ACIT, CHENNAI V. Thermodyne Technologies Pvt Ltd., CHENNAI

ITA 1369/CHNY/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9551 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 03-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 03-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K N DHANDAPANI
• Assessee Lawyers: A S SRIRAMAN
• Keywords: Reasonable cause; Tax effect
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . . . , . , & BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.1369/MDS/2015 &C.O.NO.89/MDS/2015 (IN ITA NO.1369/MDS/2015) ( / ASSESSMENT YEARS: 2010-11) THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-3(1), CHENNAI-34. VS M/S. THERMODYNE TECHNOLOGIES PVT.LTD., 18, AYODHYA COLONY, VELACHERY, CHENNAI-600 042. PAN: AAACT3393E ( /APPELLANT) ( /RESPONDENT/CROSS OBJECTOR) / APPELLANT BY : MR. K.N..DHANDAPANI JCIT /RESPONDENT BY : MR. A.S.SRIRAMAN, ADVOCATE /DATE OF HEARING : 3 RD MAY, 2016 /DATE OF PRONOUNCEMENT : 5 TH MAY, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM: THE APPEAL AND THE CROSS OBJECTION ARE FILED BY THE REVENUE AND THE ASSESSEE RESPECTIVELY AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APP EALS)- 11, CHENNAI DATED 27.02.2015 IN ITA NO.621/CIT(A )-11 /2013-14 PASSED UNDER SECTION143(3) R.W.S 250 OF THE ACT. 2. THE APPEAL FILED BY THE REVENUE WAS BARRED BY L IMITATION BY 3 DAYS AND THE REVENUE HAS FILED AN AFFIDAVIT EX PLAINING THE REASON FOR THE DELAY IN FILING THE APPEAL STATI NG THAT THE RECORDS INADVERTENTLY GOT MIXED UP WITH OTHER FILES AND THEREFORE WAS RECEIVED LATE. IT WAS FURTHER SUBMITT ED THAT THE 2 ITA NO.1369/MDS/2015 & C.O. NO.89/MDS/2015 DELAY IN FILING THE APPEAL WAS NEITHER WANTON NOR W ILLFUL AND THEREFORE PRAYED FOR CONDONATION OF DELAY. CONSIDER ING THE SUBMISSIONS OF THE REVENUE, WE ARE SATISFIED THAT T HERE WAS REASONABLE CAUSE FOR THE DELAY IN FILING THE APPEAL . HENCE IN THE INTEREST OF JUSTICE, WE HEREBY CONDONE THE DELA Y IN FILING THIS APPEAL AND ADMIT THE SAME FOR ADJUDICATION. 3. AT THE OUTSET, WE FIND THAT THE APPEAL OF THE RE VENUE WAS WITH RESPECT TO DELETION OF ADDITION MADE FOR RS.19,50,000/- INVOKING THE PROVISIONS OF SECTION 4 0(A)(IA) OF THE ACT , THE TAX EFFECT OF WHICH IS BELOW ` 10 LAKHS. IT IS PERTINENT TO MENTION THAT THE CBDT IN ITS CIRCULAR NO.21/2015 DATED 10.12.2015 HAD INSTRUCTED ITS OFFICERS TO WIT HDRAW ALL THE APPEALS PENDING BEFORE THE ITAT WHERE THE TAX E FFECT IS LESS THAN ` 10 LAKHS. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THIS CIRCULAR OF CBDT IS BI NDING ON THE OFFICERS OF THE DEPARTMENT. HENCE, THE REVENUE CANNOT PROCEED FURTHER IN THIS APPEAL. ACCORDINGLY, THE A PPEAL STANDS DISMISSED. 4. IN THE CROSS OBJECTION, THE ASSESSEE HAS RAISED TWO GROUNDS ONE IN SUPPORT OF THE ORDER OF THE LEARNED 3 ITA NO.1369/MDS/2015 & C.O. NO.89/MDS/2015 COMMISSIONER OF INCOME TAX (APPEALS) BEING THE DELE TION OF THE ADDITION INVOKING THE PROVISIONS OF SECTION 40( A)(IA) OF THE ACT AND THE OTHER TOWARDS PARTIAL SUSTENANCE OF THE DISALLOWANCE UNDER SECTION 14A OF THE ACT. SINCE W E HAVE DISMISSED THE APPEAL OF THE REVENUE IN REGARD TO TH E FIRST GROUND RAISED IN THE CROSS OBJECTION OF THE ASSESSE E, THIS GROUND OF THE ASSESSEE IS CONSEQUENTIALLY DISMISSED AS INFRUCTUOUS. 5. THE OTHER CROSS OBJECTION RAISED BY THE ASSE SSEE IS THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRONEOUSLY PARTLY SUSTAINED THE DISALLOWANCE MADE UNDER SECTION 14A OF THE ACT. 6. BRIEF FACTS OF THE ISSUE ARE THAT DURING THE COU RSE OF SCRUTINY ASSESSMENT IT WAS OBSERVED BY THE LEARNED ASSESSING OFFICER THAT THE ASSESSEE HAD MADE INVEST MENTS OUT OF INTEREST BEARING FUNDS, THE INCOME DERIVED F ROM WHICH ARE EXEMPT FROM TAX. THEREFORE THE LEARNED ASSESSI NG OFFICER INVOKED THE PROVISIONS OF SECTION 14A OF TH E ACT R.W.R 8D BY REJECTING THE CLAIM OF THE ASSESSEE THAT IT H AD ONLY 4 ITA NO.1369/MDS/2015 & C.O. NO.89/MDS/2015 INCURRED AN EXPENDITURE OF RS.8,275/- FOR MAKING SU CH INVESTMENTS. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ORDER OF THE LEA RNED ASSESSING OFFICER, HOWEVER, GRANTED RELIEF TO THE A SSESSEE BY DIRECTING THE LEARNED ASSESSING OFFICER TO EXCLU DE THE BANK CHARGES AND GRANT CREDIT FOR THE DISALLOWANCE ALREADY MADE BY THE APPELLANT. 7. BEFORE US, THE LEARNED AUTHORIZED REPRESENTATIVE DID NOT FURNISH ANY MATERIAL OR ADVANCE ANY CONVINCING ARGUMENTS TO HOLD THAT THE PROVISIONS OF SECTION 14 A AND RULE 8D WILL NOT BE APPLICABLE IN THE CASE OF THE A SSESSEE. FURTHER FROM THE FACTS OF THE CASE IT APPEARS THAT THE ASSESSEE HAS MADE INVESTMENTS IN HDFC CASH MANAGEMENT FUND, HOWEVER NOTHING IS BROUGHT BEFORE US TO ESTABLISH THAT, THE INCOME DERIVED FROM THESE INVES TMENTS ARE EXEMPT FROM TAX. THEREFORE IN THE INTEREST OF J USTICE WE HEREBY REMIT THE MATER BACK TO THE FILE OF THE LEAR NED ASSESSING OFFICER TO VERIFY THE NATURE OF INVESTMEN TS AND THE NATURE OF INCOME DERIVED FROM THE SAME AND THEREAFT ER PASS APPROPRIATE AS PER LAW AND MERIT. 5 ITA NO.1369/MDS/2015 & C.O. NO.89/MDS/2015 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED AND THE CROSS OBJECTION FILED BY THE ASSE SSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE 5 TH MAY, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 5 TH MAY, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF .