Travancore Titanium products Ltd, Trivandrum V. DCIT, Trivandrum

ITA 528/COCH/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4711 (ITAT-COCHIN)
• Duration Of Justice: 3 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2013
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 24-07-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 23-09-2010
• Court: TRIBUNAL
• Department Lawyers: M ANIL KUMAR; MT S VIJAYAPRABHA
• Assessee Lawyers: V DEVARAJAN
• Keywords: Revised return
• Section: 14A; 139(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NO. 528/COCH/2010 ASSESSMENT YEAR : 2007-08 M/S. TRAVANCORE TITANIUM PRODUCTS LTD., KOCHUVELI, TRIVANDRUM-695 021. [PAN: AAACT 8543J] VS. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1(1), TRIVANDRUM. (ASSESSEE -APPELLANT) (REVENUE-R ESPONDENT) ASSESSEE BY SHRI V. DEVARAJAN, FCA REVENUE BY MT. S. VIJAYAPRABHA, JR. DR & SHRI M. ANIL KUMAR, CIT(DR) DATE OF HEARING 24/07/2013 DATE OF PRONOUNCEMENT 30/09/2013 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER DATED 14-07-2010 PASSED BY THE LD. CIT(A)-I, TRIVANDRUM AND IT RELAT ES TO THE ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE IS ASSAILING THE DECISION OF THE LD . CIT(A) IN CONFIRMING THE ASSESSMENT ORDER ON THE FOLLOWING TWO ISSUES: (I) REJECTION OF EXPENDITURE CLAIMED AS PER AUDITE D ACCOUNTS. (II) DISALLOWANCE OF EXPENDITURE CLAIMED U/S. 14A OF THE ACT AGAINST DIVIDEND INCOME. 3. THE FACTS RELATING TO THE CASE ARE STATED IN BRI EF. THE ASSESSEE IS A GOVERNMENT OF KERALA UNDERTAKING ENGAGED IN THE BUSINESS OF MA NUFACTURING OF TITANIUM DIOXIDE. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, IT HAD FILED ITS RETURN OF INCOME ON 27-10- 2007 DECLARING A LOSS OF RS. 74.32 LAKHS ON THE BAS IS OF PROVISIONAL STATEMENT OF ACCOUNTS, SINCE REGULAR AUDIT WAS NOT FINALISED BY THAT DATE. HOWEVER, DURING THE I.T.A. NO.528/COCH/2010 2 COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FILE D AUDITED FINANCIAL STATEMENTS. THE AO NOTICED THAT THERE IS A VARIATION IN THE INT EREST INCOME DECLARED BY THE ASSESSEE BETWEEN THE RETURN OF INCOME (PROVISIONAL FINANCIAL STATEMENTS) AND THE AUDITED FINANCIAL STATEMENTS. IN THE RETURN OF INCOME, INT EREST RECEIVED FROM FIXED DEPOSITS, TREASURY SAVINGS AND ON LOANS GIVEN TO THE STAFF WA S SHOWN AT RS.1,04,10,492/-. HOWEVER IN THE AUDITED FINANCIAL STATEMENTS, IT WAS SHOWN AT RS.1,69,63,405/-. HENCE, THE ASSESSING OFFICER PROPOSED TO ADD THE DIFFERENC E IN INTEREST INCOME, REFERRED ABOVE. THE ASSESSEE SUBMITTED THAT THERE IS SUCH KIND OF D IFFERENCES BETWEEN PROVISIONAL AND AUDITED STATEMENTS IN RESPECT OF EXPENDITURE CLAIM ALSO AND ACCORDINGLY OBJECTED TO THE SAID PROPOSAL OF THE AO, SINCE THE AO HAD PROPOSED TO RECOGNISE ONLY ONE DIFFERENCE, I.E., THE DIFFERENCE IN INTEREST INCOME. THE ASSES SING OFFICER NOTICED THAT THE ASSESSEE, IN THE AUDITED FINANCIAL STATEMENTS APPROVED BY THE BOARD, HAS SHOWN HIGHER LOSS VIS-A- VIS THE RETURN OF INCOME FILED ON THE BASIS OF PROV ISIONAL STATEMENTS. THE AO ALSO NOTICED THAT THE ASSESSEE DID NOT FILE ANY REVISED RETURN OF INCOME ON THE BASIS OF AUDITED FINANCIAL STATEMENTS WITHIN THE TIME LIMIT PRESCRIBED U/S. 139(5) OF THE ACT. HENCE, THE AO DECLINED TO CONSIDER THE AUDITED FINA NCIAL STATEMENTS FOR OTHER ITEMS, SINCE THE ASSESSEE HAS FAILED TO FURNISH REVISED RE TURN OF INCOME IN ORDER TO CLAIM HIGHER LOSS SHOWN IN THE AUDITED FINANCIAL STATEMENTS. HO WEVER, THE ASSESSING OFFICER ASSESSED THE DIFFERENCE IN THE INTEREST INCOME, REF ERRED ABOVE. FURTHER, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS RECEIVED DIVI DEND INCOME OF RS.16,88,175/- FROM THE INVESTMENTS MADE BY THE ASSESSEE IN THE SHARES OF OTHER COMPANIES. HOWEVER, THE ASSESSEE DID NOT DISALLOW ANY PORTION OF EXPENDITUR E AS RELATABLE TO THE EXEMPTED DIVIDEND INCOME AS PER THE PROVISIONS OF SECTION 14 A OF THE ACT. WHEN THIS WAS POINTED OUT TO THE ASSESSEE, THE ASSESSEE SUBMITTED THAT TH E DISALLOWANCE MAY BE MADE AS PER RULE 8D OF THE INCOME TAX RULES. ACCORDINGLY, THE ASSESSING OFFICER DETERMINED THE DISALLOWANCE AS PER RULE 8D AT THE RATE OF 0.5% OF THE AVERAGE VALUE OF THE INVESTMENTS WHICH WORKED OUT TO RS.1,21,550/- AND D ISALLOWED THE SAME. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER PASS ED BY THE ASSESSING OFFICER, THE ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A), BU T COULD NOT SUCCEED. HENCE, THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. I.T.A. NO.528/COCH/2010 3 5. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER, AFTER DECLINING TO CONSIDER THE AUDITED FINANCIAL STATEME NTS, HAS CONSIDERED THE INTEREST INCOME ALONE FROM THEREIN IN ORDER TO MAKE ADDITION . THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS A GOVERNMENT OF KERA LA UNDERTAKING AND FOR THE REASONS BEYOND ITS CONTROL, IT COULD NOT COMPLETE THE AUDIT WITHIN THE TIME LIMIT PRESCRIBED. HENCE THE ASSESSEE WAS CONSTRAINED TO FILE THE RETU RN OF INCOME ALONG WITH THE PROVISIONAL ACCOUNTS. SUBSEQUENTLY, THE AUDIT WAS COMPLETED AND IT WAS ADOPTED BY THE BOARD ONLY ON 18-05-2009. THE LD COUNSEL SUBMI TTED THAT THE TIME LIMIT FOR FILING OF REVISED RETURN HAD ALREADY EXPIRED BY THAT TIME AND HENCE IT COULD NOT FILE ANY REVISED RETURN. HENCE, THE ASSESSEE FURNISHED THE AUDITED FINANCIAL STATEMENTS TO THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER SHOUL D HAVE CONSIDERED THE AUDITED ACCOUNTS FOR THE PURPOSE OF ASSESSMENT, SINCE IT IS ONLY AN EXTENSION OF THE PROVISIONAL FINANCIAL STATEMENTS ALREADY FILED BY THE ASSESSEE ALONG WITH THE RETURN OF INCOME. 6. WITH REGARD TO THE DISALLOWANCE OF EXPENSES INCU RRED ON EARNING EXEMPTED DIVIDEND INCOME BY INVOKING THE PROVISIONS OF U/S. 14A OF THE ACT, THE LD A.R SUBMITTED THAT THE ASSESSEE DID NOT INCUR ANY EXPENSES AS PRE SUMED BY THE AO. THE LD A.R SUBMITTED THAT THE ASSESSEE HAD MADE INVESTMENTS LO NG BACK AND DURING THE YEAR, IT HAS RECEIVED ONLY ONE DIVIDEND CHEQUE AND HENCE THE RE WAS NO OCCASION FOR THE ASSESSEE TO INCUR ANY EXPENSES. THE LD. COUNSEL FUR THER SUBMITTED THAT THE PROVISIONS OF SEC.14A(2) MANDATES THAT THE ASSESSING OFFICER S HOULD APPLY RULE 8D, ONLY IF HE IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF EXPENSES INCURRED IN RELATION TO THE EXEMPTED INCOME. THE A SSESSING OFFICER HAS NOT RECORDED ANY SATISFACTION AND HENCE, THE DISALLOWANCE MADE B Y THE ASSESSING OFFICER U/S. 14A OF THE ACT IS LIABLE TO BE DELETED. 7. ON THE CONTRARY, THE LD. DR SUBMITTED THAT THE A SSESSEE HAS FAILED TO FILE THE REVISED RETURN OF INCOME AFTER FINALISATION OF AUDI T AND HENCE, THE ASSESSING OFFICER WAS JUSTIFIED IN REJECTING THE CLAIM OF DIFFERENCES IN VARIOUS ITEMS OF EXPENDITURE AS SHOWN IN I.T.A. NO.528/COCH/2010 4 THE AUDITED FINANCIAL STATEMENTS. IN THIS REGARD, THE LD. DR PLACED RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F GOETZE (INDIA) LTD. (284 ITR 323). WITH REGARD TO THE DISALLOWANCE MADE U/S. 14A OF TH E ACT, THE LD. DR INVITED OUR ATTENTION TO SUB SECTION (3) OF SECTION 14A WHEREIN IT IS STATED THAT THE PROVISIONS OF SUB SECTION 2, WHICH REQUIRES THE ASSESSING OFFICER TO FOLLOW RULE 8D FOR MAKING DISALLOWANCE, SHALL ALSO APPLY IN RELATION TO A CAS E WHERE THE ASSESSEE CLAIMS THAT NO EXPENDITURE HAS BEEN INCURRED BY HIM IN RELATION TO THE EXEMPTED INCOME. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE RECORD. AS SUBMITTED BY THE LD. AR, WE NOTICE THAT THE STATUTO RY AUDIT FOR THE INSTANT YEAR WAS COMPLETED IN THE HANDS OF THE ASSESSEE ONLY ON 18-0 5-2009. AS PER THE PROVISIONS OF SEC. 139(5) OF THE ACT, THE REVISED RETURN COULD BE FILED BEFORE THE EXPIRY OF ONE YEAR FROM THE END OF THE RELEVANT ASSESSMENT YEAR OR BEF ORE THE COMPLETION OF THE ASSESSMENT, WHICHEVER IS EARLIER. THE ASSESSMENT Y EAR UNDER CONSIDERATION IS 2007-08 AND THE TIME LIMIT FOR FILING REVISED RETURN OF INC OME FOR THIS YEAR WOULD EXPIRE BY 31- 03-2009, SINCE THE ASSESSMENT WAS ALSO NOT COMPLETE D BY THAT TIME. THE AUDIT OF ACCOUNTS OF THE ASSESSEE COMPANY WAS COMPLETED ONLY BY 18.05.2009, I.E., SUBSEQUENT TO THE EXPIRY OF THE TIME LIMIT PRESCRIBED FOR FILI NG REVISED RETURN OF INCOME. HENCE, THE ASSESSEE COULD NOT HAVE FILED THE REVISED RETURN OF INCOME, AS OBSERVED BY THE ASSESSING OFFICER. UNDER THIS PECULIAR SET OF FACT S, THE QUESTION THAT ARISES IS WHETHER THE ASSESSING OFFICER WAS JUSTIFIED IN DECLINING TO CONSIDER THE AUDITED ACCOUNTS OR NOT. WE NOTICE THAT AN IDENTICAL ISSUE WAS CONSIDERED BY THIS BENCH IN THE CASE OF M/S. KERALA SMALL INDUSTRIES DEVELOPMENT CORPORATION LTD ., IN I.T.A. NO. 149/COCH/2009. IN THE SAID CASE THE TRIBUNAL, VIDE ITS ORDER DATED 10 -08-2012, HAS DECIDED THIS ISSUE AS UNDER: 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORD. WITH REGARD TO THE ISSUE RELATING TO THE REVISED RETURN OF INCO ME, THE LD. A.R SUBMITTED THAT THE ASSESSEE HAS CLAIMED ADDITIONAL EXPENDITUR E IN THE REVISED RETURN OF INCOME AND AS PER THE DECISION OF THE HONBLE SUPRE ME COURT IN THE CASE OF GOETZE (INDIA) LTD. VS. CIT (284 ITR 323), NEW DEDU CTIONS CAN BE CLAIMED BY FILING REVISED RETURN OF INCOME. ACCORDINGLY HE SU BMITTED THAT THE ASSESSING OFFICER SHOULD HAVE ACCEPTED THE REVISED RETURN FIL ED BY THE ASSESSEE. HE I.T.A. NO.528/COCH/2010 5 ALSO RELIED UPON THE DECISION OF THE CO-ORDINATE BE NCH OF COCHIN DATED 28-07- 2009 IN THE CASE OF C.W.P. TAYLOR IN I.T.A. NO. 695 /COCH/2008 TO SUBMIT THAT THE LD. CIT(A) IS ENTITLED TO CONSIDER THE ADDITION AL CLAIMS, AS THE HONBLE SUPREME COURT, IN THE CASE OF GOETTZE (INDIA) LTD, HAS PUT A BAR ONLY ON THE ASSESSING OFFICER. 7. ON THE OTHER HAND, THE LD. DR SUBMITTED THA T THE ASSESSEE HAS FILED THE REVISED RETURN OF INCOME BEYOND THE TIME LIMIT PRES CRIBED U/S. 139(5) OF THE ACT. HENCE, THE ASSESSING OFFICER IS NOT STATUTORI LY ENTITLED TO CONSIDER THE SAID REVISED RETURN OF INCOME. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFUL LY PERUSED THE RECORD. WE HAVE ALREADY EXTRACTED THE DETAILS OF ADDITIONAL CL AIMS OF EXPENDITURE IN PARAGRAPH 3 SUPRA. ON A PERUSAL OF THE SAID DETAIL S, WE NOTICE THAT THE ASSESSEE DID NOT MAKE ANY CLAIM FOR FRESH DEDUCTION S, BUT HAS ONLY ENHANCED THE EXPENDITURE CLAIMS, WHICH HAVE ALREADY BEEN MAD E IN THE ORIGINAL RETURN OF INCOME. THE REASON FOR MAKING SUCH ADDITIONAL CL AIMS HAS ALSO BEEN DULY EXPLAINED BY THE ASSESSEE, I.E., THE ORIGINAL RETUR N OF INCOME WAS FILED BY THE ASSESSEE ON THE BASIS OF THE PROVISIONAL ACCOUNTS A ND UPON COMPLETION OF THE STATUTORY AUDIT, THE EXACT AMOUNT OF CLAIM UNDER VA RIOUS HEADS OF EXPENDITURE COULD BE FINALISED, WHICH HAS RESULTED IN ENHANCEMENT OF THE SAID CLAIMS. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS HAVING NUMBER OF BRANCHES THROUGHOUT THE STATE OF K ERALA AND THE ASSESSEE BEING A GOVERNMENT OWNED COMPANY, IT TOOK CONSIDERA BLE TIME FOR CONSOLIDATION OF ACCOUNTS OF ALL THE BRANCHES AND F INALISATION OF AUDIT. HE FURTHER SUBMITTED THAT THE EXACT QUANTUM OF EXPENDI TURE CLAIMS COULD BE DETERMINED ONLY DURING THE COURSE OF FINALISATION O F AUDIT IN SUCH KIND OF COMPANIES HAVING LOT OF BRANCHES. ACCORDINGLY, HE SUBMITTED THAT THE TAX AUTHORITIES SHOULD HAVE CONSIDERED THE ADDITIONAL C LAIM OF EXPENDITURES BY DULY CONSIDERING THE PRACTICAL DIFFICULTIES FACED B Y THE ASSESSEE. 9. THE ISSUE IN THE CASE OF GOETZE (INDIA) LTD, SUPRA, WAS WHETHER THE ASSESSEE COULD MAKE A CLAIM FOR DEDUCTION OTHERWISE THAN BY FILING A REVISED RETURN OF INCOME. HOWEVER, IN THE INSTANT CASE, TH E ISSUE IS WHETHER THE AO COULD IGNORE THE ENHANCEMENT OF EXPENDITURE, WHICH HAS ALREADY BEEN CLAIMED. HENCE, WE ARE OF THE VIEW THAT THE DECISI ON RENDERED IN THE CASE OF GOETZE (INDIA) LTD DOES NOT APPLY TO THE FACTS OF T HE INSTANT CASE. IN OUR VIEW, THE DECISION RENDERED BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. SHELLY PRODUCTS AND ANOTHER REPORTED IN 261 ITR 367 IS APPLICABLE. WE EXTRACT BELOW THE OBSERVATIONS MADE BY THE HONBLE SUPREME COURT AT PG. 382:- WE CANNOT LOSE SIGHT OF THE FACT THAT THE FAILURE OR INABILITY OF THE REVENUE TO FRAME A FRESH ASSESSMENT SHOULD NOT PLACE THE AS SESSEE IN A MORE I.T.A. NO.528/COCH/2010 6 DISADVANTAGEOUS POSITION THAN IN WHAT HE WOULD HAVE BEEN IF A FRESH ASSESSMENT WAS MADE. IN A CASE WHERE AN ASSESSEE CHOOSES TO DEPOSIT BY WAY OF ABUNDANT CAUTION ADVANCE TAX OR S ELF-ASSESSMENT TAX WHICH IS IN EXCESS OF HIS LIABILITY ON THE BAS IS OF THE RETURN FURNISHED OR THERE IS ANY ARITHMETICAL ERROR OR INA CCURACY, IT IS OPEN TO HIM TO CLAIM REFUND OF THE EXCESS TAX PAID IN TH E COURSE OF THE ASSESSMENT PROCEEDING. HE CAN CERTAINLY MAKE SUCH A CLAIM ALSO BEFORE THE CONCERNED AUTHORITY CALCULATING THE REFU ND. SIMILARLY, IF HE HAS BY MISTAKE OR INADVERTENCE OR ON ACCOUNT OF IGNORANCE, INCLUDED IN HIS INCOME ANY AMOUNT WHICH IS EXEMPTED FROM PAYMENT OF INCOME-TAX, OR IS NOT INCOME WITHIN THE CONTEMPLATION OF LAW, HE MAY LIKEWISE BRING THIS TO THE NOTICE OF THE ASSESSING AUTHORITY, WHICH IF SATISFIED, MAY GRANT HIM RELIEF AND REFUND THE TAX PAID IN EXCESS, IF ANY. SUCH MATTERS CAN BE BROUGHT TO THE NOTICE OF THE CONCERNED AUTHORITY IN A CASE WHEN REFUND IS DU E AND PAYABLE, AND THE AUTHORITY CONCERNED, ON BEING SATISFIED, SHALL GRAN T APPROPRIATE RELIEF. IN CASES GOVERNED BY SECTION 240 OF THE ACT, AN OBLIGA TION IS CAST UPON THE REVENUE TO REFUND THE AMOUNT TO THE ASSESSEE WITHOU T HIS HAVING TO MAKE ANY CLAIM IN THAT BEHALF. IN APPROPRIATE CASES, THE REFORE, IT IS OPEN TO THE ASSESSEE TO BRING FACTS TO THE NOTICE OF THE CONCER NED AUTHORITY ON THE BASIS OF THE RETURN FURNISHED, WHICH MAY HAVE A BEARING O N THE QUANTUM OF THE REFUND, SUCH AS THOSE THE ASSESSEE COULD HAVE URGED U/S. 237 OF THE ACT. THE CONCERNED AUTHORITY, FOR ITS LIMITED PURPOSE OF CALCULATING THE AMOUNT TO BE REFUNDED U/S. 240 OF THE ACT, MAY TAKE ALL SUCH FACTS INTO CONSIDERATION AND CALCULATE THE AMOUNT TO BE REFUNDED. SO VIEWED, AN ASSESSEE WILL NOT BE PLACED IN A MORE DISADVANTAGEOUS POSITION THAN WHAT HE WOULD HAVE BEEN, HAD AN ASSESSMENT BEEN MADE IN ACCORDANCE WITH LAW . 10. THOUGH THE HONBLE SUPREME COURT HAS MADE THE ABOVE OBSERVATIONS IN THE CONTEXT OF SEC. 237 TO SEC. 240 RELATING TO REF UND OF TAX, YET IN OUR VIEW, THE RATIO OF THE SAID DECISION CAN BE GAINFULLY APP LIED TO THE FACTS OF THE INSTANT CASE ALSO. IT IS FOR THE REASON THAT THE C OMPUTATION OF CORRECT I.T.A. NO.528/COCH/2010 7 AMOUNT OF REFUND IS POSSIBLE ONLY IF CORRECT AMOUNT OF TOTAL INCOME IS DETERMINED. IN THE INSTANT CASE, THE ASSESSEE HAD CLAIMED CERTAIN EXPENSES ON THE BASIS OF PROVISIONAL ACCOUNTS AND THE QUANTU M OF SUCH EXPENSES GOT ENHANCED AT THE TIME OF FINALISATION OF AUDIT. THI S HAS RESULTED IN MISTAKES IN THE CLAIM OF SUCH EXPENSES AND SUCH MISTAKES WERE S OUGHT TO BE CORRECTED OR BROUGHT TO THE NOTICE OF THE AO DURING THE COURS E OF ASSESSMENT PROCEEDINGS. ON AN ABUNDANT CAUTION, THE ASSESSEE HAS BROUGHT THE MISTAKES TO THE NOTICE OF THE AO BY FILING A BELATE D REVISED RETURN OF INCOME. AS OBSERVED BY THE HONBLE SUPREME COURT IN THE CAS E OF SHELLY PRODUCTS, SUPRA, THE INABILITY OF THE DEPARTMENT TO CONSIDER THE BELATED REVISED RETURN SHOULD NOT PLACE THE ASSESSEE IN A MORE DISADVANTAG EOUS POSITION. HENCE, WE ARE OF THE VIEW THAT THE AO, WHILE FRAMING THE A SSESSMENT, IS VERY MUCH ENTITLED TO CONSIDER THE ADDITIONAL EXPENDITURE CLA IMS, WHICH ARE IN THE FORM OF CORRECTION OF ERRORS AND MISTAKES, MADE DURING T HE COURSE OF ASSESSMENT PROCEEDINGS, AS THE AO IS DUTY BOUND TO DETERMINE T HE CORRECT TOTAL INCOME. IN THE INSTANT CASE, THE FAILURE OF THE AO TO CONSI DER THE ADDITIONAL EXPENDITURE CLAIMS MADE IN THE BELATED REVISED RETU RN HAS PUT THE ASSESSEE IN A DISADVANTAGEOUS POSITION, WHICH SHOULD HAVE BE EN AVOIDED BY CONSIDERING THE PRACTICAL DIFFICULTIES OF THE ASSES SEE. HENCE, THIS ISSUE REQUIRES RE-EXAMINATION AT THE END OF THE AO. 11. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF THE AO WITH T HE DIRECTION TO REDO THE ASSESSMENT BY CONSIDERING THE ADDITIONAL CLAIMS MAD E IN THE REVISED RETURN. 9. IN THE ABOVE CITED CASE, THE ASSESSEE HAD FILED REVISED RETURN OF INCOME AFTER THE EXPIRY OF THE TIME LIMIT PRESCRIBED FOR FILING THE SAME. HENCE, IT WAS AS GOOD AS NOT FILED. IN THE INSTANT CASE, THE ASSESSEE HAS NOT F ILED THE REVISED RETURN OF INCOME, BUT FURNISHED THE AUDITED FINANCIAL STATEMENTS DURING T HE COURSE OF ASSESSMENT PROCEEDINGS. SINCE THE ASSESSEE HAD FILED PROVISIO NAL STATEMENT OF ACCOUNTS ALONG WITH THE RETURN OF INCOME, IT CANNOT BE SAID THAT THE DI FFERENCES IN EXPENDITURE AMOUNTS WOULD RESULT IN FRESH CLAIM. HENCE, CONSISTENT WIT H THE VIEW TAKEN IN THE ABOVE CITED CASE, WE ARE OF THE VIEW THAT THE AO SHOULD HAVE CO NSIDERED THE AUDITED FINANCIAL STATEMENTS WHILE FINALISING THE ASSESSMENT. ACCORD INGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND RESTORE THE MATTER BAC K TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO RE-DO THE ASSESSMENT BY CONSI DERING THE AUDITED ACCOUNTS FILED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. I.T.A. NO.528/COCH/2010 8 10. THE NEXT ISSUE RELATES TO THE DISALLOWANCE MADE U/S. 14A OF THE ACT. WE NOTICE THAT THE ASSESSEE HAS ACCEPTED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF HEARING THAT THE DISALLOWANCE MAY BE MADE AS PER TH E RULE 8D OF THE INCOME TAX RULES. NOW, BEFORE US THE ASSESSEE IS CONTENDING THAT IT DID NOT INCUR ANY EXPENDITURE FOR THE PURPOSE OF EARNING DIVIDEND INCOME. HOWEVE R, AS POINTED OUT BY LD D.R, THE PROVISIONS OF SUB-SECTION (3) OF SECTION 14A REQUIR ES THE ASSESSING OFFICER TO APPLY RULE 8D IF SUCH KIND OF CLAIM IS MADE. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A) ON THIS ISSUE. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED. PRONOUNCED ACCORDINGLY ON 30-09-20 13. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 30TH SEPTEMBER , 2013 GJ COPY TO: 1. M/S. TRAVANCORE TITANIUM PRODUCTS LTD., KOCHUVEL I, TRIVANDRUM-695 021. 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1( 1), TRIVANDRUM. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-I, TRIVA NDRUM. 4. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN