ACIT, Thanjavur v. R.Ravichandran, Thanjavur

ITA 1337/CHNY/2014 | 2006-2007
Pronouncement Date: 31-07-2015 | Result: Dismissed

Appeal Details

RSA Number 133721714 RSA 2014
Assessee PAN AFMPR1111A
Bench Chennai
Appeal Number ITA 1337/CHNY/2014
Duration Of Justice 1 year(s) 2 month(s) 15 day(s)
Appellant ACIT, Thanjavur
Respondent R.Ravichandran, Thanjavur
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2015
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 31-07-2015
Assessment Year 2006-2007
Appeal Filed On 15-05-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . . . ! ' # $% & [ BEFORE SHRI N.R.S. GANESAN JUDICIAL MEMBER AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ] ./ I.T.A.NOS.1337 & 1338/MDS/2014 AND C.O. NOS.26 & 27/MDS/2015 / ASSESSMENT YEARS : 2006-07 & 2008-09 THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-I THANJAVUR VS. SHRI. R. RAVICHANDRAN NO.B-30 MUNICIPAL COLONY M.C. ROD THANJAVUR 613 007 [PAN AFMPR 1111A ] ( '( / APPELLANT) ( )*'( /RESPONDENT/CROSS OBJECTOR) / APPELLANT BY : SHRI. S. DAS GUPTA IRS JCIT /RESPONDENT BY : SHRI. T. BANUSEKAR C.A. / DATE OF HEARING : 22-07-2015 / DATE OF PRONOUNCEMENT : 31-07-2015 / O R D E R PER CHANDRA POOJARI ACCOUNTANT MEMBER THESE APPEALS BY THE REVENUE AND CROSS OBJECTION S BY THE ASSESSEE ARE DIRECTED AGAINST DIFFERENT ORDERS OF THE COMMISSIONER OF INCOME-TAX (APPEALS) TRICHY FOR THE ASSESSMENTS Y EARS 2006-07 AND 2008-2009. ITA NOS.1337 & 1338/MDS/2014 & CO NOS.26 & 27/MDS/2015. :- 2 -: 2. THERE WAS A DELAY OF TEN DAYS IN FILING THESE APPE ALS BY THE REVENUE. THE REVENUE HAS FILED CONDONATION PETITIO NS EXPLAINING THE REASONS FOR DELAY IN FILING THE APPEALS. WE HAVE G ONE THROUGH THE CONDONOTION PETITIONS AND THE REASONS EXPLAINED BY THE REVENUE FOUND TO BE REASONABLE AND ALSO IN THE ABSENCE OF ANY OBJ ECTION THEREOF ON THE ASSESSEES PART WE CONDONE THE DELAY OF TEN DA YS IN FILING THE APPEALS AND ADMIT THE APPEALS FOR ADJUDICATION. ITA NO.1337/MDS/2014 ASSESSMENT YEAR 2006-07 3. IN THIS APPEAL THE DEPARTMENT CHALLENGED THE DELE TION OF ADDITION IN RESPECT OF FOREIGN GIFT FOR D8 76 835/- . 4. AFTER HEARING BOTH THE PARTIES WE ARE OF THE OPINI ON THAT THE TAX EFFECT INVOLVED IN THIS APPEAL IS LESS THAN D 4 00 000/- AS THE ADDITION OF DELETION IN RESPECT OF FOREIGN GIFT IS D8 76 835/- ONLY WHICH IS LESS THAN MONETARY LIMITS FIXED BY THE CBDT TO F ILE APPEAL BY THE REVENUE AS PER CBDT CIRCULAR NO.5/2014 DATED 10 TH JULY 2014 WHEREIN THE MONETARY LIMIT FIXED AT D4 00 000/- TO FILE APPEAL BEFORE THE TRIBUNAL. THE LD DEPARTMENTAL REPRESENTATIVE SU BMITTED THAT THE BOARDS CIRCULAR NO.5/2014 ISSUED ON 10.7.2014 REVI SING THE MONETARY LIMITS FOR FILING OF APPEALS BY THE DEPARTMENT BEFO RE THE TRIBUNAL WILL APPLY TO THE APPEALS FILED ON OR AFTER 10.07.2014 A ND NOT TO THE APPEAL ITA NOS.1337 & 1338/MDS/2014 & CO NOS.26 & 27/MDS/2015. :- 3 -: FILED PRIOR TO 10.07.2014. THUS LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY OPPOSED THE ARGUMENT OF THE ASSESSEE AND STATED THAT THIS INSTRUCTION IS PROSPECTIVE AND NOT RETROSPECTIVE. I N OUR OPINION AS HELD BY THE KOLKATA BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. SUJIT PANDEY VIDE ORDER DATED 10.09.2014 IN ITA NO.1914(KOL)/20 12 THE CBDT INSTRUCTION NO.5/2014 DATED 10.7.2014 HAD REV ISED THE MONETARY LIMIT FOR FILING AN APPEAL TO TRIBUNAL TO D4 00 000/- AND THE SAME WOULD BE APPLICABLE TO PENDING APPEALS ALSO FO R THE REASON THAT THE SAME IS EXACTLY IDENTICAL TO EARLIER INSTRUCTIO NS ISSUED BY CBDT THEREFORE WHERE TAX EFFECT WAS LESS THAN D4 00 000 /- APPEAL WAS NOT MAINTAINABLE. BEING SO THE REVENUE AUTHORITIES ARE PRECLUDED FROM FILING OF APPEAL IN THIS CASE ALSO. ACCORDINGLY T HIS APPEAL IS DISMISSED AS UN-ADMITTED. C.O. NO. 26/MDS/215 FOR THE A.Y. 2006-2007 5. THE ASSESSEE CHALLENGED SUSTAINING THE ADDITION MAD E U/S.14A OF THE INCOME TAX ACT 1961 AT D3 57 823/-. IN THIS CASE ADDITION WAS MADE AS THE ASSESSEE RECEIVED D9 62 09 4/- AS INTEREST ON CAPITAL FROM FIRM KARUPS REALTORS. AGAINST THIS THE ASSESSEE HAS CLAIMED DEDUCTION TOWARES THE INTEREST PAID OF D7 2 7 200/- ON THE LOAN TAKEN FOR THE INVESTMENT IN THE FIRM. IN ADDITION TO THE INTEREST EARNED DURING THE RELEVANT PREVIOUS YEAR THE ASSESSEE HAD ALSO EARNED SHARE ITA NOS.1337 & 1338/MDS/2014 & CO NOS.26 & 27/MDS/2015. :- 4 -: PROFIT OF D9 31 988/- WHICH WAS EXEMPT FROM TAX SI NCE IT WAS TAXED IN THE HANDS OF THE FIRM. SINCE THE INTEREST ON BORRO WED CAPITAL CLAIMED WAS IN RESPECT OF THE INVESTMENT FROM WHICH THE ASS ESSEE HAD EARNED INCOME BOTH IN THE FORM OF INTEREST ON SHARE CAPITA L AND SHARE PROFIT PROPORTIONATE INTEREST CLAIMED IN RESPECT OF THE EX EMPTED PORTION OF THE INCOME REQUIRED TO BE DISALLOWED UNDER SECTION 14A OF THE ACT. THE PROPORTIONATE INTEREST WAS WORKED OUT AT D3 57 823/- AND THE SAME WAS DISALLOWED. AGAINST THIS THE ASSESSEE PR EFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). TH E COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. 6. THE LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE SUBM ITTED THAT SECTION 14A OF THE ACT WAS INTRODUCED BY THE F INANCE ACT 2006 WHICH IS APPLICABLE WITH EFFECT FROM 01.04.2007 I.E . FROM THE ASSESSMENT YEAR 2007-2008 AND THE ASSESSEES CASE I S RELATING TO THE ASSESSMENT YEAR 2006-07 AND THE PROVISIONS OF SECTI ON 14A HAS NO APPLICATION. 7. ON THE OTHER HAND THE LD. DEPARTMENTAL REPRESENTAT IVE SUBMITTED THAT PROVISIONS OF SECTION 14A IS APPLICA BLE WITH RETROSPECTIVE EFFECT. ITA NOS.1337 & 1338/MDS/2014 & CO NOS.26 & 27/MDS/2015. :- 5 -: 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MAT ERIAL ON RECORD. IN OUR OPINION THE PROVISIONS OF SECTION 14A WAS INTRODUCED BY THE FINANCE ACT 2006 WITH EFFECT FROM 01.04.200 7 AND THIS PROVISION IS NOT WITH RETROSPECTIVE EFFECT SINCE T HE DATE AS SPECIFIED IN THE ACT IS WITH EFFECT FROM 01.04.2007 ONLY. SINCE THE ASSESSMENT YEAR INVOLVED IN THE CASE IS 2006 - 07 IN OUR OPINION PROVISIONS U/S.14A IS NOT APPLICABLE TO THE FACTS OF PRESENT CASE. 9. ACCORDINGLY THE C.O. FILED BY THE ASSESSEE IS AL LOWED. ITA NO. 1338/MDS/2014 ASSESSMENT YEAR 2008-2009 10. THE GROUND RAISED BY THE REVENUE IN THIS APPEAL IS WITH REGARD TO THE COMMISSIONER OF INCOME TAX (APPEALS) HAD ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER EVEN THOUGH THE ASSESSING OFFICER HAD RIGHTLY ADOPTED THE INTEREST RATE OF 8% IN RESPECT OF FIXED DEPOSITS MADE BY THE ASSESSEE. 11. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD SHO WED FIXED DEPOSIT WITH BANK AT D13 03 629/- AND ADMITTED IN TEREST OF D15 416/- ONLY. THE INTEREST ADMITTED BY THE ASSESSEE WAS VE RY LOW COMPARED TO THE BANK INTEREST. HENCE THE ASSESSING OFFICER ADO PTED A BANK FIXED DEPOSIT INTEREST AT 8% ON D13 03 629/- WHICH WORKED OUT TO D1 04 290/-. THE DIFFERENCE AMOUNT OF D88 874/- WA S ADDED BACK TO ITA NOS.1337 & 1338/MDS/2014 & CO NOS.26 & 27/MDS/2015. :- 6 -: THE INCOME OF THE ASSESSEE. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEA LS). 12. THE COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED T HAT FROM THE SUBMISSIONS OF THE ASSESSEE AND OTHER MATE RIALS ON RECORDS THE ASSESSEE HAS RIGHTLY DECLARED THE INTEREST ON B ANK FIXED DEPOSITS N RECEIPT BASIS AND THERE WAS SUBSTANCE IN HIS SUBMIS SIONS. ACCORDINGLY HE DELETED THE ADDITION OF D88 874/- MADE BY THE AS SESSING OFFICER. AGAINST THIS THE REVENUE IS IN APPEAL BEFORE US. 13. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. IN OUR OPINION IT IS NOT APPROPRIATE TO DE LETE THE ADDITION MADE TOWARDS INTEREST FROM BANK DEPOSIT. HOWEVER IT I S APPROPRIATE TO FIND OUT THE EXACT AMOUNT OF INTEREST EARNED BY ASSESSEE FROM FIXED DEPOSITS FROM BANK BY MAKING NECESSARY ENQUIRY. AC CORDINGLY THIS GROUND IS REMITTED BACK TO ASSESSING OFFICER FOR F RESH CONSIDERATION. THE ASSESSING OFFICER HAS TO BRING TO TAX THE EXACT AMOUNT OF INTEREST EARNED BY THE ASSESSEE FROM FIXED DEPOSITS. THIS GR OUND IS PARTLY ALLOWED FOR STATISTICAL PURPOSES . 14. THE NEXT GROUND IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED BY ALLOWING THE CLAIM OF EXEMPTION U/S.54. THE ASSESSING OFFICER HAS COMPUTED THE INCOME FROM LON G TERM CAPITAL ITA NOS.1337 & 1338/MDS/2014 & CO NOS.26 & 27/MDS/2015. :- 7 -: GAINS ON THE BASIS OF THE DOCUMENTS PRODUCED BY THE ASSESSEE DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS. . 15. THE FACTS OF THE CASE ARE THAT THE DURING THE ASSES SMENT YEAR UNDER CONSIDERATION THE ASSESSEE SOLD A PROPE RTY AT PLOT NO.A-21 THANGAM NAGAR MEDIAL COLLEGE RAOD THANJAVUR FOR CONSIDERATION OF D36 00 000/- ON 01.10.2007. THE ASSESSEE PURCHASED A PLOT ON 05.12.2007 COSTING D14 01 050/-. HE GOT APPROVAL F OR CONSTRUCTION OF THE PROPERTY ON THE NEW PLOT VIDE THE APPROVAL DATE D 18.06.2009 AND A LOAN FROM BANK OF BARODA IN SEPTEMBER 2009. IN VIEW OF THIS THE LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE SUBMITTE D A LETTER TO THE ASSESSING OFFICER ON 22.12.2010 REQUESTING FOR EXEM PTION U/S.54 OF THE ACT FOR THE CAPITAL GAIN ENCLOSING THEREWITH A DETAILED WORKING OF THE CAPITAL GAIN PLOT PURCHASED DOCUMENT COPY MUN ICIPAL APPROVAL LETTER AND BANK OF BARODA HOUSING LOAN SANCTION LET TER. THE ASSESSING OFFICER FAILED TO CONSIDER THE ABOVE DOCUMENTS WHIL E FRAMING THE ASSESSMENT ORDER AND ARRIVED AT A FIGURE ON HIS OWN . AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONE R OF INCOME TAX (APPEALS). 16. THE COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT THERE WAS SUBSTANTIAL STRENGTH IN THE ARGUMENT OF T HE ASSESSEE AND THE ASSESSING OFFICER HAD FAILED TO CONSIDER THE MA TERIALS PLACED BEFORE ITA NOS.1337 & 1338/MDS/2014 & CO NOS.26 & 27/MDS/2015. :- 8 -: HIM AND THERE WAS VALID CASE FOR ALLOWING THE EXEM PTION U/S.54 OF THE ACT AND HE DELETED THE ADDITION MADE BY THE ASS ESSING OFFICER. AGAINST THIS THE REVENUE IS IN APPEAL BEFORE US. 17. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED TH AT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS CONSIDERED FRESH EVIDENCE WHICH WAS NOT PLACED BEFORE THE ASSESSING OFFICER W HILE GRANTING EXEMPTION U/S.54 OF THE ACT. 18. THE LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE FAIR LY CONCEDED THAT THE ASSESSEE HAS FILED INFORMATION RELATING TO CLAIM OF DEDUCTION U/S.54 OF THE ACT ON 22.12.2010 BEFORE TH E ASSESSING OFFICER THE DATE ON WHICH ASSESSMENT ORDER WAS PAS SED. BEING SO AT THE TIME OF PASSING ASSESSMENT ORDER THE ASSESSING OFFICER HAD NO OCCASION TO CONSIDER THE DOCUMENTS FILED BY THE ASS ESSEE FOR THE PURPOSE OF DECIDING THE ISSUE. FURTHER THE COMMIS SIONER OF INCOME TAX (APPEALS) CONSIDERED THE SAME DOCUMENTS WITHOUT CALLING FOR REMAND REPORT FROM THE ASSESSING OFFICER. IN OUR OPINION IN THE INTEREST OF JUSTICE IT IS APPROPRIATE TO REMIT THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION AND THE I SSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONS IDERATION. ACCORDINGLY THIS GROUND OF THE REVENUE IS PARTLY ALLOWED FOR ST ATISTICAL PURPOSES. C.O.NO.27/MDS/2015 ASSESSMENT YEAR 2008-2009. ITA NOS.1337 & 1338/MDS/2014 & CO NOS.26 & 27/MDS/2015. :- 9 -: 19. THE ASSESSEE RAISED THE GROUND IN C.O. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE ADDITION OF INTEREST @10% ON ADVANCES TOWARDS BUSIN ESS INVESTMENT AMOUNTING TO D1 02 636/-. 20. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD GIV EN ADVANCES OF D2 00 000/- D8 16 359/- AND D10 000/- T OWARDS BUSINESS INVESTMENT. THE ASSESSEE HAD NOT ADMITTED ANY INTER EST TOWARDS THIS ADVANCE AND THE ASSESSING OFFICER ADOPTED A NOMIN AL AND REASONABLE INTEREST AT 12% WHICH WORKS OUT TO D1 23 120/- AND THE SAME IS ADDED BACK TO THE INCOME RETURNED. AGGRIEVED THE A SSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (AP PEALS). 21. THE COMMISSIONER OF INCOME TAX (APPEALS) DIRECTED THE ASSESSING OFFICER TO COMPUTE INTEREST AT THE RATE O F 10% WHICH IS NORMAL BANK INTEREST ALLOWABLE ON THE FIXED DEPOSIT S. ACCORDINGLY THE COMMISSIONER OF INCOME TAX (APPEALS) RESTRICTED THE ADDITION TO D1 02 636/- INSTEAD OF D1 23 120/- AS COMPUTED BY T HE ASSESSING OFFICER. AGAINST THIS THE ASSESSEE IS IN APPEAL BE FORE US. 22. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIALS ON RECORD. THE TRIBUNAL HAD CONSISTENTLY HOLDING TH AT IF ASSESSEE HAD NOT BORROWED FUNDS THERE CANNOT BE ADDITIONS TOWARD S NOTIONAL INTEREST. BEFORE US THE ASSESSEE FILED A COPY OF THE BALANCE SHEET. WE ITA NOS.1337 & 1338/MDS/2014 & CO NOS.26 & 27/MDS/2015. :- 10 -: ARE OF THE OPINION THAT THERE IS NO BORROWED FUNDS AND THE ASSESSEE ADVANCED ONLY HIS OWN FUNDS. BEING SO IT IS NOT A PPROPRIATE TO CONSIDER THE NOTIONAL INTEREST FROM ADVANCE. ACCOR DINGLY THE ADDITION MADE TOWARDS NOTIONAL INTEREST IS NOT JUSTIFIED AND THE ADDITION IS DELETED. THE C.O FILED BY THE ASSESSEE IS ALLOWED. 23. IN THE RESULT THE REVENUES APPEAL IN ITA NO.1337/MDS/2014 IS DISMISSED ITA NO.1338/MDS/2014 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND C.O. NOS.26 & 27/MDS/2015 FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON FRIDAY THE 31ST DAY OF JULY 2015 AT CHENNAI. SD/- SD/- ( . . . ! ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( ! ' ) (CHANDRA POOJARI) # / ACCOUNTANT MEMBER '# / CHENNAI $% / DATED:31.07. 2015 KV %&'' ()'*) / COPY TO: ' 1 . / APPELLANT 4. ' + / CIT 2. / RESPONDENT 5. ) -' . / DR 3. ' +'/! / CIT(A) 6. -0'1 / GF