Income Tax Appellate Tribunal - Chandigarh
Mehar Chand Bhatia, Ludhiana vs Acit, Ludhiana on 31 October, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCHES, 'SMC', CHANDIGARH
BEFORE MS. DIVA SINGH, JUDICIAL MEMBER
ITA No . 1425/CHD/2016
Assessment year: 2011-12
Shri Mehar Chand Bhatia, Vs. The ACIT,
92, Surya Kiran Complex, Circle-VI,
The Mall, Ludhiana. Ludhiana.
PAN No. ABFPB7591M
(Appellant) (Respondent)
Appellant By : Shri Gurjeet Singh
Respondent By : Smt. Chander Kanta,Sr.DR
Date of hearing : 31.08.2017
Date of Pronouncement : 31.10.2017
ORDER
The present appeal has been filed by the assessee assailing the correctness of the order dated 25.10.2016 of ld.CIT (Appeals)-4 Ludhiana pertaining to 2011-12 assessment year on the following grounds :
1. Because the action for upholding the disallowance of interest (Rs.18,24,686/-) by invoking the Provisions of Section 14A are being challenged on facts and law.
2. Because the action for disallowance of interest u/s 14A is misapplication of the principles of law and a result of the non appreciation of the ratio of the Judgments in the true and correct sense.
3. The ld. AR inviting attention to the impugned order submitted that the findings of the ld. CIT(A) in the facts of the present case arrived at in para 5.2 are contrary to the settled legal position as considered by various High Courts including the jurisdictional High Court namely CIT Vs Lakhani Marketing Incl. (2014) 111 DTR 149 (P&H) and decision of the Hon'ble Delhi High Court in the case of CIT Vs Holcim India Pvt. Ltd. 90 CCH 81 and Cheminvest Ltd.Vs CIT 378 ITR 33. In the facts of the present case, it was his submission that no addition by way of disallowance could have been made by the AO as no dividend income had been earned by the assessee. It was his submission that the said argument was advanced before the AO and also the CIT(A), however, no finding of fact had been arrived at by them. In the circumstances, it was his prayer that either the addition be deleted or the issue be restored for verification of this limited fact.
ITA 1425/CHD/2016 A.Y. 2011-12 Page 2 of 2
4. The ld. Sr.DR relies upon the impugned order.
5. I have heard the submissions and perused the material available on record. In the facts of the present case, admittedly the AO has made the addition u/s 14A invoking Rule 8D which was upheld by the CIT(A) in appeal. In the facts of the present case, it has been argued by the ld. AR that no dividend income has been received. The fact whether this claim is correct or not is not coming out from the record. Accordingly, in the light of the submissions of the parties, I deem it appropriate to set aside the impugned order and restore the issue back to the file of the AO with the direction to verify the factual position whether any dividend income has been earned by the assessee in the year under consideration or not. In case it is found that no dividend income has been earned by the assessee, then in terms of the judicial precedent as laid down by the Hon'ble Delhi High Court in the case of Holcim India Pvt. Ltd. 90 CCH 81 and Cheminvest Ltd.Vs CIT 378 ITR 33 and CIT Vs Lakhani Marketing Incl. of the Hon'ble Punjab & Haryana High Court, no addition by way of a disallowance could be made. It may not be out of place to even refer to decisions of the Hon'ble Gujrat High Court in the case of CIT Vs Corrtech Energy P. Ltd. (2015) 372 ITR 97. Accordingly, for this limited purpose, the issue is sent back to the file of the AO to pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard.
6. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the Open Court on 31st October2017.
Sd/-
(DIVA SINGH) JUDICIAL MEMBER ' P o on am ' C o py t o:
1. Th e A p p ell ant
2. Th e R e s p on d ent
3. Th e CI T
4. Th e CI T( A)
5. Th e DR Asstt. Registrar ITAT,Chandigarh.