DCIT, CHENNAI V. Orchid Healthcare P Ltd., CHENNAI

ITA 1156/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6262 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 08-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B RAMAKRISHNAN
• Assessee Lawyers: S NATARAJA
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , , ' # BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.1156/MDS/2017 & '& / ASSESSMENT YEAR : 2012-13 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 5(1), CHENNAI - 600 034. V. M/S ORCHID HEALTHCARE PVT. LTD., NO.1, 6 TH FLOOR, CROWN COURT, 34, CATHEDRAL ROAD, CHENNAI - 600 034. PAN : AAACO 0399 K ()*/ APPELLANT) (+,)*/ RESPONDENT) )* - . / APPELLANT BY : SH. B. RAMAKRISHNAN, FCA +,)* - . / RESPONDENT BY : SHRI S. NATARAJA, JCIT / - 0' / DATE OF HEARING : 03.07.2017 12' - 0' / DATE OF PRONOUNCEMENT : 06.09.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 3, CHENN AI, DATED 31.01.2017 AND PERTAINS TO ASSESSMENT YEAR 2012-13. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS DISAL LOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 14A OF THE I NCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 2 I.T.A. NO.1156/MDS/17 3. SHRI S. NATARAJA, THE LD. DEPARTMENTAL REPRESENT ATIVE, SUBMITTED THAT THE CIT(APPEALS) PLACED HIS RELIANCE ON THE JUDGMENT OF MADRAS HIGH COURT IN REDINGTON (INDIA) LTD. V. A DDL. CIT (2017) 77 TAXMANN.COM 257. IN THE CASE OF REDINGTON (INDI A) LTD. (SUPRA), ACCORDING TO THE LD. D.R., THE HIGH COURT HELD THAT WHEN THERE WAS NO EXEMPTED INCOME, THERE CANNOT BE ANY DISALLOWANC E FOR THE EXPENDITURE. IN THE PRESENT CASE, THERE WAS A DIVI DEND INCOME WHICH WAS EXEMPTED FROM TAXATION, THEREFORE, THE JU DGMENT OF MADRAS HIGH COURT IN REDINGTON (INDIA) LTD. (SUPRA) IS NOT APPLICABLE TO THE FACTS OF THE CASE. HENCE, ACCORD ING TO THE LD. D.R., THE CIT(APPEALS) IS NOT JUSTIFIED IN ALLOWING THE CLAIM OF THE ASSESSEE. 4. ON THE CONTRARY, SH. B. RAMAKRISHNAN, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT NO DOUBT, THE ASSESSEE EARNED DIVIDEND INCOME OF ` 1,10,99,331/-. THE ASSESSING OFFICER COMPUTED THE DISALLOWANCE AT ` 4,19,38,494/-. THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER THAT THE INVESTMENT WAS MADE FROM NON-INTEREST BEARING FUNDS AVAILABLE WITH THE ASSESSEE, THEREFORE, THERE CANNOT BE ANY DISALLOWAN CE UNDER 3 I.T.A. NO.1156/MDS/17 SECTION 14A OF THE ACT. THE ASSESSEE, IN FACT, ACC ORDING TO THE LD. REPRESENTATIVE, HAS NOT INCURRED ANY EXPENDITURE AT ALL. SINCE THE ASSESSEE HAS INVESTED ONLY ITS OWN FUNDS, THERE CAN NOT BE ANY DISALLOWANCE UNDER SECTION 14A OF THE ACT. INSPITE OF THAT, ACCORDING TO THE LD. REPRESENTATIVE, THE CIT(APPEAL S) DIRECTED THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE ONLY TO THE EXTENT OF DIVIDEND INCOME. THIS IS WHAT THE MADRAS HIGH COUR T HELD IN REDINGTON (INDIA) LTD. (SUPRA). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE MADRAS HIGH COURT IN REDINGTON (INDIA) LTD. (SUPRA) FOUND THAT THERE CANNOT BE ANY DISALLOWANCE OF EXPENDITURE IN CASE NO EXEMPTED INCOME WAS EARNED. IN THE VERY SAME JUDGMENT, THE MADRAS HIGH COURT FOUND THAT THE DISALLOWANCE CANNOT BE EXCEEDED TO THE EXE MPTED INCOME EARNED BY THE ASSESSEE. IN THE CASE BEFORE US, THE CIT(APPEALS) DIRECTED THE ASSESSING OFFICER TO RESTRICT THE DISA LLOWANCE ONLY TO THE EXTENT OF DIVIDEND INCOME EARNED BY THE ASSESSE E. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE W ITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRM ED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. 4 I.T.A. NO.1156/MDS/17 ORDER PRONOUNCED ON 6 TH SEPTEMBER, 2017 AT CHENNAI. SD/- SD/- ( ) ( . . . ) (S. JAYARAMAN) (N.R.S. GANESAN) ' / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 6 TH SEPTEMBER, 2017. KRI. - +056 76'0 /COPY TO: 1. )* /APPELLANT 2. +,)* /RESPONDENT 3. / 80 () /CIT(A)-3, CHENNAI-34 4. PRINCIPAL CIT- 5, CHENNAI 5. 69 +0 /DR 6. :& ; /GF.