Tidel Park Limited, CHENNAI V. Addl .CIT, CHENNAI

ITA 1233/CHNY/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7942 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 04-01-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 08-05-2014
• Court: TRIBUNAL
• Department Lawyers: PATHLAVATH PEERYA
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Competent authority

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . . . , . !' , # $ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NO.1233/MDS/2014 / ASSESSMENT YEAR : 2005-06 M/S TIDEL PARK LTD NO.4, RAJIV GANDHI SALAI TARAMANI CHENNAI 600 113 VS. THE ADDL. COMMISSIONER OF INCOME-TAX COMPANY RANGE III CHENNAI [PAN AABCT 0666 R ] ( &' / APPELLANT) ( ()&' /RESPONDENT) ./ I.T.A.NO.1656/MDS/2014 / ASSESSMENT YEAR : 2005-06 THE ASST. COMMISSIONER OF INCOME-TAX COMPANY RANGE III(2) CHENNAI VS. M/S TIDEL PARK LTD NO.4, RAJIV GANDHI SALAI TARAMANI CHENNAI 600 113 ( &' / APPELLANT) ( ()&' /RESPONDENT) ASSESSEE BY : SHRI R. VIJAYARAGHAVAN, A DVOCATE DEPARTMENT BY : SHRI PATHLAVATH PEERYA, CIT / DATE OF HEARING : 04 - 01 - 2016 / DATE OF PRONOUNCEMENT : 19 - 0 2 - 2016 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THESE CROSS APPEALS BY THE ASSESSEE AND REVENUE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX ITA NOS.1233 & 1656/14 :- 2 -: (APPEALS)-III, CHENNAI, DATED 20.12.2013 AND PERTAI NS TO ASSESSMENT YEAR 2005-06. 2. FIRST WE TAKE UP ASSESSEES APPEAL I.T.A.NO. 1233/MDS/2014. THE FIRST GROUND OF APPEAL IS WITH REGARD TO DISALLOWANCE OF DEDUCTION CLAIMED BY THE ASSESSEE U/S 80IA OF THE ACT IN RESPECT OF INTEREST INCOME FROM DEPOSITS. 3. SHRI R.VIJAYARAGHAVAN, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT INTEREST WAS RECEIVED FROM DEPOSITS. THE VERY SAME ISSUE CAME UP BEFORE THIS TRIBUNAL IN ASSESSEES O WN CASE FOR ASSESSMENT YEAR 2008-09 AND THIS TRIBUNAL FOUND THA T INTEREST INCOME IS NOT ELIGIBLE FOR DEDUCTION U/S 80IA OF THE ACT. 4. WE HEARD SHRI PATHLAVATH PEERYA, LD. DEPARTMENTAL REPRESENTATIVE ALSO. 5. AS RIGHTLY SUBMITTED BY THE LD. COUNSEL FOR THE ASS ESSEE, THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2008-09 IN I.T.A.NO. 2104/MDS/2011 DATED 27.9.2013 FOUND THAT THE INTEREST INCOME IS NOT ELIGIBLE FOR DEDUCTION U/S 80IA OF T HE ACT. IN VIEW OF THE ABOVE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTE RFERE WITH THE ORDER OF THE LOWER AUTHORITY. MOREOVER, THE INTEREST IN COME IS NOT FROM BUSINESS OF THE ASSESSEE. THE SOURCE OF INCOME IS FROM DEPOSITS MADE ITA NOS.1233 & 1656/14 :- 3 -: BY THE ASSESSEE, THEREFORE, IT IS NOT ELIGIBLE FOR DEDUCTION U/S 80IA OF THE ACT. ACCORDINGLY, THE ORDER OF THE CIT(A) IS C ONFIRMED. 6. THE NEXT ISSUE IS WITH REGARD TO DEDUCTION IN RESPE CT OF OTHER INCOME TO THE EXTENT OF ` 42,13,330/-. 7. SHRI R.VIJAYARAGHAVAN, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THE ASSESSEES OWN CASE FOR ASSE SSMENT YEAR 2008- 09 IN I.T.A.NO. 2104/MDS/2011 DATED 27.9.2013 THIS TRIBUNAL FOUND THAT THE OTHER INCOME IS ALSO NOT ELIGIBLE FOR DEDU CTION U/S 80IA OF THE ACT. IN FACT, THE CIT(A) HAS FOLLOWED THE ORDER OF THIS TRIBUNAL. 8. WE HEARD SHRI PATHLAVATH PEERYA, LD. DR ALSO. 9. SINCE IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2 008-09, A CO-ORDINATE BENCH OF THIS TRIBUNAL FOUND THAT OTH ER INCOME IS NOT ELIGIBLE FOR DEDUCTION U/S 80IA OF THE ACT AND THE CIT(A) HAS FOLLOWED THE ORDER OF THIS TRIBUNAL, WE DO NOT FIND ANY REAS ON TO INTERFERE WITH THE ORDER OF THE CIT(A). ACCORDINGLY, THE SAME IS CONFIRMED. 10. THE NEXT ISSUE IS WITH REGARD TO EXCLUSION OF EXPEN DITURE IN RESPECT OF INCOME WHICH DOES NOT FORM PART OF THE E LIGIBLE PROFIT FOR DEDUCTION U/S 80IA OF THE ACT. 11. SHRI R.VIJAYARAGHAVAN, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IF THE RECEIPT WAS NOT INCLUDED FOR COMPUTATION OF ITA NOS.1233 & 1656/14 :- 4 -: DEDUCTION U/S 80IA OF THE ACT, THE CORRESPONDING E XPENDITURE HAS TO BE EXCLUDED. ACCORDING TO THE LD. COUNSEL, THE EXP ENDITURE INCURRED BY THE ASSESSEE FOR EARNING THE INCOME WHICH DOES NOT FORM PART OF THE ELIGIBLE PROFIT FOR DEDUCTION U/S 80IA HAS TO BE D EDUCTED FROM PROFITS AND GAINS. 12. ON THE CONTRARY, SHRI PATHLAVATH PEERYA, LD. DR SUB MITTED THAT WHAT WAS EXCLUDED IS THE INTEREST AND OTHER IN COME. THE ASSESSEE HAS NOT CLAIMED ANY EXPENDITURE FOR EARNIN G THIS INCOME AND NO DETAILS OF EXPENDITURE SAID TO BE INCURRED BY TH E ASSESSEE ARE ALSO NOT AVAILABLE ON RECORD. THEREFORE, THE QUESTION O F EXCLUSION OF EXPENDITURE DOES NOT ARISE FOR CONSIDERATION. 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WHA T WAS NOT EXCLUDED IN THE ELIGIBLE PROFIT FOR COMPUTATION OF DEDUCTION U/S 80IA IS INTEREST RECEIVED BY THE ASSESSEE FROM FIXED DEPOSITS AND O THER INCOME. FOR EARNING INTEREST FROM FIXED DEPOSITS, THE ASSESSEE NEED NOT SPEND ANY MONEY OR INCUR ANY EXPENDITURE. THE DETAILS OF OTH ER INCOME ARE NOT AVAILABLE ON RECORD AND NO MATERIAL IS AVAILABLE ON RECORD TO INDICATE THAT THE ASSESSEE HAS INCURRED ANY EXPENDITURE FOR EARNING THE OTHER INCOME. IN THOSE CIRCUMSTANCES, THIS TRIBUNAL IS OF THE CONSIDERED ITA NOS.1233 & 1656/14 :- 5 -: OPINION THAT EXCLUSION OF THE SO CALLED EXPENDITURE DOES NOT ARISE FOR CONSIDERATION. 14. THE NEXT ISSUE IS DISALLOWANCE OF GRATUITY AMOUNT P AID TO LIC OF ` 4,45,339/-. 15. SHRI R.VIJAYARAGHAVA, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS PAID GRATUITY TO THE EXTENT OF ` 4,45,339/- TO LIC. THE AUTHORITIES BELOW REJECTED THE CLAIM OF T HE ASSESSEE ON THE GROUND THAT THE FUND WAS NOT APPROVED. PLACING REL IANCE ON THE JUDGMENT OF THE APEX COURT IN THE CASE OF CIT VS TE XTOOL CO. LTD, 35 TAXMANN.COM 639, THE LD. COUNSEL SUBMITTED THAT ONC E THE PAYMENT WAS MADE TO LIC, IT GOES OUT OF THE HANDS OF THE A SSESSEE. THE ASSESSEE HAS NO CONTROL OVER THE FUNDS, THEREFORE, THE PAYMENT MADE TO THE FUND CREATED BY LIC FOR THE BENEFIT OF THE E MPLOYEES OF THE ASSESSEE HAS TO BE ALLOWED. 16. WE HEARD SHRI PATHLAVATH PEERYA, LD. DR ALSO. 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FINANCIAL YEAR ENDED ON 31.3.2005. THE TRUST DEED WAS EXECUTED ON LY ON 2.5.2015. THEREFORE, AS ON THE DATE OF PAYMENT, THE TRUST DEE D ITSELF IS NOT IN EXISTENCE, THEREFORE, THE ASSESSEE COULD NOT HAVE PAID THE MONEY TO LIC. IN THE CASE BEFORE THE APEX COURT IN TEXTOOL CO. LTD(SUPRA), THE ITA NOS.1233 & 1656/14 :- 6 -: THE GRATUITY FUND WAS ESTABLISHED AND THE ONLY ISSU E WAS THAT IT WAS NOT APPROVED BY THE COMPETENT AUTHORITY. THE ANNUA L PREMIUM WAS PAID TO LIC AS INITIAL CONTRIBUTION. IN THOSE CIRC UMSTANCES, THE APEX COURT FOUND THAT THE REAL INTENTION BEHIND SEC. 36( 1)(V) IS THAT THE EMPLOYER SHOULD NOT HAVE ANY CONTROL OVER THE FUNDS OF THE IRREVOCABLE TRUST CREATED EXCLUSIVELY FOR THE BENEFIT OF THE EM PLOYEES. THEREFORE, CREATION OF THE TRUST IS A MANDATORY PRE-CONDITION FOR PAYMENT OF CONTRIBUTION BY THE ASSESSEE. IN THE CASE BEFORE US, FOR THE YEAR ENDED 31.3.2005, THE TRUST WAS NOT CREATED. THE TR UST WAS CREATED ON 2.5.2015. THEREFORE, IT CANNOT BE SAID THAT THE FU ND WAS PAID FOR THE IRREVOCABLE TRUST CREATED EXCLUSIVELY FOR THE BENEF IT OF THE EMPLOYEES. IN THE ABSENCE OF ANY MATERIAL TO INDICATE THAT THE ASSESSEE HAS CREATED AN IRREVOCABLE TRUST, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE JUDGMENT OF THE APEX COURT (SUPRA) MAY NOT BE APPLICABLE TO THE FACTS OF THE CASE. IN VIEW OF THE ABOVE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY, THE SAME IS CONFIRMED. 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMI SSED. 19. NOW, COMING TO THE REVENUES APPEAL I.T.A.NO.1656/MDS/2014, THE ONLY ISSUE FOR CONSIDER ATION IS WITH REGARD TO DEDUCTION U/S 80IA OF THE ACT ON THE REV ENUE SHARING ITA NOS.1233 & 1656/14 :- 7 -: INCOME FROM LESSEES, LEASE RENT, RENT FROM AUDITORI UM, RENT FROM MODULES ETC. 20. WE HEARD SHRI PATHLAVATH PEERYA LD. DR AND SHRI R.VIJAYARAGHAVAN, LD. COUNSEL FOR THE ASSESSEE ALSO . 21. THE CIT(A) BY FOLLOWING THE ORDER OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FR ASSESSMENT YEAR 2008-09, FOU ND THAT EXCEPT INTEREST INCOME, THE ASSESSEE IS ELIGIBLE FOR DEDU CTION U/S 80IA OF THE ACT. IN FACT, THE CIT(A) HAS FOLLOWED THE ORDER OF THIS TRIBUNAL. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). ACCORDINGLY, THE SAME IS CONF IRMED. 22. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMIS SED. 23. TO SUMMARIZE, BOTH THE APPEAL OF THE ASSESSEE AND THE REVENUE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH FEBRUARY, 2016, AT CHENNAI. SD/- SD/- ( . !' ) (A. MOHAN ALANKAMONY) # / ACCOUNTANT MEMBER ( . . . ) ) (N.R.S. GANESAN) / JUDICIAL MEMBER / CHENNAI ! / DATED: 19 TH FEBRUARY, 2016 RD ITA NOS.1233 & 1656/14 :- 8 -: !' # $% &% / COPY TO: 1 . '( / APPELLANT 4. ) / CIT 2. #*'( / RESPONDENT 5. %+, # - / DR 3. ) () / CIT(A) 6. ,/ 0 / GF