Thriumagal Investments, Madurai V. ITO Non Corporate Ward 3(5), Madurai

ITA 972/CHNY/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1547 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 09-04-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: B RAMAKRISHNAN
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A BENCH, CHENNAI [ , , BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ I.T.A.NOS.970 & 971/CHNY/2019 ( [ [ / ASSESSMENT YEARS: 2013-14 & 2014-15) SHRI T. KANNAN, THIAGARAJAR MILLS PREMISES, KAPPALUR, MADURAI. VS THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 2, MADURAI. PAN: AAQPK8713Q ( /APPELLANT) ( /RESPONDENT) & ./ I.T.A.NO.972/CHNY/2019 ( [ [ / ASSESSMENT YEAR: 2009-10) M/S. THIRUMAGAL INVESTMENTS, THIAGARAJAR MILLS PREMISES, KAPPALUR, MADURAI 625 008. VS THE INCOME TAX OFFICER, NON-CORPORATE WARD -3(5), MADURAI. PAN: AABFT0078N ( /APPELLANT) ( /RESPONDENT) / APPELLANTS BY : SHRI B. RAMAKRISHNAN, FCA / RESPONDENT BY : SHRI AR.V. SREENIVASAN, JCIT /DATE OF HEARING : 03.06.2019 /DATE OF PRONOUNCEMENT : 12.06.2019 / O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: THE ABOVE ASSESSEES FILED THESE APPEALS AGAINST THE ORDERS OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-1, MADURAI IN ITA 2 ITA NOS.970 TO 972/CHNY/2019 NOS.39 & 178 OF 2016-17 DATED 21.02.2019 FOR THE ASSESSMENT YEARS 2013-14 & 2014-15 AND 231/2016-17 DATED 20.02.2019 FOR THE ASSESSMENT YEAR 2009-10 RESPECTIVELY. 2. SHRI T. KANNAN, THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MONEY LENDING, DERIVATIVE TRADING AND PORTFOLIO MANAGEMENT. DURING THE IMPUGNED ASSESSMENT YEARS, THE ASSESSEE EARNED DIVIDEND WHICH WAS CLAIMED AS AN EXEMPT INCOME U/S.10(34) OF THE ACT. THE ASSESSEE IN HIS RETURN DID NOT MAKE ANY DISALLOWANCE, BUT FOR MAT CHARGES, IN RESPECT OF EXPENDITURE INCURRED IN RELATION TO DIVIDEND INCOME WHICH DID NOT FORM PART OF TOTAL INCOME AS REQUIRED U/S.14A OF THE ACT. THEREFORE, THE LD.AO RECORDED HIS SATISFACTION AND DETERMINED THE QUANTUM OF DISALLOWANCE U/S.14A READ WITH RULE 8D OF THE RULES AND COMPLETED THE ASSESSMENTS. 3. WHILE MAKING THE ASSESSMENT FOR THE ASSESSMENT YEAR 2009-10 IN THE CASE OF M/S. THIRUMAGAL INVESTMENTS, THE FIRM, THE LD.AO FOUND THAT THE ASSESSEE HAS MADE INVESTMENTS IN SHARES AND EARNED TAX FREE DIVIDENDS. HE OBSERVED THAT THE ASSESSEE HAVE NOT MAINTAINED PROPER BOOKS OF ACCOUNTS WITH REGARD TO INVESTMENTS. THEREFORE AFTER 3 ITA NOS.970 TO 972/CHNY/2019 RECORDING DUE SATISFACTION, MADE DISALLOWANCE U/S.14A READ WITH RULE 8D OF THE RULES. 4. AGGRIEVED AGAINST THOSE ORDERS, THE RESPECTIVE ASSESSEE FILED APPEALS BEFORE THE CIT(A). THE LD.CIT(A) AFTER GOING THROUGH VARIOUS DECISIONS HELD, INTER-ALIA, THAT THE LD.AO WAS CORRECT IN APPLYING THE PROVISIONS CONTAINED IN SECTION 14A READ WITH RULE 8D OF THE RULES FOR THE PURPOSE OF WORKING OUT THE QUANTUM OF DISALLOWANCE AND THEREFORE DISMISSED THE APPEALS. 5. AGGRIEVED AGAINST ALL THE ABOVE ORDERS OF THE LD.CIT(A), THE ABOVE ASSESSEES FILED THE ABOVE APPEALS. AT THE TIME OF HEARING, THOUGH THE ASSESSEE HAS TAKEN VARIOUS GROUNDS, THE LD.AR INVITING OUR ATTENTION TO THE COPY OF PAPER-BOOK SUBMITTED THAT THE ASSESSEE VOLUNTARILY DISALLOWED VARIOUS EXPENDITURES AND THEN COMPUTED THE INCOME. THEREFORE THE DISALLOWANCE MADE INVOKING THE PROVISIONS OF SECTION 14A READ WITH RULE 8D OF THE RULES IS NOT WARRANTED. HOWEVER THE LD.DR SUBMITTED THAT THE DISALLOWANCE MADE WERE ON DRAWINGS, DONATION, ETC., AND NOT ON INTEREST PAYMENTS. THE INTEREST PAYMENTS DISALLOWED ARE VERY MEAGER, THEREFORE THE ASSESSEES PLEA ARE NOT CORRECT. THE LD.DR SUBMITTED THAT SINCE THE ASSESSEE HAS NOT 4 ITA NOS.970 TO 972/CHNY/2019 QUANTIFIED THE DISALLOWANCE RELATED TO THE EARNING OF EXEMPT INCOME AS REQUIRED U/S.14A READ WITH RULE 8D OF THE RULES, IT IS NOT POSSIBLE TO TAKE ANY DECISION ON THE BASIS OF THE MATERIAL IN THE PAPER-BOOK. THE LD.AR SUBMITTED THAT HE HAS NO OBJECTION IF THE APPEALS ARE REMITTED BACK TO THE LD.AO FOR DUE EXAMINATION AND DUE DECISION, ON WHICH THE LD.DR DID NOT OPPOSE. 6. WE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT THE ABOVE ASSESSEES HAVE NOT MADE DUE COMPUTATION AS REQUIRED U/S.14A READ WITH RULE 8D OF THE RULES. THEREFORE, ON THE FACTS AND CIRCUMSTANCES, WE DEEM IT FIT AND PROPER TO REMIT THESE ISSUES BACK TO THE LD.AO FOR A FRESH CONSIDERATION. THE ASSESSEE SHALL FURNISH THE DUE COMPUTATION AS REQUIRED U/S.14A READ WITH RULE 8D OF THE RULES AND ITS RATIONALE BEFORE THE LD.AO. THE LD.AO SHALL EXAMINE THEM AND AFTER AFFORDING ADEQUATE OPPORTUNITY TO THE ASSESSEE, SHALL PASS A SPEAKING ORDER IN EACH OF THESE CASES IN ACCORDANCE WITH LAW. 7. SINCE THE LD.AR HAS NOT ARGUED ON THE OTHER GROUNDS OF APPEAL, THOSE GROUNDS ARE TREATED AS NOT PRESSED AND ACCORDINGLY TREATED AS DISMISSED. 5 ITA NOS.970 TO 972/CHNY/2019 8. IN THE RESULT, THE ABOVE ASSESSEES APPEALS FOR THE ASSESSMENT YEARS 2012-13, 2013-14 & 2009-10 ARE TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 12 TH JUNE, 2019 AT CHENNAI. SD/- SD/- /CHENNAI, /DATED 12 TH JUNE, 2019 RSR /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( ) /CIT(A) 4. /CIT 5. /DR 6. [ /GF ( ) (GEORGE MATHAN) /JUDICIAL MEMBER ( ) (S. JAYARAMAN) /ACCOUNTANT MEMBER