ITO, Ward-16(3), Hyd, Hyderabad V. Pioneer Elabs Ltd., Hyd, Hyderabad

ITA 1266/HYD/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6047 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 22-11-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 04-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: V RAGHAVENDRA RAO
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NOS. 1266/HYD/2015 ASSESSMENT YEAR: 2011-12 INCOME-TAX OFFICER, WARD 16(3), HYDERABAD. VS. PIONEER ELABS LTD., HYDERABAD. PAN AACCP 0461 F (APPELLANT) (RESPONDENT) C.O. NO. 57/HYD/2016 (IN ITA NOS. 1266/HYD/2015 ASSESSMENT YEAR: 2011-12) PIONEER ELABS LTD., HYDERABAD. PAN AACCP 0461 F VS. INCOME-TAX OFFICER, WARD 16(3), HYDERABAD. (CROSS OBJECTOR) (RESPONDENT) REVENUE BY : SHRI K.J. RAO ASSESSEE BY : SHRI V. RAGHAVENDRA RAO DATE OF HEARING 22-11-2016 DATE OF PRONOUNCEMENT 30-11-2016 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGA INST THE ORDER OF CIT(A)-4, HYDERABAD, DATED 11/08/2015 FOR AY 201 1-12. THE ASSESSEE ALSO FILED C.O. AGAINST THE SAID ORDER OF THE CIT(A). 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE COMPANY IS ENGAGED IN THE BUSINESS OF TELECOMMUNICATION AND PR OVIDING INTERNET SERVICES. THE ASSESSEE FILED ITS RETURN OF INCOME F OR THE AY 2011-12 ON 30/09/2011 ADMITTING A TOTAL INCOME OF RS. 10,54 ,915/-. THE ASSESSEE HAD CLAIMED DEDUCTION OF RS. 4,52,107/- U/ S 80IA OF THE ACT. SUBSEQUENTLY, THE RETURN OF INCOME WAS PROCESSED U/ S 143(1) OF THE 2 ITA NO. 1266/H/15 AND CO NO. 57/H/16 PIONEER ELABS LTD. ACT. THE AO COMPLETED THE ASSESSMENT U/S 143(3) ON 28/03/2014 BY DISALLOWING AN AMOUNT OF RS. 1,18,21,521/- ON ACCOU NT OF INTEREST U/S 14A OF THE ACT. 3. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT(A). 4. ELABORATE SUBMISSIONS WERE MADE BY THE ASSESSEE BEFORE THE CIT(A), WHICH WERE EXTRACTED BY THE CIT(A) FROM PAG ES 2 TO 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE CI T(A) DELETED THE ADDITION MADE BY THE AO U/S 14A OF THE ACT BY OBSER VING AS UNDER: 5. I HAVE GONE THROUGH THE FACTS OF THE CASE, GROUN DS OF APPEAL AND THE SUBMISSIONS OF THE ASSESSEE. AFTER CAREFUL CONSIDERATION OF THE FACTS OF THE CASE, IT IS FOUND THAT, THERE I S NO FRESH INVESTMENTS MADE IN THIS YEAR AND ALL THE INVESTMEN TS WERE CARRIED FORWARD FROM EARLIER YEARS. AS PER THE P & L ACCOUNT AND FROM THE DETAILS SUBMITTED, IT IS ALSO OBSERVED THA T THE APPELLANT HAS NOT CLAIMED ANY EXPENDITURE RELATING TO THIS IN VESTMENT DURING THIS YEAR AND EXPENSES WERE DEBITED TO P & L A/C PERTAINING TO EARLIER YEARS INVESTMENT. . THE TERM LOANS WERE UTILIZED FOR BUILDING ITSELF FOR EARLIER YEARS AND THERE IS NO FRESH ADDITION TO THE BUILDING AND ALSO NO FRESH LOANS WE RE OBTAINED DURING THE YEAR UNDER CONSIDERATION. IT IS ALSO SEE N THAT THERE IS NO SHARE CAPITAL INVESTMENT DURING THIS YEAR. 5.1. SINCE THERE IS NO EXPENSES CLAIMED, SECTION 14 A IS NOT APPLICABLE. AS PER SECTION 14A, 'NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME '. THEREFORE, THE OBSERVATION OF THE ASSESSING OFFICER AND THE CA LCULATION OF 14 A IS NOT CORRECT. HENCE, THE ADDITION MADE BY THE A O IS DELETED AND THIS GROUND OF APPEAL IS ALLOWED. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUND OF APPEAL: 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 1,18,21,521/- MADE U/S 14A OF THE IT ACT. 6. THE LD. DR RELIED ON THE ORDER OF THE AO. 3 ITA NO. 1266/H/15 AND CO NO. 57/H/16 PIONEER ELABS LTD. 7. THE LD. AR OF THE ASSESSEE BESIDES RELYING ON TH E ORDER OF THE CIT(A) PLACED RELIANCE ON THE FOLLOWING CASES: 1. PRATHISTA INDUSTRIES LTD. VS. DCIT, ITA NO. 130 2/HYD/2015, AY 2011-12, DATED 29/04/16. 2. M/S MEDHA SERVO DRIVES PVT. LTD. VS. DCIT IN IT A NOS. 260 & 261/HYD/2015 FOR THE AY 2010-11 AND 2011-12, DATED 05/06/15. 3. VBC INDUSTRIES LTD. VS. DCIT, ITA NO. 143/HYD/1 3 AND OTHERS, DATED 08/05/2015. 8. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL FACTS ON RECORD. THE ISSUE IN DISPUTE IS SQUARELY COVERED BY THE ORDERS OF COORDINATE BENCHES OF HYDERABAD. 8.1 IN THE CASE OF PRATHISTA INDUSTRIES LTD., (SUPR A), THE BENCH HELD THAT WHEN THE ASSESSEE HAS NOT EARNED ANY EXEMPT IN COME, THERE CAN BE NO DISALLOWANCE U/S 14A OF THE ACT. THE HONBLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD., [2015] 378 ITR 33 ( DEL.) HAS HELD THAT SECTION 14A WILL NOT APPLY WHERE NO EXEMPT INCOME I S RECEIVED OR RECEIVABLE DURING THE RELEVANT AY. SIMILAR VIEW WAS HELD IN THE CASE OF MEDHA SERVO DRIVES PVT. LTD. (SUPRA) AND IN THE CASE OF VBC INDUSTRIES LTD. (SUPRA). 8.2 IN THE CASE UNDER CONSIDERATION, THE ASSESSEE H AS NOT EARNED EXEMPT INCOME DURING THE YEAR UNDER CONSIDERATION A ND, THEREFORE, THERE CANNOT BE ANY EXPENDITURE FOR EARNING SUCH EX EMPT INCOME. THEREFORE, RESPECTFULLY FOLLOWING THE RATIO LAID DO WN BY THE COORDINATE BENCHES OF ITAT, WE UPHOLD THE ORDER OF THE CIT(A) IN DELETING THE ADDITION MADE BY THE AO OBSERVING THAT SINCE THERE IS NO EXPENSES, CLAIMED, SECTION 14A IS NOT APPLICABLE. ACCORDINGLY , WE DISMISS THE GROUNDS RAISED BY THE REVENUE ON THIS COUNT. 9. THE ASSESSEE HAS FILED THE C.O BEFORE US WITH A DELAY OF 296 DAYS. THE ASSESSEE FILED A PETITION FOR CONDONATION OF THE SAID DELAY WHEREIN STATING, INTER-ALIA, THAT THE DELAY OCCURRE D IN FILING THE C.O. DUE TO OVERSIGHT AND INADVERTENCE. AS THE REASON A DVANCED BY THE 4 ITA NO. 1266/H/15 AND CO NO. 57/H/16 PIONEER ELABS LTD. ASSESSEE IS NOT PROPER FOR THE SAID DELAY, WE DISMI SS THE C.O. AS TIME BARRED. 10. IN THE RESULT, APPEAL OF THE REVENUE AND THE C. O. OF THE ASSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER, 2016 SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAHM AN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 30 TH NOVEMBER, 2016 KV COPY TO:- 1) DCIT, CIRCLE 16(2), 2 ND FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 2) M/S PIONEER ELABS PVT. LTD., PLOT NO. 16, PIONEE R TOWERS, SOFTWARE UNITS, HITECH CITY, MADHAPUR, HYD. 8 1. 3) CIT(A) - 4, HYDERABAD 4 CIT 4, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./ P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER