TAKE SOLUTIONS LIMITED, CHENNAI V. ACIT CORPORATE CIRCLE 3(1), CHENNAI

ITA 1359/CHNY/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6620 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2016-2017
• Appeal Filed On: 03-05-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R. ANITHA
• Assessee Lawyers: M. MUKESH KUMAR
• Keywords: Depreciation; Earning of tax free income; Rule 8D
• Section: 154; 143(3); 14A; 20

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . , , BEFORE SHRI DUVVURU RL REDDY, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER /. I.T.A. NO. 1359/CHNY/2019 / ASSESSMENT YEAR : 2016-17 M/S. TAKE SOLUTIONS LIMITED, NO. 27, TANK BUNK ROAD, NUNGAMBAKKAM, CHENNAI 600 034. [PAN: AABCT 3684M] VS. ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 3(1), CHENNAI. ( / APPELLANT) ( / RESPONDENT) ' ( / APPELLANT BY : SHRI. M. MUKESH KUMAR, CA +,' ( / RESPONDENT BY : SHRI. R. ANITHA, JCIT ( /DATE OF HEARING : 24.10.2019 ( /DATE OF PRONOUNCEMENT : 20.01.2020 / O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME TAX (APPEALS)- 11, CHENNAI, IN ITA NO. 51/1 8-19 DATED 21.02.2019 FOR ASSESSMENT YEAR 2016-17. :-2-: ITA NO.1359/CHNY/2019 2. M/S. TAKE SOLUTIONS LIMITED, THE ASSESSEE, IS EN GAGED IN THE BUSINESS OF SOFTWARE DEVELOPMENT AND SERVICE SECTOR. ITS ASSES SMENT FOR THE ASSESSMENT YEAR 2016-17 WAS COMPLETED U/S. 143(3) ON 23.12.201 8, WHEREIN, THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 14A R.W.R . 8D AND MADE A DISALLOWANCE OF RS. 13,72,828/- UNDER RULE 8D(I), RS. 1,32,48,90 0/- UNDER RULE 8D(III) AND THUS, ARRIVED A TOTAL DISALLOWANCE AT RS. 1,46,21,4 28/-. HOWEVER, APPLYING THE APEX COURT DECISION IN THE CASE OF PCIT, PATIALA VS STATE BANK OF PATIALA (2018) 99 TAXMANN.286 (SC) DATED 08.11.2018, HE RESTRICTED THE DISALLOWANCE U/S. 14A R.W.R. 8D TO THE EXTENT OF EXEMPT INCOME AT RS. 24, 83,128/- ONLY. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE CI T(A) ENHANCED THE DISALLOWANCE FROM RS. 24,83,128/- TO RS. 1,46,21,42 8/-. THUS, AN ENHANCEMENT OF INCOME OF RS. 1,21,38,300/- WAS MADE BY THE LD. CIT(A) AND HE HAS ALSO INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C). AGGR IEVED, THE ASSESSEE FILED THIS APPEAL. 3. THE LD. AR SUBMITTED THAT AGGRIEVED AGAINST THE DISALLOWANCE MADE BY THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT (A) PLEADING, INTER ALIA, THAT THE ASSESSEE HAS NOT INCURRED ANY EXPENDITURE FOR E ARNING EXEMPT INCOME, THE LD. AO ERRED IN APPLYING RULE 8D WITHOUT HAVING REG ARD TO THE ACCOUNTS OF THE ASSESSEE AS TO WHY HE WAS NOT SATISFIED WITH ASSESS EES CLAIM THAT NO EXPENDITURE WAS INCURRED IN RELATION TO EXEMPT INCO ME, THAT THE INTEREST EXPENSES OF RS. 19,09,178/- WAS INCURRED EXCLUSIVEL Y FOR THE BUSINESS CARRIED ON BY THE ASSESSEE ETC AND RELYING ON SPECIFIC CASE LA WS OF THE TRIBUNAL ON SUCH :-3-: ITA NO.1359/CHNY/2019 ISSUES. FURTHER, THE ASSESSEE ALSO CLAIMED THAT TH E DEPRECIATION ALLOWANCE CLAIMED BY IT WAS NOT ALLOWED BY THE AO. THE LD.AR SUBMITTED THAT THE LD. CIT(A) WITHOUT CONSIDERING THE FACTS AND THE ASSOCI ATED CASE LAWS RELIED ON BY THE ASSESSEE, OVERRULED THE DECISION OF THE AO WHIC H IS BASED ON THE APPLICATION OF THE APEX COURT DECISION IN THE CASE OF PCIT, PAT IALA VS STATE BANK OF PATIALA, (2018) 99 TAXMANN.286 (SC) DATED 08.11.2018, ENHANC ED THE ASSESSMENT AND HENCE THE LD. AR PLEADED TO ALLOW THE ASSESSEES A PPEAL. HE FURTHER BROUGHT TO OUR NOTICE THAT THE LD. CIT(A) IN THE ASSESSEES OW N CASE IN ITA 65(T)/CIT(A)- 7/17-18 DATED 15.11.2018 HAS CONSIDERED THESE ISSUE S IN FAVOUR OF THE ASSESSEE. THOUGH, THE ASSESSEE FILED AN APPLICATION U/S. 154 BEFORE THE LD. CIT(A), THE LD. CIT(A) WHILE DISPOSING THE PETITION U/S. 154 VIDE H IS ORDER IN ITA NO. 51/18-19 DATED 04.04.2019 HAS PARTIALLY CONSIDERED THE ISSUE S AND HE HAS NOT DEALT THE OTHER ISSUES. PER CONTRA, THE LD. DR SUPPORTED THE ORDERS OF THE LD CIT(A). 4. WE HEARD THE RIVAL SUBMISSIONS. IT IS CLEAR FRO M THE ORDER OF THE LD. AO THAT HE HAS APPLIED THE APEX COURT DECISION IN THE CASE OF PCIT, PATIALA VS STATE BANK OF PATIALA, (2018) 99 TAXMANN.286 (SC) DATED 0 8.11.2018 IN THE ASSESSEES CASE, AND RESTRICTED THE DISALLOWANCE U/S. 14A R.W. R 8D TO THE EXTENT OF EXEMPT INCOME ONLY. AGGRIEVED AGAINST THAT ORDER, THE ASS ESSEE FILED AN APPEAL RAISING SPECIFIC ISSUES RELYING ON THE SPECIFIC CASE LAWS. IT IS SEEN FROM THE ORDER OF THE LD. CIT(A) THAT HE HAS NOT CONSIDERED THE SPECIFIC POINTS RAISED BY THE ASSESSEE, HOWEVER, DISPOSED THE APPEAL BY ENHANCING THE ASSES SMENT. IT IS ALSO SEEN THAT THE LD. CIT(A) HAS NOT DEALT THE GROUND RAISED BY T HE ASSESSEE WITH REGARD TO THE :-4-: ITA NO.1359/CHNY/2019 DEPRECIATION ISSUE. IN VIEW OF THESE FACTS AND CIR CUMSTANCES, WE DEEM IT FIT TO REMIT THE ISSUES BACK TO THE LD. CIT(A). THE ASSES SEE SHALL LAY ALL MATERIAL IN SUPPORT OF ITS CONTENTIONS AND COMPLY WITH THE REQU IREMENTS OF THE LD. CIT(A) IN ACCORDANCE WITH LAW. THE LD. CIT(A) AFTER EXAMININ G THE SPECIFIC ISSUES RAISED BY THE ASSESSEE AND AFTER AFFORDING EFFECTIVE OPPOR TUNITY TO THE ASSESSEE, SHALL PASS APPROPRIATE ORDER IN ACCORDANCE WITH LAW. 5. IN THE RESULT, THE ASSESSEES APPEAL IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 20 TH JANUARY, 2020 AT CHENNAI. SD/- ( . ' ) (DUVVURU RL REDDY) $% /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) % /ACCOUNTANT MEMBER /CHENNAI, 1 /DATED: 20 TH JANUARY, 2020 JPV (+3454 /COPY TO: 1. ' / APPELLANT 2. +,' /RESPONDENT 3. 6 ) ( /CIT(A) 4. 6 /CIT 5. 4+ /DR 6. 9 /GF