K.H.Arind Private Limited, CHENNAI V. DCIT, CHENNAI

MA 140/CHNY/2015

• Counselvise Citation: [2015] 124 COUNSELVISE.COM (IT) 3572 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 9 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 20-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 06-11-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 11-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: S VIDHYA
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER M.P. NO.140/MDS/2015 (IN ITA NO.405/MDS/2015) ' (' / ASSESSMENT YEAR : 2011-12 M/S K.H. ARIND PRIVATE LTD., NO.15/2, COLLEGE ROAD, NUNGAMBAKKAM, CHENNAI - 600 006. PAN : AAACK 1426 B V. THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 4(2), CHENNAI - 600 034. (*+' /PETITIONER) (*,+-/ RESPONDENT) *+' / 0 / PETITIONER BY : SMT. S. VIDHYA, CA *,+- / 0 / RESPONDENT BY : SH. P. RADHAKRISHNAN, JCIT 1 / 2% / DATE OF HEARING : 06.11.2015 3'( / 2% / DATE OF PRONOUNCEMENT : 20.11.2015 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THE ASSESSEE HAS FILED THE PRESENT MISCELLANEOUS PETITION ON THE GROUND THAT THERE IS AN ERROR IN THE ORDER O F THIS TRIBUNAL DATED 26.06.2015. 2 M.P. NO.140/MDS/15 2. SMT. S. VIDHYA, THE LD. REPRESENTATIVE FOR THE P ETITIONER, SUBMITTED THAT THE ASSESSING OFFICER MADE DISALLOWA NCE UNDER SECTION 14A OF THE INCOME-TAX ACT, 1961 (IN SHORT ' THE ACT') AND THE SAME WAS ALLOWED BY THE CIT(APPEALS). ON APPEAL FI LED BY THE REVENUE, THIS TRIBUNAL FOUND THAT SECTION 14A OF TH E ACT IS MANDATORY AND THE ESTIMATION OF EXPENDITURE AT 10% MAY NOT BE IN ACCORDANCE WITH THE PROVISIONS OF SUB-RULE (2) OF R ULE 8D OF THE INCOME-TAX RULES, 1962. THE LD. REPRESENTATIVE SUB MITTED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE B ORROWED PACKING CREDIT LOAN WHICH WAS NOT CONSIDERED BY THE TRIBUNAL WHILE DISPOSING OF THE APPEAL. ACCORDINGLY, PACKING CRED IT LOAN IS ONLY FOR THE PURPOSE OF PURCHASE OF RAW MATERIAL AND FOR EXP ORT AND THE SAME CANNOT BE USED FOR ANY OTHER PURPOSE. THE LD. REPRESENTATIVE FURTHER CLARIFIED THAT THE ASSESSEE HAS NOT BORROWE D ANY OTHER LOAN AND THERE IS NO OUTGOING TOWARDS INTEREST. THE LD. REPRESENTATIVE FURTHER CLARIFIED THAT THE INVESTMENT WAS MADE FROM INTEREST FREE FUNDS. THIS FACTUAL ASPECT WAS NOT CONSIDERED BY T HIS TRIBUNAL WHILE DISPOSING OF THE APPEAL. THEREFORE, THERE IS AN ER ROR IN THE ORDER OF THE TRIBUNAL WHICH NEEDS TO BE RECTIFIED. THE LD. REPRESENTATIVE SUBMITTED THAT THE ORDER MAY BE RECALLED AND AN OPP ORTUNITY MAY BE 3 M.P. NO.140/MDS/15 GIVEN TO THE ASSESSEE TO PLACE ALL THE MATERIAL FAC TS BEFORE THE TRIBUNAL. 3. ON THE CONTRARY, SH. P. RADHAKRISHNAN, THE LD. D EPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THIS TRIBUNAL, AFTER CONSIDERING THE ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 2008-09 , FOUND THAT SECTION 14A READ WITH RULE 8D IS MANDATORY FOR THE YEAR UNDER CONSIDERATION AND THE ASSESSING OFFICER HAS ALSO NO OPTION EXCEPT TO DETERMINE THE EXPENDITURE BY APPLYING THE PROVIS IONS OF RULE 8D. ACCORDINGLY, THIS TRIBUNAL REMITTED BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO DETERMINE THE EXPENDITURE INCU RRED BY THE ASSESSEE BY APPLYING SECOND LIMB OF RULE 8D(2) OF T HE INCOME-TAX RULES, 1962 AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE. THEREFORE, THERE IS NO ERROR IN THE ORDER OF THE TR IBUNAL. ON A QUERY FROM THE BENCH WHETHER THE ASSESSEE HAS BORROWED PA CKING CREDIT LOAN OR ANY OTHER LOAN, THE LD. D.R. BY PLACING REL IANCE ON THE PROFIT & LOSS ACCOUNT AND OTHER MATERIAL FILED ALONG WITH RETURN OF INCOME, SUBMITTED THAT THE ASSESSEE HAS BORROWED ONLY PACKI NG CREDIT LOAN AND NO OTHER LOAN WAS BORROWED. THE LD. D.R. FURTH ER SUBMITTED THAT SINCE THE MATTER IS REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER, THERE IS NO ERROR IN THE ORDER OF THE TRIB UNAL. 4 M.P. NO.140/MDS/15 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE CLAIM OF THE ASSESSEE IS THAT THE ASSESSEE BORROWED PACKING CRED IT LOAN FOR RAW MATERIAL AND EXPORT. THIS LOAN CANNOT BE DIVERTED FOR ANY OTHER PURPOSE. IT IS AN ADMITTED FACT THAT THE ASSESSEE HAS NOT BORROWED ANY OTHER LOAN, THEREFORE, NATURALLY BORROWED FUNDS WERE NOT USED FOR MAKING INVESTMENT IN EARNING EXEMPTED INCOME. THE CONTENTION OF THE LD. D.R. DURING THE COURSE OF HEARING OF THE APPEAL WAS THAT THE INTEREST EXPENDITURE WAS NOT DIRECTLY ATTRIBUTA BLE TO ANY PARTICULAR INCOME OR RECEIPT, THEREFORE, THE DISALL OWANCE HAS TO BE COMPUTED AS PER SECOND LIMB OF RULE 8D(2) OF THE IN COME-TAX RULES, 1962. NOW THE ASSESSEE DEMONSTRATES THAT TH E INTEREST EXPENDITURE IS RELATABLE TO PACKING CREDIT LOAN. T HEREFORE, IT MAY NOT BE CORRECT TO SAY THAT THE INTEREST EXPENDITURE IS NOT RELATABLE TO ANY PARTICULAR INCOME OR RECEIPT. AS DEMONSTRATED BY T HE ASSESSEE AND ACCEPTED BY THE LD. D.R. THAT THE ENTIRE INTEREST P AYMENT MADE BY THE ASSESSEE IS ONLY ON PACKING CREDIT LOAN WHICH I S ATTRIBUTABLE TO RAW MATERIAL AND EXPORT. THEREFORE, THERE WAS A FA CTUAL ERROR CREPT IN THE ORDER OF THE TRIBUNAL DATED 26.06.2015 WHICH NEEDS TO BE RECTIFIED. THIS TRIBUNAL IS OF THE CONSIDERED OPIN ION THAT THAT THE 5 M.P. NO.140/MDS/15 FACTUAL ERROR NEEDS TO BE RECTIFIED ONLY AFTER HEAR ING THE APPEAL AFRESH. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDE RED OPINION THAT THE MATTER NEEDS TO BE HEARD AFTER RECALL OF THE ORDER DATED 26.06.2015. ACCORDINGLY, THE ORDER OF THE TRIBUNAL DATED 26.06. 2015 IS HEREBY RECALLED AND THE APPEAL OF THE REVENUE IN I.T.A. NO .405/MDS/2015 IS RESTORED ON THE FILE OF THE TRIBUNAL. THE REGIS TRY IS DIRECTED TO POST THE APPEAL IN I.T.A. NO.405/MDS/2015 BEFORE TH E REGULAR BENCH ON 20.01.2016. 5. IN THE RESULT, THE MISCELLANEOUS PETITION FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 20 TH NOVEMBER, 2015 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 20 TH NOVEMBER, 2015. KRI. / *267 87(2 /COPY TO: 1. *+' /PETITIONER 2. *,+- /RESPONDENT 3. 1 92 () /CIT(A) 4. 1 92 /CIT 5. 7: *2 /DR 6. ' ; /GF.