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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) -9, Chennai, dated 27.03.2017 and pertains to assessment year 2008-09.
The only issue arises for consideration is disallowance made by the Assessing Officer under Section 14A of the Income-tax Act, 1961 (in short 'the Act').
Sh. SP. Chidambaram, the Ld.counsel for the assessee, submitted that the investments in the shares were made during the assessment years 1991-92 and 1992-93. The Ld.counsel clarified that no investment was made during the year under consideration.
The loan was borrowed for the purpose of business during the assessment year 2007-08. Therefore, according to the Ld. counsel, no borrowed funds were invested in the shares for earning the exempted income. Hence, according to the Ld. counsel, the provisions of Rule 8D(2) of the Income-tax Rules, 1962 are not applicable. The Ld.counsel submitted that when this was brought to the notice of the CIT(Appeals), the CIT(Appeals) has not discussed anything in the appellate order. Moreover, the Assessing Officer also has not brought on record the dates of investments and the date of borrowal of loan. Therefore, the Ld.counsel submitted that the matter may be remitted back to the file of the Assessing Officer.
We heard Smt. Ruby George, the Ld. Departmental Representative also. The assessee claims that there was no expenditure for earning the exempted income. According to the Ld. counsel, the funds were borrowed for business during the assessment year 2007-08 and actual investments in the shares for earning exempted income were made during the assessment years 1991-92 and 1992-93. These facts were not brought on record either by the Assessing Officer or by the CIT(Appeals). Therefore, this Tribunal is of the considered opinion that the matter needs to be reconsidered. Accordingly, orders of both the authorities below are set aside and the entire issue with regard to disallowance made under Section 14A of the Act is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter in the light of the material that may be filed by the assessee and bring on record the actual dates on which the investments were made for earning exempted income by the assessee and the date of borrowal of loan. The Assessing Officer also needs to examine whether during the year in which the investments were made, any loan was borrowed by the assessee. The Assessing Officer shall also bring on record the nexus between the borrowal of loan and the investments said to be made. Thereafter, the Assessing Officer shall decide the issue afresh in accordance with law, after giving a reasonable opportunity to the assessee.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the court on 16th November, 2018 at Chennai.