Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN
आदेश / O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:: This appeal of the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals)-1, Coimbatore dated 22.01.2019 and pertains to the assessment year 2014-15.
The first issue arising for consideration is with regard to disallowance made u/s. 14A of the Income Tax Act, 1961 (in short ‘the Act’). Shri K. Raghu, the Ld. Representative for the assessee submitted
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 comes to only Rs. 11,790/- therefore, the disallowance made by the AO to the extent of Rs. 1,17,274/- is not justified.
Having heard the Ld. Representative for the assessee, we heard the Ld. Departmental Representative also. This Tribunal is of the considered opinion that since the assessee claims before 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 verified by the AO.
Accordingly, the orders of both the lower authorities 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-consideration.
The next issue arising for consideration with regard 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 the assessee clarified that this year there was a loss to the extent of Rs. 45 lakhs.
3 -: 5. On the contrary, the Ld. Departmental Representative submitted that it is known whether the funds were available in capital and reserve as claimed by assessee therefore, the matter may be remitted back to the file of AO for verification.
Having heard the Ld. Representative for the assessee and the Ld. Departmental Representative, this Tribunal is of the considered opinion that the availability of capital, reserve and surplus 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 available 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 of the considered opinion that the factual aspects needs to be verified and brought on record.
Accordingly, the orders of the both the authorities 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 material that may be filed by the assessee and thereafter, decide the issue in accordance with law after giving a reasonable opportunity to the assessee.
4 -: 7. In the result, the appeal filed by the assessee stands allowed for statistical purpose.
Order pronounced in the open court on 06th February, 2020 at Chennai (Camp at Coimbatore).