DCIT, CHENNAI V. Ennore Tank Terminals Private Limited, CHENNAI

ITA 1047/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6172 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: misc
• Appeal Filed On: 28-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASISH TRIPATHY
• Assessee Lawyers: P RANGA RAMANUJAM
• Section: 14A; 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , , ' # BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.1047/MDS/2017 & '& / ASSESSMENT YEAR : 2010-11 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 2(1), CHENNAI - 600 034. V. M/S ENNORE TANK TERMINALS PVT. LTD., NEELADRI, 3 RD FLOOR, NO.9, CENOTAPH ROAD, ALWARPET, CHENNAI - 600 018. PAN : AABCE 3918 K ()*/ APPELLANT) (+,)*/ RESPONDENT) )* - . / APPELLANT BY : SHRI ASISH TRIPATHY, JCIT +,)* - . / RESPONDENT BY : SHRI P. RANGA RAMANUJAM, CA / - 0' / DATE OF HEARING : 14.09.2017 12' - 0' / DATE OF PRONOUNCEMENT : 18.09.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 9, CHENN AI, DATED 12.01.2017 AND PERTAINS TO ASSESSMENT YEAR 2010-11. 2. SHRI ASISH TRIPATHY, THE LD. DEPARTMENTAL REPRES ENTATIVE, SUBMITTED THAT THE ONLY ISSUE ARISES FOR CONSIDERAT ION IS DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SE CTION 14A OF 2 I.T.A. NO.1047/MDS/17 THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). THE ASSESSING OFFICER COMPUTED THE DISALLOWANCE BY APPLYING THE PROVISION S OF RULE 8D OF INCOME-TAX RULES, 1962. THE LD. D.R. FURTHER SUBMI TTED THAT THE ASSESSEE HAS EARNED ` 13,62,200/- WHICH WAS EXEMPTED FROM TAXATION. ACCORDING TO THE LD. D.R., WHILE REFERRI NG TO RULE 8D, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS NOT I NCURRED ANY DIRECT EXPENDITURE. THE ASSESSING OFFICER HAS ALSO FOUND THAT THE ASSESSEE HAS INVESTED ` 5,50,48,412/-, 0.5% OF THE SAME COMES TO ` 2,75,242/- AS PER LIMB (III) OF RULE 8D(2) OF INCOM E-TAX RULES, 1962. ACCORDING TO THE LD. D.R., THE ASSESSING OFF ICER COMPUTED THE INTEREST AT ` 51,34,950/-. THE TOTAL DISALLOWANCE COMPUTED BY THE ASSESSING OFFICER UNDER SECTION 14A READ WITH R ULE 8D IS ` 54,10,192/-. EVEN THOUGH THE CIT(APPEALS) HAS NOT FOUND ANY ERROR IN THE COMPUTATION OF DISALLOWANCE UNDER RULE 8D, ACCORDING TO THE LD. D.R., HE DIRECTED THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE TO THE EXTENT OF THE INCOME EARNED, I. E. ` 13,62,200/-. PLACING RELIANCE ON THE CBDT CIRCULAR IN CIRCULAR N O.21/2015, THE LD. D.R. SUBMITTED THAT THE DISALLOWANCE HAS TO BE MADE UNDER RULE 8D(2) OF INCOME-TAX RULES, 1962, THEREFORE, TH E CIT(APPEALS) 3 I.T.A. NO.1047/MDS/17 IS NOT JUSTIFIED IN RESTRICTING THE DISALLOWANCE TO THE EXTENT OF THE EXEMPTED INCOME EARNED BY THE ASSESSEE. 3. ON THE CONTRARY, SHRI P. RANGA RAMANUJAM, THE LD . REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE CIT(APPEALS) BY PLACING RELIANCE ON THE ORDER OF THIS TRIBUNAL IN S OUTHERN PETROCHEMICAL INDUSTRIES V. DCIT (993 TTJ 161), THE JUDGMENT OF DELHI HIGH COURT IN JOINT INVESTMENTS PVT. LTD. V. CIT (2015) 372 ITR 694 AND THE JUDGMENT OF PUNJAB & HARYANA HIGH C OURT IN EMPIRE PACKAGE PVT. LTD. IN I.T.A. NO.415 OF 2015 D ATED 12.01.2016, FOUND THAT THE DISALLOWANCE HAS TO BE R ESTRICTED TO THE EXTENT OF EXEMPTED INCOME EARNED BY THE ASSESSEE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER COMPUTED THE DISALLOWANCE BY APPLYING RULE 8D(2) OF INCOME-TAX RULES, 1962 AT ` 54,10,192/-. THE CIT(APPEALS) BY FOLLOWING THE JUDGMENT OF DELHI HIGH COURT IN JOINT INVESTMENTS PVT. LTD. (SUPRA) AND JUDGMENT OF PUNJAB & HARYANA HIGH COURT IN EMPIRE PACKAGE PVT. LTD. (SUPRA) AND THE ORDER OF T HIS TRIBUNAL IN AMBATTUR CLOTHING LTD. IN I.T.A. NO.1643/MDS/2014 D ATED 4 I.T.A. NO.1047/MDS/17 28.12.2015, DIRECTED THE ASSESSING OFFICER TO RESTR ICT THE DISALLOWANCE TO THE EXTENT OF EXEMPTED INCOME EARNE D BY THE ASSESSEE. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED ON 18 TH SEPTEMBER, 2017 AT CHENNAI. SD/- SD/- ( ) ( . . . ) (S. JAYARAMAN) (N.R.S. GANESAN) ' / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 18 TH SEPTEMBER, 2017. KRI. - +056 76'0 /COPY TO: 1. )* /APPELLANT 2. +,)* /RESPONDENT 3. / 80 () /CIT(A)-9, CHENNAI-34 4. PRINCIPAL CIT- 2, CHENNAI 5. 69 +0 /DR 6. :& ; /GF.