ITAT. T HE THIRD, AND IN THE OPINION OF THIS COURT, IMPORTANT ANOMALY WHICH WE C ANNOT BE UNMINDFUL IS THAT WHEREAS THE ENTIRE TAX EXEMPT INC OME IS RS.48,90,000/-, THE DISALLOWANCE ULTIMATELY DIRECTE D WORKS OUT TO NEARLY 110% OF THAT SUM, I.E., RS.52,56,197/-. BY N O STRETCH OF SMT. SANGITA CHOURADIA PAN ACWPC 4829R 3 IMAGINATION CAN SECTION 14A OR RULE 8D BE INTERPRET ED SO AS TO MEAN THAT THE ENTIRE TAX EXEMPT INCOME IS TO BE DISALLOW ED. THE WINDOW FOR DISALLOWANCE IS INDICATED IN SECTION 14A, AND IS ON LY TO THE EXTENT OF DISALLOWING EXPENDITURE INCURRED BY THE ASSESSEE I N RELATION TO THE TAX EXEMPT INCOME. THIS PROPORTION OR PORTION OF THE T AX EXEMPT INCOME SURELY CANNOT SWALLOW THE ENTIRE AMOUNT AS HAS HAPP ENED IN THIS CASE. 10. FOR THE ABOVE REASONS, THE IMPUGNED O RDER OF THE ITAT IS SET ASIDE. THE QUESTION OF LAW IS ANSWERED IN FAVOUR OF THE ASSESSEE. CONSEQUENTLY, ORDER OF THE AO IS SET ASIDE. THE INI TIATION OF PENALTY PROCEEDINGS ALSO IS SET ASIDE. THE MATTER IS REMITT ED TO THE AO FOR FRESH CONSIDERATION IN ACCORDANCE WITH THE ABOVE DI RECTIONS. THE APPEAL IS PARTLY ALLOWED. I, THEREFORE, SET ASIDE THE ORDERS OF THE AUTHORITI ES BELOW WITH THE DIRECTION TO THE ASSESSING OFFICER T O CONSIDER THE ABOVE HIGH COURT JUDGMENTS CITED ABOVE AND DECIDE THE ISSUE IN VIEW THEREOF. I ORDER ACCORDINGLY. 4. FOLLOWING THE ABOVE ORDER OF THE TRIBUNAL, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW WITH THE DIRECTI ON TO THE ASSESSING OFFICER TO CONSIDER THE ABOVE HIGH COURT JUDGMENTS CITED ABOVE AND DECIDE THE ISSUE IN VIEW T HEREOF, AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. SMT. SANGITA CHOURADIA PAN ACWPC 4829R 4 PRONOUNCED IN OPEN COURT ON 17 TH AUGUST, 2016 SD SD (O.P. MEENA) (D.T. G ARASIA) ACCOUNTANTMEMBER JUDICIAL MEMB ER 17 TH AUGUST, 2016 DN/- SMT. SANGITA CHOURADIA PAN ACWPC 4829R 5