GMP Infrastructure Private Limited, Hyderabad V. The Assistant Commissioner of Income Tax, Central Circle-1, , Rajahmundry

CO 52/VIZ/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7546 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 7 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 30-04-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 23-04-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D K SONOWAL
• Keywords: Earning of tax free income; Deemed dividend; Tax effect; Rule 8D
• Section: 14A; 12; 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 5 24 - 528 /VIZ/2018 ( / ASSESSMENT YEAR S : 201 1 - 1 2 TO 20 15 - 16 RESPECTIVELY ) ASST.COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 1 RAJAHMUNDRY VS. M/S GMP INFRASTRUCTURE PVT. LTD. D.NO.145/A, RAOD NO - 10 PRASASHAN NAGAR JUBILEE HILLS HYDERABAD [PAN : AADCG7123L] ( / APPELLANT) ( / RESPONDENT) CROSS OBJECTION NOS.52 - 56/VIZ/2019 (ARISING OUT OF I.T. A.NO S . 524 - 528 /VIZ/2018 RESPECTIVELY) ( / ASSESSMENT YEAR S : 201 1 - 1 2 TO 20 15 - 16 RESPECTIVELY ) M/S GMP INFRASTRUCTURE PVT. LTD. D.NO.145/A, RAOD NO - 10 PRASASHAN NAGAR JUBILEE HILLS HYDERABAD [PAN : AADCG7123L] VS. ASST.COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 1 RAJAHMUNDRY ( / APPELLANT) ( / RESPONDENT) /REVENUE BY : SHRI D.K.SONOWAL, CIT DR / ASSESSEE BY : SHRI G.V.N.HARI, AR / DATE OF HEARING : 29 . 04. 201 9 / DATE OF PRONOUNCEMENT : 30 .04. 201 9 2 I.T.A. NO . 524 - 528 /VIZ/2018 AND CO NO. 52 - 56 /VIZ/201 9 M/S GMP INFRASTRUCTURE PVT. LTD., HYDERABAD / O R D E R P ER BENCH : THESE APPEALS ARE FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] - 3 DATED 29.06.2018 AND CROSS OBJECTIONS ARE FILED BY THE ASSESSEE IN SUPPORT OF THE ORDER OF THE LD.CIT(A) FOR THE ASSESSMENT YEAR (A.Y.) 2011 - 12 TO 2015 - 16. SINCE THE ISSUES INVOLVED IN THESE APPEALS ARE IDENTICAL, THESE APPEALS ARE CLUBBED, HEARD TOGETHER AND A COMMON ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AS UNDER. I.T.A 524/VIZ/2018, A.Y. 201 1 - 1 2 AND 525/VIZ/2018, A.Y. 2012 - 13 2. THE REVENUE HAS FILED THESE APPEALS AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] - 3 DATED 29.06.2018. DURING THE APPEAL HEARING, THE LD.AR SUBMITTED THAT THE TAX EFFECT INVOLVED IN THESE APPEALS IS LESS THAN RS.20,00,000/ - , HENC E, NOT MAINTAINABLE. LD.DR HAS NOT RAISED ANY OBJECTION FOR THE SAME. 2.1. WE HAVE HEARD BOTH THE PARTIES AND HOLD THAT SINCE THE TAX EFFECT INVOLVED IN THESE APPEALS IS LESS THAN RS.20,00,000/ - , THESE APPEALS ARE NOT 3 I.T.A. NO . 524 - 528 /VIZ/2018 AND CO NO. 52 - 56 /VIZ/201 9 M/S GMP INFRASTRUCTURE PVT. LTD., HYDERABAD MAINTAINABLE AS PER CBDT CIRCULAR NO. 03/2018, DATED 11 . 07 . 2018 , HENCE, DISMISSED. I.T.A. 526/VIZ/2018 TO 528/VIZ/2018, A.YS 2013 - 14 TO 2015 - 16 3. THE ONLY ISSUE IN THESE APPEALS IS RELATED TO THE DISALLOWANCE MADE BY THE ASSESSING OFFICER (AO) U/S 14A R.W.RULE 8D OF I.T.RULES. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEVELOPING OF INFRASTRUCTURE FACILITIES AND DURING THE ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE HAS MADE THE INVESTMENTS IN M/S PANDURANGA ENERGY SYSTEMS PVT. LIMITED OUT OF BORROWED FUNDS. SINCE THE INVESTMENT RESULTS IN EXEMPT INCOME , THE AO MADE THE DISALLOWANCE U/S 14A R.W.RULE 8D OF I.T.RULES. THE AO MADE THE DISALLOWANCES FOR THE A.YS 2013 - 14 TO 2015 - 16 AS UNDER : 2013 - 14 - RS.2,61,12,325/ - 2014 - 15 - RS.3,38,11,417/ - 2015 - 16 - RS.3,57,47,258/ - 4. AGGR IEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) FOUND THAT THE ASSESSEE DID NOT EARN ANY EXEMPT INCOME DURING THE RELEVANT ASSESSMENT YEARS. THEREFORE, FOLLOWING THE ORDERS OF THIS TRIBUNAL IN THE CASE OF D.VE ERABHADHRA REDDY (HUF) VS. DCIT, CIRCLE - 1, KAKINADA AND DCIT, CIRCLE - 2(1), VIJAYAWADA VS. 4 I.T.A. NO . 524 - 528 /VIZ/2018 AND CO NO. 52 - 56 /VIZ/201 9 M/S GMP INFRASTRUCTURE PVT. LTD., HYDERABAD RADHAKRISHNA AUTOMOBILES, DELETED THE ADDITION MADE BY THE AO. HENCE, THE REVENUE HAS FILED APPEAL BEFORE THIS TRIBUNAL. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUS ED THE MATERIAL PLACED ON RECORD. IN THIS CASE, THE AO MADE THE DISALLOWANCES RELATING TO THE TO EXEMPT INCOMEU/S 14A R.W. RLE 8D OF INCOME TAX RULES. HOWEVER, IT WAS FOUND THAT THE ASSESSEE DID NOT EARN EXEMPT INCOME IN THE IMPUGNED ASSESSMENT YEARS. TH EREFORE, THE LD.CIT(A) FOLLOWED THE ORDERS OF THIS TRIBUNAL AND DELETED THE ADDITION. FOR THE SAKE OF CLARITY AND CONVENIENCE WE EXTRACT THE RELEVANT PART OF THE LD.CIT(A) WHICH READS ASUNDER: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, WRITTEN S UBMISSIONS AND THE FINDING OF THE AO IN THE ASSESSMENT ORDERS. THERE IS NO DISPUTE REGARDING THE INVESTMENT MADE OUT OF THE BORROWED FUNDS BY THE APPELLANT. THERE IS ALSO NO DISPUTE THAT THE EXPENDITURE IN THE FORM OF INVESTMENT WAS INCURRED BY THE APPELL ANT. I T I S ALSO EQUALLY NOT IN DISPUTE THAT THERE IS NO EXEMPT INCOME IN THE FORM OF DIVIDEND RECEIVED BY THE APPELLANT FOR THE RESPECTIVE ASSESSMENT YEARS. THERE IS NO CONTROVERTING MATERIAL BEFORE THE AO REGARDING THE EXEMPTED INCOME. THE OVERWHELMING JU DICIAL VIEW REGARDING DISALLOWANCE ULS.14A R.W.R. 8D IS THAT 'NO DISALLOWANCE CAN BE MADE IN THE ABSENCE OF DEEMED DIVIDEND'. THIS VIEW HAS BEEN RENDERED BY HON'BLE MADRAS HIGH COURT IN THE CASE OF M/S REDINGTON (INDIA) LTD. VS. THE ADDL, CIT, COMPANY RANG E - V, CHENNAI IN T.C.A.NO. 520 OF 216 AND CIT , CENTRAL - 1, CHENNAL VS CHETTINAD LOGISTICS (P) LTD.[2017] 80 TAXMANN. COM 221 (MADRAS) AND HON'BLE ITAT (VIZAG) IN THE CASE OF D.VEERABHADHRA REDDY(HUF) VS THE DCIT, CIRCLE - 1, KAKINADA AND DCIT, CIRCLE - 2(1), VI JAYAWADA VS. RADHAKRISHNA AUTOMOBILES. RESPECTFULLY FOLLOWING THE DECISIONS MENTIONED ABOVE AND IN THE FACTS OF THE CASE, THE AO IS DIRECTED TO DELETE THE ADDITIONS. 5 I.T.A. NO . 524 - 528 /VIZ/2018 AND CO NO. 52 - 56 /VIZ/201 9 M/S GMP INFRASTRUCTURE PVT. LTD., HYDERABAD SINCE THE ISSUE IS SQUARELY COVERED BY THE ORDERS OF THE TRIBUNAL IN FAVOUR OF THE ASSESSEE , WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDERS OF THE LD. CIT(A) AND THE SAME IS UPHELD. THE APPEALS OF THE REVENUE FOR THE A.Y.2013 - 14 TO 2015 - 16 ARE ACCORDINGLY DISMISSED. CROSS OBJECTION NOS.52/VIZ/2018 TO 56/VIZ/201 8, A.Y. 2011 - 12 TO 2015 - 16 6. THE ASSESSEE HAS FILED CROSS OBJECTIONS FOR THE A.Y.2011 - 12 TO 2015 - 16 WITH A DELAY OF 88 DAYS AND HAS NOT FILED ANY CONDONATION PETITION FOR THE DELAY. HENCE, THE CROSS OBJECTIONS OF THE ASSESSEE ARE ALSO DISMISSED IN LIMINE. 7. IN THE RESULT, THE APPEALS OF THE REVENUE AS WELL AS THE CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH APRIL 2019. SD/ - SD/ - ( . . ) ( . ) ( D.S. SUNDER SINGH ) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER /VISAKHAPATNAM /DATED : 30 .04.2019 L.RAMA, SPS 6 I.T.A. NO . 524 - 528 /VIZ/2018 AND CO NO. 52 - 56 /VIZ/201 9 M/S GMP INFRASTRUCTURE PVT. LTD., HYDERABAD / COPY OF THE ORDER FORWARDED TO: - 1 . / THE REVENUE ASST.COMMISSIONER OF INCOME TAX , CENTRAL CIRCLE - 1 , RAJAHMUNDRY 2 . / THE ASSESSEE - M/S GMP INFRASTRUCTURE PVT. LTD. , D.NO.145/A, RAOD NO - 10, PRASASHAN NAGAR, JUBILEE HILLS, HYDERABAD 3. ( ) / THE PR. COMMISSIONER OF INCOME TAX (CENTRAL) , VISAKHAPATNAM 4 . ( ) / THE COMMISSIONER OF INCOME - TAX (APPEALS) - 3 , VISAKHAPATNAM 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM