Tiruvengadam Investments P Ltd., CHENNAI V. ACIT, CHENNAI

ITA 1230/CHNY/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4223 (ITAT-CHENNAI)
• Duration Of Justice: 4 year(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-04-2017
• Assessment Year: 2002-2003
• Appeal Filed On: 06-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Additional evidence
• Section: 143(3); 14A; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , . , ' # BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI. G. PAVAN KUMAR, JUDICIAL MEMBER ./I.T.A. NO. 1230/MDS/2013 /ASSESSMENT YEAR : 2002-03 M/S. TIRUVENGADAM INVESTMENTS P LTD., NOW HANSA VISION INDIA P LTD., SOUTH INDIAN FILM CHAMBER BUILDING, NO. 605-606, ANNA SALAI, II FLOOR, THOUSAND LIGHTS, CHENNAI 600 006. [PAN: AABCT 3770E] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE III(2), CHENNAI. ( % /APPELLANT) ( &'% /RESPONDENT) %( / APPELLANT BY : SHRI. S. SRIDHAR &'%( /RESPONDENT BY : SHRI. SUPRIYO PAL, JCIT ( /DATE OF HEARING : 06.04.2017 ( /DATE OF PRONOUNCEMENT : 20.06.2017 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER: THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-III, CHENNAI I N ITA NO. 745/09- 10/A.III DATED 18.02.2013 :- 2 -: ITA NO.1230/MDS/2013 2. THE ASSESSEE HAS RAISED THREE SUBSTANTIVE GROUND S (I) THE LD. CIT(A) ERRED IN SUSTAINING DISALLOWANCE OF MCH TAXES CLAIM AND SOCIETY MAINTENANCE CHARGES OF RS. 13,71,437/-, (II) THE LD. CIT(A) ERR ED IN CONFIRMING THE DISALLOWANCE U/S. 14A R.W.R. 8D AND (III) LD. CIT(A ) ERRED IN ACCEPTING THE DISALLOWANCE OF EXPENSES TOWARDS LOGIN ADS AND HAN ZA ZONE FOR WANT OF ADDITIONAL EVIDENCE. AT THE TIME OF HEARING THE LD AR HAS NOT PRESSED GROUND NO. 12 AND MADE ENDORSEMENT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS IN THE BUSINESS OF FINANCIAL INVESTMENTS AND FILED THE RETURN OF INCOM E ON 21.10.2002 WITH TOTAL LOSS OF RS. 32,06,051/-. SUBSEQUENTLY, THE CASE WA S SELECTED FOR SCRUTINY AND NOTICE U/S. 148 OF THE ACT WAS ISSUED. IN COMPLIAN CE TO THE NOTICE, THE LD. AR OF THE ASSESSEE FILED THE REPLY ON 09.12.2009 TO TR EAT RETURN OF INCOME FILED AS COMPLIANCE. FURTHER, THE LD. AO ISSUED NOTICE U/S. 143(2) OF THE ACT. THE LD. AR APPEARED FROM TIME TO TIME AND FURNISHED THE DET AILS. THE ASSESSING OFFICER ON PERUSAL OF THE FINANCIAL STATEMENTS FOUN D THAT THE ASSESSEE HAS CLAIMED FROM INCOME FROM HOUSE PROPERTY, PAYMENT OF SOCIETY MAINTENANCE CHARGES OF RS. 13,71,437/- AND FILED THE EXPLANATIO NS THAT THESE CHARGES INCLUDES MUNICIPAL TAXES OF RS. 10,80,112/- AND RS . 2,91,325/- OTHER EXPENSES AND THE MUNICIPAL TAX RECEIPTS ARE IN RESP ECT OF PUSA ROAD PROPERTY AT NEW DELHI RS. 9,38,427/- AS FURNISHED BY THE ASS ESSEEE RELATE TO THE FINANCIAL YEAR 2001-02. SINCE, THE ASSESSEE COULD NOT SUPPORT WITH EVIDENCE :- 3 -: ITA NO.1230/MDS/2013 THE LD. AO DISALLOWED THE CLAIM. THE ASSESSEE RECEI VED DIVIDEND INCOME OF RS. 77,47,866/- AND CLAIMED EXEMPTION AND FURTHER HAS N OT DISALLOWED ANY EXPENDITURE. THE ASSESSING OFFICER APPLIED THE PRO VISIONS OF SECTION 14A R.W.R. 8D OF THE INCOME TAX ACT AND WORKED OUT DISALLOWANC E OF RS. 7,25,801/- AND ON THE THIRD DISPUTED ISSUE THE ASSESSEE HAS CLAIM ED EXPENDITURE OF RS. 37,33,247/- TOWARDS LOGIN ADS AND RS. 33,07,475/- T OWARDS HANZA ZONE. THE ASSESSEE MAINTAINS THE ACCOUNTS ON COST CENTRE BASI S FOR BOTH HANZA ZONE AND LOGIN ADS AND FURNISHED THE BREAKUP DETAILS BUT COU LD NOT SUBSTANTIATE THE CLAIM WITH RELEVANT VOUCHERS BEFORE THE ASSESSING O FFICER AND WAS DISALLOWED AND LD. AO PASSED ORDER U/S. 143(3) R.W.S. 147, DAT ED 29.12.2009. 4. AGGRIEVED BY THE ORDER, THE ASSESSEE FILED AN AP PEAL BEFORE THE CIT(A). BEFORE THE LD. CIT(A) THE LD. AR ARGUED TH E GROUNDS AND SUBSTANTIATED THE FACTS WITH EVIDENCE FOR CLAIM OF DEDUCTION. WHEREAS, THE LD. CIT(A) HAS DISMISSED THE CLAIM OF MUNICIPAL TAX PAI D AS THE ASSESSEE HAS NOT PRODUCED ANY PROOF IN THE CASE OF MUNICIPAL TAX AND THEREFORE LD. CIT(A) DUE TO NON-AVAILABILITY OF THE EVIDENCE CONFIRM THE ADD ITION OF RS. 13,71,437/-. SIMILARLY, THE LD. CIT(A) HAS CONFIRMED THE ADDITIO N U/S. 14A R.W.R 8D AND COST CENTRES EXPENDITURE OF LOGIN ADS AND HANZA ZONE. 5. AGGRIEVED BY THE CIT(A) ORDER, THE ASSESSEE FILE D AN APPEAL BEFORE THE TRIBUNAL. BEFORE US, ON THE FIRST DISPUTED ISSU E, THE LD. AR ARGUED THAT THE :- 4 -: ITA NO.1230/MDS/2013 ASSESSEE HAS PAID MUNICIPAL TAX OF THE PROPERTY AND CLAIM DEDUCTION UNDER INCOME FROM HOUSE PROPERTY AND WAS DISCLOSED UNDER SOCIETY MAINTENANCE CHARGES RS. 13,71,437/- AND PRAYED FOR ALLOWING TH E APPEAL. WHEREAS, THE LD. DR RELIED ON THE ORDERS OF LOWER AUTHORITIES 6. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATE RIAL ON RECORD AND JUDICIAL DECISIONS. THE LD. AR ARGUED THAT THE ASS ESSEE IS ENTITLED FOR DEDUCTION OF MUNICIPAL TAX IN RESPECT OF PROPERTIES SITUATED AT DIFFERENT PLACES AND ALSO PRODUCED LETTER FROM SOCIETY TO WHOM TAX H AVE BEEN PAID AND IGNORING THESE FACTS THE CLAIM WAS DISALLOWED. WE A RE OF THE OPINION THAT THE MUNICIPAL TAX PAID DURING THE FINANCIAL YEAR HAS TO BE ALLOWED TO THE ASSESSEE IRRESPECTIVE OF THE FACT BEING OUTSTANDING OF EARLI ER YEARS. FURTHER, THE ASSESSEE SHOULD BE PROVIDED AN OPPORTUNITY TO SUBST ANTIATE ITS GENUINENESS TOWARDS CLAIM AND THEREFORE IN THE INTEREST OF JUST ICE, WE REMIT THE DISPUTED ISSUE TO THE FILE OF THE ASSESSING OFFICER TO VERIF Y AND EXAMINE THE MUNICIPAL TAX PAID ALONG WITH THE SOCIETY MAINTENANCE CHARGES BEFORE PASSING THE ORDER ON MERITS. 6.1 ON THE SECOND DISPUTED ISSUE, THE LD. AR SUBMIT TED THAT THE ASSESSING OFFICER HAS MADE DISALLOWANCE U/S. 14A R. W.R. 8D RS. 7,25,801/-. THE LD. AR SUPPORTED THE PROVISIONS OF SECTION 14A R.W.R. 8D WHICH ARE APPLICABLE FROM THE ASSESSMENT YEAR 2008-09 AND FUR THER SUBMITTED THAT THE :- 5 -: ITA NO.1230/MDS/2013 ASSESSEE HAS NOT INCURRED ANY EXPENDITURE ON EARNIN G DIVIDEND INCOME. THE LD. DR RELIED ON THE ORDERS OF THE LOWER AUTHORITIE S. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD. THE P ROVISIONS OF SECTION 14A AND RULE 8D ARE MANDATORILY APPLICABLE FROM ASSESSM ENT YEAR 2008-09, WHEREAS, THE PRESENT CASE PERTAINS TO ASSESSMENT YE AR 2002-03. ACCORDINGLY, WE FOLLOW THE COORDINATE BENCH DECISION AND JURISDI CTIONAL HIGH COURT DECISION IN THE CASE OF SIMSON IN TCA NO. 2621 OF 2016 DATED 15.10.2012 AND DIRECT THE ASSESSING OFFICER TO MAKE DISALLOWANCE U/S. 14A OF THE ACT AT 2% OF EXEMPTED INCOME. 6.2 THE LAST DISPUTED ISSUE BEING THE ASSESSING OFF ICER DISALLOWED EXPENDITURE OF COST CENTRES LOGIN ADS AND HANZA ZON E. THE LD. AR SUBSTANTIATED HIS SUBMISSIONS ON COST CENTRES AND T HE EXPENDITURE INCURRED UNDER VARIOUS HEADS LIKE BONUS, CAR EXPENSES, CONVE YANCE ALLOWANCE, HRA ETC., AND PRAYED TO PROVIDE AN OPPORTUNITY TO SUBST ANTIATE ITS CLAIM BEFORE THE ASSESSING OFFICER ALONG WITH MATERIAL EVIDENCE. AC CORDINGLY, WE DIRECT THE ASSESSING OFFICER TO VERIFY THE GENUINENESS OF EXPE NSES BEFORE ALLOWING THE CLAIM AND WE REMIT THE DISPUTED ISSUE FOR EXAMINATI ON/VERIFICATION TO THE FILE OF ASSESSING OFFICER IN RESPECT OF COST CENTRES AS SUB MITTED BEFORE US AND ALLOW THE APPEAL FOR STATISTICAL PURPOSE. :- 6 -: ITA NO.1230/MDS/2013 7. IN THE RESULT, THE ASSESSEE APPEAL IS ALLOWED F OR STATISTICAL PURPOSE. ORDER PRONOUNCED ON TUESDAY, THE 20 TH DAY OF JUNE, 2017 AT CHENNAI. SD/- ( ) (CHANDRA POOJARI) /ACCOUNTANT MEMBER SD/- ( . ) (G. PAVAN KUMAR) /JUDICIAL MEMBER /CHENNAI / /DATED: 20 TH JUNE, 2017 JPV ( &'01 21 /COPY TO: 1. % /APPELLANT 2. &'% /RESPONDENT 3. 3 ( )/CIT(A) 4. 3 /CIT 5. 1 &'' /DR 6. 7 /GF