M/s. Tamil Nadu Minerals Ltd., CHENNAI V. DCIT, CHENNAI

CO 161/CHNY/2016

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 2936 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 6 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 03-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 01-03-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 27-10-2016
• Court: TRIBUNAL
• Assessee Lawyers: SHIVA SRINIVAS
• Keywords: Earning of tax free income; Condonation of delay
• Section: 43B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU R.L REDDY, JUDICIAL MEMBER ./ ITA NOS.:2553/MDS/2016 & C.O. NO.161/MDS./2016 / ASSESSMENT YEAR : 2011-12 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 3(1), CHENNAI 600 034. V. M/S. TAMILNADU MINERALS LTD., NO.31, TWAD HOUSE, KAMARAJAR SALAI, CHEPAUK, CHENNAI 05. PAN: AABCT2250P ( /APPELLANT) ( /RESPONDENT) /APPELLANT BY : SHRI SHIVA SRINIVAS, JCIT /RESPONDENT BY : SHRI PHILIP GEORGE, ADVOCATE /DATE OF HEARING : 02.03.2017 /DATE OF PRONOUNCEMENT : 03-04-2017 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER : THE APPEAL OF THE REVENUE AND CROSS OBJECTIONS FILE D BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF LD.CIT(A )-11, CHENNAI, DATED 20.05.2016 PERTAINING TO ASSESSMENT YEAR 2011-12. 2. ON PERUSING THE APPEAL, WE FIND THAT THE AO HA D FILED THE APPEAL WITH DELAY OF 09 DAYS. THE LEARNED AO FILED A PETITION D ATED 31.08.2016 SEEKING CONDONATION OF DELAY AND STATED IN THIS PETITION T HAT THE DELAY OF 09 DAYS IN 2 I.T.A. NO. 2553/MDS/2016 FILING THE APPEAL BEFORE THIS TRIBUNAL IS ON ACCOUN T OF MIXING UP OF PAPERS IN HIS OFFICE AND IT TOOK TIME TO LOCATE THE SAME AND AS SOON AS HE TRACED THE RECORDS, HE FILED THE APPEAL ON 31.08.2016. IN OUR OPINION, THE REASONS EXPLAINED BY THE AO FOR FILING THE APPEAL BELATEDLY IS BONAFIDE. ACCORDINGLY, THE DELAY IS CONDONED. 3. THE ONLY ONE GROUND IN THE REVENUES APPEAL IS WITH REGARD TO DELETION OF ADDITION MADE ON ACCOUNT OF PRIOR PERIOD EXPENDI TURE RELATING TO DEAD RENT AND LEASE RENT CLAIMED BY THE ASSESSEE. 4. THE BRIEF FACTS OF THE CASE IS THAT THE ASSESSE E, IS A PUBLIC SECTOR CORPORATION OF THE GOVERNMENT OF TAMIL NADU, ENGAGE D IN THE BUSINESS OF MANUFACTURING AND EXPORT OF GRANITE, GRAPHITE AND L IMESTONE. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2011-12 ON 29.09.2011 DECLARING TOTAL INCOME OF ` 47,01,438/- . LD. ASSESSING OFFICER DISALLOWED PAYMENT OF ` 33,56,913/- ON THE REASON THAT THIS AMOUNT WAS PAI D IN THE ASSESSMENT YEAR UNDER CONSIDERATION TOWARDS DEAD RE NT RELATING TO ASSESSMENT YEAR 2009-10. HENCE, THIS PAYMENT CANNOT BE ALLOWED AS DEDUCTION IN THE ASSESSMENT YEAR UNDER CONSIDERATI ON. AGGRIEVED, THE ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A). O N APPEAL, THE LD.CIT(A) ALLOWED THIS GROUND HOLDING THAT IT IS STATUTORY LI ABILITY AND SEC.43B OF THE ACT IS APPLICABLE TO THIS ISSUE. AGAINST THIS, REVENU E IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. SIMILAR ISSUE CAME FOR CONSIDERATION BEFORE THIS TR IBUNAL IN ASSESSEE'S OWN 3 I.T.A. NO. 2553/MDS/2016 CASE IN ITA NO.569 & 570/MDS./2014 VIDE ORDER DATED 08.05.2015 WHEREIN THE TRIBUNAL HELD AS UNDER:- 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTED LY, WHAT WAS PAID BY THE ASSESSEE IS FOR THE AREA ALLOTTED TO THEM FOR MINING. THEREFORE, THE NATURE OF PAYMENT MADE BY THE ASSESSEE CANNOT BE T REATED AS A SIMPLE CASE OF PAYMENT OF RENT. AS RIGHTLY SUBMITTED BY T HE LD. DR, WHAT WAS PAID BY THE ASSESSEE IS A ROYALTY IN RESPECT OF THE AREA OF LAND ALLOTTED FOR MINING. THEREFORE, THIS TRIBUNAL IS OF THE OPINION THAT THE PROVISIONS OF SECTION 43B ARE APPLICABLE. ADMITTEDLY, THE PAYMEN T WAS NOT MADE BY THE ASSESSEE BEFORE THE DUE DATE OF FILING OF RETU RN. THEREFORE, THE CIT(A) HAS RIGHTLY CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. BEING SO, IN OUR OPINION THE ABOVE PAYMENT OF DEAD RENT AND LEASED RENT TO BE CONSIDERED AS PAYMENT IN TERMS OF SEC.43B OF THE ACT ON ACTUAL PAYMENT, IT HAS TO BE ALLOWED. ACCORDINGLY, THE APP EAL OF REVENUE STANDS DISMISSED. C.O. NO.161/MDS./2016 BY ASSESSEE 6. THE FIRST ISSUE IN ASSESSEES C.O IS WITH REGAR D TO DISALLOWANCE U/S.14A R.W.RULE 8D 7. THE MAIN CONTENTION OF THE ASSESSEE IS THAT IT DID NOT INCUR ANY EXPENDITURE FOR EARNING THE EXEMPT INCOME AND SEC.1 4A R.W.RULE 8D IS NOT APPLICABLE, SINCE THE ASSESSEE INVESTED ITS OWN FUNDS AND NOT ANY BORROWED FUNDS. TO THIS EFFECT, THE ASSESSEE FILED A CHART SHOWING THE AVAILABILITY OF THE FUNDS. IN OUR OPINION, IF THE A SSESSEE USES ITS OWN 4 I.T.A. NO. 2553/MDS/2016 FUNDS FOR INVESTMENT FOR YIELDING EXEMPTED INCOME, THEN THERE CANNOT BE ANY DISALLOWANCE U/S.14A R.W.RULE 8D(2)(II) OF THE INCOME TAX RULES, 1962. WITH THIS OBSERVATION, WE ARE INCLINED TO REM IT THE ENTIRE ISSUE IN DISPUTE TO THE FILE OF AO FOR FRESH CONSIDERATION FOR THE PURPOSE OF DISALLOWANCE SEC.14A READ WITH RULE 8D(2)(II) OF THE INCOME TAX RULES AND ACCORDINGLY, REMITTED TO THE FILE OF AO FOR FRESH C ONSIDERATION. THIS GROUND IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 8. BEFORE US, THE LD.A.R HAS NOT PRESSED ANY OTHER GROUNDS RAISED IN THE C.O. THEREFORE, OTHER GROUNDS ARE DISMISSED AS NOT PRESSED. 9. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSE D AND THE CROSS OBJECTIONS BY ASSESSEE IS PARTLY ALLOWED FOR STATIS TICAL PURPOSES. ORDER PRONOUNCED ON 03 RD APRIL, 2017 AT CHENNAI . SD/- SD/- ( (( ( ) )) ) ( ) (DUVVURU R.L REDDY) (CHAN DRA POOJARI) /JUDICIAL MEMBER / ACCOUNTANT MEMBER /CHENNAI, /DATED, THE 03 RD APRIL, 2017 . KSSUNDARAM /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( )/CIT(A) 4. /CIT 5. /DR 6. /GF.