S Annamalai (BHUF), Sivakasi V. ITO, Ward-4, Viridhunagar

ITA 569/CHNY/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2677 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 06-03-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: M KAUSHILI
• Keywords: Earning of tax free income
• Section: 143(3); 14A; 13

Judgement Text

, /SMC , IN THE INCOME TAX APPELLATE TRIBUNAL A/SMC BENCH, CHENNAI , , $ BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER /. I.T.A. NO.569/CHNY/2019 / ASSESSMENT YEAR : 2013-14 M/S. S. ANNAMALAI (BHUF), 118, BOOPATHY BUILDINGS, VIRUDHUNAGAR ROAD, SIVAKASI 626 123. [PAN: AADHS 9547K] VS. THE INCOME TAX OFFICER, WARD -4, VIRUDHUNAGAR. ( / APPELLANT) ( %&' /RESPONDENT ) '( / APPELLANT BY : SHRI. M. KAUSHILI, ADVOCATE %&'( / RESPONDENT BY : SHRI. A R V SREENIVASAN, JCIT ( /DATE OF HEARING : 19.12.2019 ( /DATE OF PRONOUNCEMENT : 09.03.2020 / O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER : THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-1, MADURAI, IN ITA NO. 101/201 6-17 DATED 28.01.2019 FOR ASSESSMENT YEAR 2013-14. :-2-: ITA NO.569/CHNY/2019 2. M/S. S. ANNAMALAI, A BIG HUF. WHILE MAKING THE ASSESSMENT FOR ASSESSMENT YEAR 2013-14, THE ASSESSEE CLAIMED DIVID END INCOME AT RS. 1,59,954/-. THE AO COMPUTED DISALLOWANCE U/S. 14A R.W.R. 8D AT RS. 25,50,600/-. AGGRIEVED, THE ASSESSEE FILED AN APPE AL BEFORE THE CIT(A). THE LD. CIT(A) DISMISSED THE APPEAL. AGGRIEVED AGA INST THAT ORDER, THE ASSESSEE FILED THIS APPEAL. 3. THE LD. AR SUBMITTED THAT THE ASSESSEE HAS A BIG HUF FIRM, AND ALSO PARTNERS IN PARTNERSHIP CONCERN HAVING DEPOSIT /LOAN ACCOUNTS WITH VARIOUS FIRMS AND ALSO HAVING SHARES OF VARIOUS COM PANIES. THE ASSESSEES INCOME COMPRISES INTEREST AND DIVIDEND I NCOME FROM THE COMPANIES. THE ASSESSEES CAPITAL AS ON 31.03.2013 WAS AT RS. 4.2 CRORES, WHEREAS, THE INVESTMENT IN SHARES WAS AT RS . 2.84 CRORES ONLY. THESE INVESTMENTS WERE MADE LONG BACK AND NONE OF T HE INVESTMENTS WERE MADE DURING THE ASSESSMENT YEAR. THE ASSESSEE BORROWED LOAN ONLY IN THE PRECEDING ASSESSMENT YEAR I.E., IN THE ASSESSMENT YEAR 2012- 13 AND THE INCOME TAX OFFICER VERIFIED THE NEXUS OF THE INTEREST EXPENSES WITH PURCHASE OF LAND AND HENCE DISALLOWED THE ENTIRE INTEREST EXPENDITURE OF RS. 9,46,855/- IN THE ASSESSMENT MAD E FOR THE ASSESSMENT YEAR 2012-13 U/S. 143(3) DATED 21.03.201 5. THE ASSESSING OFFICER HAS ALSO FAILED TO CONSIDER THE FACTS THAT IN THE COMPUTATION STATEMENT, THOUGH THE ASSESSEE HAS ARRIVED INTEREST LOSS OF RS. :-3-: ITA NO.569/CHNY/2019 16,23,795/-, IT HAS NOT CLAIMED ANY INTEREST EXPEND ITURE IN THE RETURN. THEREFORE, THE ASSESSING OFFICER SHOULD NOT HAVE DI SALLOWED ANY EXPENDITURE WHEN THE ASSESSEE ITSELF HAS NOT CLAIME D EXPENDITURE IN ITS RETURN, AND HENCE PLEADED TO ALLOW THE APPEAL. IN THIS REGARD, THE LD. AR INVITED OUR ATTENTION TO THE STATEMENT OF TOTAL INC OME, COPIES OF BALANCE SHEET ETC. PER CONTRA, THE LD. DR SUPPORTED THE OR DERS OF THE LOWER AUTHORITIES. 4. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE RELEVANT MATERIAL. THE ASSESSEE IS PLEADING THAT ITS CAPITA L AS ON 31.03.2013 WAS AT RS. 4.27 CRORES, WHILE ITS INVESTMENTS IN SHARES ON THAT DATE WAS AT RS. 2.81 CRORES ONLY, ALL THESE INVESTMENTS WERE MADE L ONG BACK, THE ASSESSEE HAS NOT BORROWED ANY LOAN TOWARDS ANY INVE STMENT WHICH EARNED EXEMPT INCOME AND IT HAS NOT CLAIMED ANY INT EREST EXPENDITURE AS AN EXPENDITURE FROM ANY OF ITS INCOME AND THEREFORE , SECTION 14A R.W.R. 8D IS NOT APPLICABLE. SINCE THESE ASPECTS HAVE NOT BEEN EXAMINED, WE ARE OF THE VIEW THAT THIS ISSUE REQUIRES A FRESH EX AMINATION. THEREFORE, WE REMIT THE ISSUE BACK TO THE AO FOR A FRESH EXAMI NATION. THE ASSESSEE SHALL LAY RELEVANT MATERIALS IN SUPPORT OF ITS CO NTENTION BEFORE THE AO AND COMPLY WITH THE REQUIREMENTS OF THE AO IN ACCOR DANCE WITH LAW. THE AO IS FREE TO CONDUCT APPROPRIATE ENQUIRY AS DEEMED FIT, BUT HE SHALL :-4-: ITA NO.569/CHNY/2019 FURNISH ADEQUATE OPPORTUNITY TO THE ASSESSSEE ON T HE MATERIAL ETC TO BE USED AGAINST IT AND DECIDE THE MATTER IN ACCORDANC E WITH LAW. 5. IN THE RESULT, THE ASSESSEES APPEAL IS TREATED AS PARTLY ALLOWED. ORDER PRONOUNCED ON MONDAY, 09 TH MARCH, 2020 AT CHENNAI. SD/- ( ) (GEORGE MATHAN) ! /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) ! /ACCOUNTANT MEMBER /CHENNAI, 0 /DATED: 09 TH MARCH, 2020 JPV (%2343 /COPY TO: 1. '/ APPELLANT 2. %&' /RESPONDENT 3. 5 ) (/CIT(A) 4. 5 /CIT 5. 3% /DR 6. /GF