SHRI VIMLESH AGARWAL, JAIPUR V. INCOME TAX OFFICER, WARD-4-5, JAIPUR

ITA 639/JPR/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2004 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 03-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POONAM ROY DCIT DHK
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPAN] YS[KK LNL; ] DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 639/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13 VIMLESH AGARWAL, N.G.-2, KRISHNA SQUARE MALL, JDA COMPLEX, SUBHASH NAGAR, JAIPUR. CUKE VS. I.T.O., WARD 4(5), JAIPUR. PAN NO.: ABSPA 1359 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SMT. POONAM ROY (DCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 28/09/2017 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 10/10/2017 VKNS'K@ ORDER PER: BHAGCHAND, A.M. THIS IS THE APPEAL FILED BY THE ASSESSEE EMANATES F ROM THE ORDER OF THE LD. CIT(A)-2, JAIPUR DATED 31/05/2017 FOR THE A .Y. 2012-13, WHEREIN THE ASSESSEE HAS TAKEN SOLE EFFECTIVE GROUND OF APP EAL, WHICH IS AS UNDER:- (I) THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW I N CONFIRMING THE DISALLOWANCE OF RS. 2,41,134/- MADE BY THE ASSESSIN G OFFICER U/S 14A OF THE ACT. 2. THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASS ESSEE BY HOLDING AS UNDER:- ITA 639/JP/2017 VIMLESH AGARWAL VS ITO 2 3.3 I HAVE PERUSED THE FACTS OF THE CASE, THE ASSE SSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. THE DISALLOWANCE OF R S.2,41,134/- HAS BEEN MADE UNDER SECTION 14A OF THE I.T. ACT, 1961. THE ASSESSING OFFICER OBSERVED THAT A DIVIDEND INCOME OF RS.7,50, 753/- HAS BEEN EARNED DURING THE YEAR WHILE THE ASSESSEE HAS INVES TMENT OF RS.55,75,000/- IN SHARES OF VARIOUS COMPANIES. THE ASSESSING OFFICER AFTER RECORDING HIS SATISFACTION HAS MADE THE ABOVE DISALLOWANCE. IN THE PRESENT PROCEEDINGS, IT WAS SUBMITTED THAT THE DIVIDEND IS ATTRIBUTABLE TO THE INVESTMENT OF 10,000 SHARES OF JOY SYNDICATE & ENCLAVE PVT. LTD. RECEIVED DURING THE RELEVANT YEAR . IT WAS FURTHER CLAIMED THAT THIS INVESTMENT WAS MADE FROM INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE. HOWEVER, IT IS SEEN TH AT TOTAL INVESTMENT IN ASSETS YIELDING EXEMPT INCOME IS MUCH MORE AND INTEREST PAYMENTS HAVE BEEN MADE. IN VIEW OF THE SA ME, THE INVOCATION OF SECTION 14A OF THE I.T. ACT, 1961 IS UPHELD AND THE DISALLOWANCE MADE IS CONFIRMED. THE GROUND OF APPEA L IS DISMISSED. 3. NOW THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THE DIVIDEND INCOME OF RS. 7,50,753/- IS IN RESPECT OF THE INVESTMENT OF 10,000 SHARES OF JOY S YNDICATE & ENCLAVE PVT. LTD.. IT WAS CLAIMED THAT THESE SHARES WERE ACQUIRED IN THE F.Y. 2002-03 FOR RS. 20,000/-. IT WAS ALSO CLAIMED THAT OUT OF TO TAL INVESTMENT OF RS. 55,75,000/-, RS. 51,75,000/- PERTAINS TO SHARE APPL ICATION MONEY. IT WAS SUBMITTED THAT SECTION 14A OF THE ACT R.W.R. 8D(2) O F THE INCOME TAX RULES, 1962 IS APPLICABLE ONLY IN RESPECT OF INVEST MENT IN SHARES AND NO WHERE SHARE APPLICATION MONEY HAS BEEN GIVEN. HE REL IED ON THE DECISION ITA 639/JP/2017 VIMLESH AGARWAL VS ITO 3 OF THE KOLKATA TRIBUNAL IN THE CASE OF ITO VS LGW LTD . (2016) 130 DTR 201. 4. ON THE OTHER HAND, THE LD DR HAS SUBMITTED THAT HOW THE ASSESSEE HAS EARNED A HUGE DIVIDEND OF 7,50,753/- DURING THE YEAR ON 10,000 SHARES OF JOY SYNDICATE & ENCLAVE PVT. LTD., WHICH WA S STATED TO BE ACQUIRED FOR RS. 20,000/- IN F.Y. 2002-03. IT WAS PL EADED THAT THE SHARE APPLICATION MONEY IS ALSO INVESTED IN EARNING THE E XEMPTED INCOME, THEREFORE, THE INTEREST PAID TOWARDS THE SHARE APPLI CABLE GIVEN BY THE ASSESSEE ALSO DESERVES TO BE DISALLOWED AS PER SECTI ON 14A OF THE ACT. 5. I HAVE HEARD BOTH THE SIDES ON THIS ISSUE. THE AS SESSEE CLAIMED THAT HE HAS ACQUIRED 10,000 SHARES OF JOY SYNDICATE & EN CLAVE PVT. LTD. IN F.Y. 2002-03 FOR RS. 20,000/-. IT IS NOT CLEAR FROM THE RECORD THAT THE ASSESSEE GOT 10000 SHARES IN RS. 20,000/-. THE SHARE APPLICA TION MONEY GIVEN TOWARDS THE ACQUISITION OF THE SHARES IS ALSO AN ADV ANCE TOWARDS THE ACQUISITION OF THE SHARES WHICH ULTIMATELY COULD EAR N DIVIDEND WHICH IS EXEMPTED UNDER THE INCOME TAX ACT. CONSIDERING ALL T HESE ASPECTS AND IN THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, I HOLD THAT CERTAIN MORE FACTS REQUIRE ON RECORD TO DECIDE THE ISSUE IN RIGHT PERSPECTIVE, THEREFORE, IN THE INTEREST OF JUSTICE AND EQUITY, I RESTORE THE ISSUE TO THE ITA 639/JP/2017 VIMLESH AGARWAL VS ITO 4 FILE OF THE ASSESSING OFFICER TO BE DECIDED DE NOVO AFTER GIVING EFFECTIVE AND REASONABLE OPPORTUNITIES OF BEING HEARD TO THE ASSESSEE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT ON 10/10/2017. SD/- HKKXPAN (BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 10 TH OCTOBER, 2017 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI VIMLESH AGARWAL, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE I.T.O., WARD 4(5), JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 639/JP/2017) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR