ASSISTANT COMMISSIONER OF INCOME-TAX CORPORATE CIRCLE 1 1, CHENNAI V. HYUNDAI STEEL INDIA PRIVATE LIMITED, KANCHIPURAM

ITA 1945/CHNY/2024

AI Insights

The case involves an appeal by the Revenue against the order of the Learned Commissioner of Income Tax (Appeals), which had deleted the addition made by the Assessing Officer under section 14A of the Income Tax Act, 1961. The addition was initially made following the application of Rule 8D of the Income Tax Rules, 1962, due to the assessee's investments yielding exempt income. However, the CIT(A) deleted the addition based on the finding that the assessee did not earn any exempt income during the relevant year, relying on a Supreme Court decision. The Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 107476 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Other Referred Cases: CIT v. Chettinad Logistics (P) Ltd.
• Laws Referred To: Income Tax Act, 1961, Income Tax Rules, 1962
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R.ANITA
• Keywords: Reasonable cause; Rectification of order; Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

"आयकर अपीलीय अिधकरण, ’सी’ \u0001यायपीठ, चे ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI \u0001ी एबी टी. वक , ाियक सद\u0011 एवं एवं एवं एवं \u0001ी एस. आर. रघुनाथा, लेखा सद क े सम\u001b BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI S.R.RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.1945/Chny/2024 िनधा\u000eरण वष\u000e/Assessment Year: 2014-15 The ACIT, Corporate Circle-1(1), Chennai. v. M/s. Hyundai Steel- India Pvt. Ltd., No.49, Sengadu Village, Sengadu, Kanchipuram-602 002. [PAN: AABCH 7074 D] (अपीलाथ\u0016/Appellant) (\u0017\u0018यथ\u0016/Respondent) अपीलाथ\u0016 क\u001a ओर से/ Appellant by : Ms. R. Anita, Addl.CIT \u0017\u0018यथ\u0016 क\u001a ओर से /Respondent by : None सुनवाईक\u001aतारीख/Date of Hearing : 04.11.2024 घोषणाक\u001aतारीख /Date of Pronouncement : 10.01.2025 आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the Revenue against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter in short \"the Ld.CIT(A)”), Delhi, dated 19.12.2023 for the Assessment Year (hereinafter in short \"AY”) 2014-15. 2. At the outset, it is noted that there is a delay of ‘139’ days in filing of the appeal. And the AO/ACIT has filed an affidavit explaining the cause for delay and after going through the contents of the affidavit, we are ITA No.1945/Chny/2024 (AY 2014-15) M/s. Hyundai Steel India Pvt. Ltd. :: 2 :: satisfied that there is reasonable cause for the delay in filing of the appeal. Therefore, we condone the delay and proceed to hear the appeal. 3. None appeared for the assessee. However, the main grievance of the Revenue is against the action of the Ld.CIT(A) deleting the addition made by the AO u/s.14A of the Income Tax Act, 1961 (hereinafter in short \"the Act”) to the tune of Rs.69,69,630/-. 4. The brief facts are that the assessee has filed its original return electronically on 30.11.2014 declaring income of Rs.9,23,94,570/-, which was subsequently selected for scrutiny and the AO noted that the assessee has shown Rs.55,00,000/- as exempt income yielding investments [sic]. Therefore, he asked the assessee ‘as to why’ provisions of Sec.14A of the Act should not be applied for disallowing the expenditure incurred for the purpose of earning the exempt income. In response, assessee furnished certain explanations which was not accepted by the AO who applied Rule 8D of the Income Tax Rules, 1962 (hereinafter in short ‘the Rules’) and made disallowance of Rs.69,69,630/- under the normal computation as well as under MAT and passed the Assessment Order dated 23.12.2016 u/s.143(3) of the Act. 5. Aggrieved, the assessee preferred an appeal before the Ld.CIT(A) who was pleased to delete the same on the ground that the assessee didn’t earn any exempt income during the relevant year and relied on the ITA No.1945/Chny/2024 (AY 2014-15) M/s. Hyundai Steel India Pvt. Ltd. :: 3 :: decision of the Hon’ble Supreme Court in the case of CIT v. Chettinad Logistics (P) Ltd., reported in [2017] Taxmann.com 221 (SC). Pursuant to it, the department preferred an appeal before the Tribunal challenging the action of Ld CIT(A) deleting the addition (in ITA No.595/Chny/2019 for AY 2014-15 which was decided by the Tribunal dated 19.07.2019), and the Tribunal confirmed the action of the Ld.CIT(A) and dismissed the appeal of the Revenue. 6. In the meanwhile, the AO took note of the fact that in the Original Assessment Order passed on 23.12.2016, he has inadvertently taken note of the interest expenditure of Rs.5,47,10,000/- instead of the correct figures of Rs.45,31,72,192/-. According to the AO, since the mistake was apparent on record, he passed a rectification order u/s.154 of the Act dated 28.06.2017 and recomputed u/s.14A disallowance at Rs.3,81,69,675/-. Assessee being aggrieved by the order of the AO passed u/s.154 dated 28.06.2017 preferred an appeal before the Ld.CIT(A) who has again deleted the addition made u/s.14A r.w.r.8D by relying on the decision of the Hon’ble Supreme Court in the case of Chettinad Logistics (P) Ltd., (supra) on the ground that the assessee didn’t earn any exempt income during the relevant year. Before us, the Revenue couldn’t contradict the finding of fact by the Ld.CIT(A) that assessee didn’t earn any exempt income in this relevant assessment [AY ITA No.1945/Chny/2024 (AY 2014-15) M/s. Hyundai Steel India Pvt. Ltd. :: 4 :: 2014-15]. Therefore, we taking note that the issue raised by Revenue being no longer res integra and finding that the assessee didn’t earn any exempt income, disallowance u/s.14A was not warranted; and hence, the Ld.CIT(A) has rightly deleted the additions made by the AO and therefore, we confirm the impugned action of the Ld.CIT(A); and find no merit in the contention of the Ld.DR that the explanation inserted by the Finance Act, 2022 in section 14A of the Act is explanatory in nature and even if assessee didn’t earn any exempt income, disallowance needs to be resorted to, which plea, we can’t accept because, according to us, the said explanation would be prospective in nature and wont apply for AY 2014-15 and hence, we dismiss the Revenue appeal. 7. In the result, appeal filed by the Revenue is dismissed. Order pronounced on the 10th day of January, 2025, in Chennai. Sd/- (एस. आर. रघुनाथा) (S.R.RAGHUNATHA) लेखा सद\u0003य/ACCOUNTANT MEMBER Sd/- (एबी टी. वक ) (ABY T. VARKEY) \u0005याियक सद\u0003य/JUDICIAL MEMBER चे ई/Chennai, !दनांक/Dated: 10th January, 2025. TLN, Sr.PS आदेश क\u001a \u0017ितिलिप अ$ेिषत/Copy to: 1. अपीलाथ /Appellant 2. \u000e\u000fथ /Respondent 3. आयकरआयु\u0015/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय\u000eितिनिध/DR 5. गाड फाईल/GF "