SREEDHANYA CONSTRUCTION COMPANY,TRIVANDRUM vs. DCIT CIRCLE 1(1), TRIVANDRUM

PDF · subscribers
ITA 676/COCH/2023Status: DisposedITAT Cochin22 August 2024AY 2017-18Bench: SHRI SATBEER SINGH GODARA (Judicial Member), SHRI AMARJIT SINGH (Accountant Member)4 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the Assessing Officer needed to conduct a fresh factual verification of the assessee's explanation regarding the source of investments. The Assessing Officer was directed to decide the issue afresh after providing adequate hearing opportunities.

What were the facts?

The assessee's appeal concerns a disallowance of interest expenditure under Section 14A read with Rule 8D. The lower authorities disallowed Rs. 33,85,972/- alleging diversion of funds for non-business purposes.

What were the issues?

The key issue is whether the interest expenditure claimed by the assessee was rightly disallowed under Section 14A read with Rule 8D due to alleged diversion of funds for non-business purposes.

Which sections of the Income-tax Act were involved?

Section 14A,Section 143(3),Section 263

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, COCHIN BENCH : COCHIN

Before: SHRI SATBEER SINGH GODARA & SHRI AMARJIT SINGH

Hearing: 20.08.2024Pronounced: 22.08.2024

This assessee’s appeal, for the assessment year 2017- 2018, arise against the CIT(A)-National Faceless Appeal Centre [in short the “NFAC”], Delhi, Delhi’s DIN & Order no.ITBA/NFAC/ S/250/2023-24/1055594510(1), dated 30.08.2023, in proceedings u/sec.143(3) r.w.s. 263 of the Income Tax Act, 1961 (in short the "Act").

2 ITA.No.676/COCH./2023 Heard both the parties. Case file perused.

2.

It emerges during the course of hearing that the sole substantive issue which arises for our apt adjudication is that of correctness of both the learned lower authorities action making sec.14A read with Rule 8D disallowance of Rs.33,85,972/- which represents the interest expenditure claim on account of alleged diversion of funds for non-business purposes.

3.

Learned CIT-DR invited our attention to the assessment findings dated 12.12.2022; in furtherance to sec.263 revision directions, that the Assessing Officer has duly examined the assessee’s case before arriving at the disallowance(s) figure forming subject matter of adjudication in the instant appeal.

4.

Faced with this situation, learned invited our attention to the assessee’s stand adopted throughout and more particularly, in page-2 of the assessment order, terming his source of investments to the specified bank account(s) maintained with the Federal Bank and South Indian Bank only. Learned counsel further explains before us that it was only the corresponding “CC” limits in the said bank account(s) as well as it’s Managing Partners introduction of capital after disposing off

3 ITA.No.676/COCH./2023 immovable properties; that had been diverted for the alleged non- business purposes/investments in the firm.

5.

Faced with this situation, we are of the considered opinion that the instant assessee’s sole substantive grievance requires the Assessing Officer’s fresh factual verification once both the learned lower authorities having rebutted the assessee’s categoric explanation terming the source of investments to the foregoing twin heads. The Assessing Officer is directed to decide the issue afresh after giving three effective opportunities of hearing to the assessee subject to the rider that it is the assessee’s sole risk and responsibility to plead and prove his case with all relevant documents in consequential proceedings. Ordered accordingly.

6.

This assessee’s appeal is allowed for statistical purposes in above terms.

Order pronounced in the open Court on 22.08.2024.

More judgments on Section 14A

All 15,875 judgments and leading authorities on Section 14A →

Recent GST High Court judgments

Search GST case law →