R.Jeevanlatha, Coimbatore V. ACIT Corporate Circle 2, Coimbatore

ITA 726/CHNY/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3826 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 20-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K RAGHU
• Keywords: Rule 8D; Set aside
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHE NNAI (CAMP AT COIMBATORE) . . . , , BEFORE SHRI N.R.S. GANESAN , JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBE R ./ ITA NO.726/CHNY/2019 /ASSESSMENT YEAR: 2014-15 SMT. R. JEEVANLATHA, 31 (OLD NO.10Z), BHARATHI PARK VII CROSS, SAIBABA COLONY, COIMBATORE 641 011. VS. THE ASST. COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-2, COIMBATORE. [PAN: ADXPJ 0081G] ( /APPELLANT) ( !' /RESPONDENT) # $ / ASSESSEE BY : SHRI K.RAGHU, C.A !' # $ /REVENUE BY : SHRI J.PAVITRAN KUMAR, JCIT % & # '( /DATE OF HEARING : 06.02.2020 )* # '( / DATE OF PRONOUNCEMENT : 06.02.2020 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER :: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-1, COIM BATORE DATED 22.01.2019 AND PERTAINS TO THE ASSESSMENT YEAR 2014 -15. 2. THE FIRST ISSUE ARISING FOR CONSIDERATION IS WIT H REGARD TO DISALLOWANCE MADE U/S. 14A OF THE INCOME TAX ACT, 1 961 (IN SHORT THE ACT). SHRI K. RAGHU, THE LD. REPRESENTATIVE FOR T HE ASSESSEE SUBMITTED ITA NO.726/CHNY/2019 :- 2 -: THAT THE DISPUTE IS ONLY WITH REGARD TO THIRD LIMB OF RULE 8D(2) OF THE INCOME TAX RULES, 1962 (IN SHORT THE RULES). THE 0.5% OF THE AVERAGE INVESTMENT TILL 31.03.2014 WHICH YIELDED INCOME COM ES TO ONLY RS. 11,790/- THEREFORE, THE DISALLOWANCE MADE BY THE AO TO THE EXTENT OF RS. 1,17,274/- IS NOT JUSTIFIED. 3. HAVING HEARD THE LD. REPRESENTATIVE FOR THE ASS ESSEE, WE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE ALSO. THIS TRIB UNAL IS OF THE CONSIDERED OPINION THAT SINCE THE ASSESSEE CLAIMS B EFORE THIS TRIBUNAL THE 0.5% OF THE AVERAGE INVESTMENT COMES TO ONLY RS . 1,17,274/- FOR THE YEAR ENDING 31.03.2014, THIS FACT NEEDS TO BE VERIF IED BY THE AO. ACCORDINGLY, THE ORDERS OF BOTH THE LOWER AUTHORITI ES ARE SET ASIDE AND THE ISSUE WITH REGARD TO DISALLOWANCE MADE BY THE AO U/ S. 14A OF THE ACT IS REMITTED BACK TO THE FILE OF AO FOR RE-CONSIDERATIO N. 4. THE NEXT ISSUE ARISING FOR CONSIDERATION WITH RE GARD TO DISALLOWANCE MADE BY THE AO U/S. 36(1)(III) OF THE ACT. SHRI K. RAGHU, THE LD. REPRESENTATIVE SUBMITTED THAT THE CAPITAL, RESERVE AND SURPLUS AVAILABILITY WITH THE ASSESSEE IS RS. 2,51,03,862/- AND WHAT WAS ADVANCED TO M/S. DHANALAKSHMI PAPER MILLS (P.) LTD. IS ONLY TO RS. 1 ,65,02,859/-. ON A QUERY FROM THE BENCH, THE LD. REPRESENTATIVE FOR TH E ASSESSEE CLARIFIED THAT THIS YEAR THERE WAS A LOSS TO THE EXTENT OF RS . 45 LAKHS. ITA NO.726/CHNY/2019 :- 3 -: 5. ON THE CONTRARY, THE LD. DEPARTMENTAL REPRESENTA TIVE SUBMITTED THAT IT IS KNOWN WHETHER THE FUNDS WERE AVAILABLE I N CAPITAL AND RESERVE AS CLAIMED BY ASSESSEE THEREFORE, THE MATTER MAY BE REMITTED BACK TO THE FILE OF AO FOR VERIFICATION. 6. HAVING HEARD THE LD. REPRESENTATIVE FOR THE ASSESSEE AND THE LD. DEPARTMENTAL REPRESENTATIVE, THIS TRIBUNAL IS OF TH E CONSIDERED OPINION THAT THE AVAILABILITY OF CAPITAL, RESERVE AND SURPL US NEEDS TO BE VERIFIED BY THE AO. THE ASSESSEE SPECIFICALLY CLAIMS THAT THE CAPITAL, RESERVE AND SURPLUS TO THE EXTENT OF RS. 2,51,03,862/- IS AVAIL ABLE AND WHAT WAS ADVANCED TO M/S. DHANALAKSHMI PAPER MILLS (P.) LTD. IS ONLY TO THE EXTENT OF RS. 1,65,02,859/-, THEREFORE, THIS TRIBUNAL IS O F THE CONSIDERED OPINION THAT THE FACTUAL ASPECTS NEEDS TO BE VERIFIED AND B ROUGHT ON RECORD. 7. ACCORDINGLY, THE ORDERS OF THE BOTH THE AUTHORIT IES BELOW ARE SET ASIDE AND THE ENTIRE ISSUE IS REMITTED BACK TO THE FILE OF AO. THE AO SHALL RE-CONSIDER BOTH THE ISSUES IN THE LIGHT OF M ATERIAL THAT MAY BE FILED BY THE ASSESSEE AND THEREAFTER, DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESS EE. ITA NO.726/CHNY/2019 :- 4 -: 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 06 TH FEBRUARY, 2020 AT CHENNAI (CAMP AT COIMBATORE). SD/ - SD/ - ( . ) (S. JAYARAMAN) /ACCOUNTANT MEMBER ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER / & /CHENNAI, 0 /DATED: 06 TH FEBRUARY, 2020 . EDN, SR. P.S # !'12 32' /COPY TO: 1. /APPELLANT 2. !' /RESPONDENT 3. % 4' ( )/CIT(A) 4. % 4' /CIT 5. 25 !'6 /DR 6. 7 8& /GF