Shri Mohanlal Agrawal, Indore V. The ACIT CIRCLE 5(1), Indore

ITA 72/IND/2014

• Counselvise Citation: 7222714 RSA 2014
• Duration Of Justice: 1 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 27-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: K C AGRAWAL
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

MOHANLAL AGRAWAL ITA NO. 72/IND/2014 1 IN THE INCOME TAX APPELLATE TRIBUNA L INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER AND SHRI B.C. MEENA, HONBLE ACCOUNTANT MEMBER ITA NO. 72/IND/2014 A.Y.2008-09 SHRI MOHANLAL AGRAWAL INDORE PAN AENPA 6795H ::: APPELLANT VS ASSTT.COMMR. OF INCOME TAX CIRCLE 5(1), INDORE ::: RESPONDENT APPELLANT BY SHRI K.C. AGRAWAL RESPONDENT BY SHRI R.A. VERMA DATE OF HEARING 26.8.2015 DATE OF PRONOUNCEMENT 1 . 9 .2015 O R D E R PER SHRI B.C. MEENA, AM THIS APPEAL FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LEARNED CIT(A)-II, BHOPAL, DATED 31.10.2013. THE ONLY ISSUE IN THE APPEAL IS ABOUT MOHANLAL AGRAWAL ITA NO. 72/IND/2014 2 SUSTAINING THE DISALLOWANCE OF RS.1,61,849/-BY INVOKIN G THE PROVISIONS OF SECTION 14A OF THE ACT OUT OF THE INTEREST PAYMENT MADE BY THE ASSESSEE. 2. THE ASSESSING OFFICER MADE THE DISALLOWANCE OF RS.1,61,849/- BY INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT READ WITH RULE 8-D OF THE IT RULES. THE LEARN ED CIT(A) HAS CONFIRMED THE ORDER OF THE ASSESSING OFFI CER. THE ASSESSEE IS, THEREFORE, IN APPEAL BEFORE US. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS WRONGLY DISALLOWED RS.1,61, 849/- OUT OF INTEREST PAID BY THE ASSESSEE BY INVOKING PROV ISIONS OF SECTION 14A OF THE ACT READ WITH RULE 8-D OF THE IT RULES. HE SUBMITTED THAT GROSS PAYMENT OF INTEREST WAS OF RS.4,25,706/- AND THE ASSESSEE HAS ALSO RECEIVED INTERE ST OF RS.3,56,327/- AND THE NET OUTGO OF THE INTEREST W AS ONLY OF RS. 69,379/-. HE SUBMITTED THAT THE PROVISIONS OF SECTION MOHANLAL AGRAWAL ITA NO. 72/IND/2014 3 14A OF THE ACT CAN BE INVOKED ONLY WHEN THE ASSESSIN G OFFICER IS DISSATISFIED WITH THE CLAIM OF THE ASSESSE E AND SATISFIED HIMSELF THAT EXPENDITURE RELATED TO INCOME WHICH IS NOT FORMING PART OF THE TOTAL INCOME CLAIMED BY THE ASSESSEE. HE SUBMITTED THAT RULE 80D OF THE IT RULES CAN BE INVOKED ONLY WHEN THE ASSESSING OFFICER IS NOT S ATISFIED WITH THE CORRECTNESS OF THE CLAIM OF EXPENDITURE INC URRED FOR EARNING THE EXEMPT INCOME EARNED BY THE ASSESSEE OR THE CLAIM MADE BY THE ASSESSEE THAT NO EXPENDITURE HAS BEEN INCURRED BY THE ASSESSEE FOR EARNING THE INCOME. HE SUBMITTED THAT DURING THE ASSESSMENT PROCEEDINGS IT W AS SUBMITTED BEFORE THE ASSESSING OFFICER THAT NO EXPEN DITURE HAS BEEN INCURRED FOR EARNING THE EXEMPT INCOME. THE ASSESSING OFFICER HAS NOT RECORDED ANY SATISFACTION REGARDING THE CLAIM OF THE ASSESSEE AND APPLIED PROVISIO NS OF SECTION 14A OF THE ACT READ WITH RULE 8-D.THUS, T HERE MOHANLAL AGRAWAL ITA NO. 72/IND/2014 4 WAS NO DISSATISFACTION ON THE PART OF THE ASSESSING OFF ICER REGARDING THE CLAIM OF THE ASSESSEE THAT NO EXPENDITURE HAS BEEN INCURRED IN RELATION TO EXEMPT INCOME. HE PLACED RELIANCE ON THE DECISION OF DELHI HIGH COURT IN THE CASE OF MAXOPP INVESTMENT LTD. VS. CIT; 203 TAXMAN 364 AND GODREJ & BOYCE MFG. CO. LTD. VS. DCIT; 194 TAXMAN 20 3 (BOM). HE SUBMITTED THAT THE INVESTMENTS MADE BY THE ASSESSEE WERE LESS THAN THE AMOUNT OF CAPITAL AND INTERE ST FREE FUNDS AVAILABLE WITH THE ASSESSEE. HE PLACED RELIANC E ON THE FOLLOWING DECISIONS :- 1. CIT VS.HDFC BANK LTD.(BOM) 2.CIT VS. RELIANCE UTILITIES & POWER LTD.; 313 ITR 340(BOM) 3.CIT VS. SUZLON ENERGY LTD.(CASE NO.223/2013) (GUJ HC) 4. CIT VS. UTI BANK LTD.;215 TAXMAN 8 (GUJRAT HC) 5. DCIT VS.D&H SECHERON ELECTRODES P.LTD.;22 ITJ 45 0 (INDORE ITAT) HE ALSO SUBMITTED THAT THERE ARE MANY DECISIONS WHERE DISALLOWANCE CAN BE MADE ONLY AFTER NETTING OF INTEREST WHICH ARE AS UNDER :- MOHANLAL AGRAWAL ITA NO. 72/IND/2014 5 A . SAFAL REALTY P.LTD. VS. ACIT(2334/AHD/2012 DT.29.11.2013(AHD. ITAT ) B. ITO VS. KARNAWATI PETROCHEM P.LTD.(ITA NO.2228/AHD/2012) (AHD. TRIBUNAL) C. DCIT VS. TRADE APARTMENT LTD.(ITA NO.1277/KOL/2011) (KOL TRIBUNAL) D. CIT VS. HERO CYCLES LTD.(323 ITR 518)(P&H HIGH C OURT) E. CHEMINVEST LTD. VS.ITO (317 ITR 86) ITAT, DELHI SPECIAL BENCH F. MORGAN STANLEY INDIA SECURITIES P.LTD. VS.ACIT(ITA NO.5072/MUM/2005) (MUMBAI TRIBUNAL G BENCH) 4. AFTER HEARING BOTH THE SIDES AND CONSIDERING THE VARIOUS CASE LAWS RELIED UPON BY THE ASSESSEE, WE ARE O F THE VIEW THAT THIS ISSUE REQUIRES A FRESH LOOK AT THE LEVE L OF THE ASSESSING OFFICER. WE, THEREFORE, SET ASIDE THE ORDE RS OF THE AUTHORITIES BELOW AND DIRECT TO ASSESSING OFFICER TO DECIDE THE SAME DE NOVO AFTER GIVING THE ASSESSEE AN OPPORTUN ITY OF BEING HEARD IN THE MATTER. 5. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. MOHANLAL AGRAWAL ITA NO. 72/IND/2014 6 PRONOUNCED IN OPEN COURT ON IST SEPTEMBER, 2015 SD/- SD/- (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER 21 ST SEPTEMBER, 2015 DN/-