Greenstar Fertilizers Ltd., CHENNAI V. ITO Corporate Ward 2(3), CHENNAI

ITA 1372/CHNY/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4073 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 25-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Earning of tax free income; Revised return
• Section: 143(3); 142(1); 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C BENCH, CHENNAI . , . , BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A.NO.1372/CHNY/2018 / ASSESSMENT YEAR: 2014-15) M/S. GREENSTAR FERTILIZERS LTD., NO.88, SPIC HOUSE, MOUNT ROAD, GUINDY, CHENNAI - 600 032. VS THE INCOME TAX OFFICER, CORPORATE WARD 2(3), CHENNAI 34. PAN: AADCG9451D ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI R. VIJAYARAGHAVAN, ADVOCATE / RESPONDENT BY : SHRI CLEMENT RAMESH KUMAR, ADDL. CIT /DATE OF HEARING : 24.01.2019 /DATE OF PRONOUNCEMENT : 11.03.2019 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-6, CHENNAI, DATED 30.01.2018 IN ITA NO.455/CIT(A)-6/2016-17 FOR THE ASSESSMENT YEAR 2014-15 PASSED U/S.250(6) R.W.S. 143(3) OF THE ACT. 2 ITA NO.1372/CHNY/2018 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN ITS APPEAL HOWEVER THE CRUX OF THE ISSUE IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE LD.AO AMOUNTING TO RS.26,79,272/- TOWARDS DISALLOWANCE OF EXPENDITURE BY INVOKING THE PROVISIONS OF SECTION 14A R.W.R.8D OF THE RULES. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURE OF PHOSPHATIC FERTILIZERS AND CHEMICALS LIKE ALUMINIUM FLORIDE AND MARKETING ITS PRODUCTS ALL OVER THE COUNTRY, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2014-15 ON 25.11.2014 ADMITTING TOTAL INCOME OF RS.10,45,230/- AND ALSO FILED REVISED RETURN ON 24.08.2015 ADMITTING THE SAME INCOME. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICE U/S.143(2) & 142(1) OF THE ACT WAS ISSUED ON 15.09.2015 & 15.07.2016 RESPECTIVELY. FINALLY ASSESSMENT ORDER WAS PASSED U/S.143(3) OF THE ACT ON 30.12.2016 WHEREIN THE LD.AO MADE ADDITION OF RS.26,79,272/- TOWARDS DISALLOWANCE OF EXPENDITURE BY INVOKING THE PROVISIONS OF SECTION 14A R.W.R.8D OF THE RULES. ON APPEAL THE LD.CIT(A) CONFIRMED THE ORDER OF THE LD.AO AND SUSTAINED THE ADDITION OF RS.26,79,272/-. 3 ITA NO.1372/CHNY/2018 4. ON PERUSING THE PROVISIONS OF SECTION 14A OF THE ACT, IT IS CRYSTAL CLEAR THAT THE LD.AO SHALL DETERMINE THE AMOUNT OF EXPENDITURE IN RELATION TO SUCH INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME AS PER THE PROVISIONS OF THE ACT IN ACCORDANCE WITH THE METHOD PRESCRIBED UNDER THE RULES IF HE IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RESPECT TO SUCH EXPENDITURE IN RELATION TO INCOME WHICH DOES FORM PART OF TOTAL INCOME AS PER THE PROVISIONS OF THE ACT. THEREFORE THE LD.AO HAS TO FIRST EXAMINE THE EXPENDITURE COMPUTED BY THE ASSESSEE FOR EARNING EXEMPT INCOME AND THEREAFTER IF HE IS NOT SATISFIED WITH THE COMPUTATION MADE BY THE ASSESSEE WITH VALID REASONS HE SHALL PROCEED TO COMPUTE THE EXPENDITURE INCURRED BY THE ASSESSEE FOR EARNING EXEMPT INCOME IN ACCORDANCE WITH THE METHOD PRESCRIBED UNDER THE RULES. ON PERUSING THE ORDER OF THE LD.REVENUE AUTHORITIES WE FIND THAT THIS EXERCISE HAD NOT BEEN CARRIED OUT. THEREFORE IN THE INTEREST OF JUSTICE, WE HEREBY REMIT THE MATTER BACK TO THE FILE OF LD.AO FOR DE-NOVA CONSIDERATION. THE ASSESSEE IS ALSO AT LIBERTY TO SUBMIT BEFORE THE LD.AO THE COMPUTATION WITH RESPECT TO THE EXPENSE INCURRED BY IT FOR EARNING EXEMPT INCOME WHICH SHALL BE DULY EXAMINED BY THE LD.AO AND THEREAFTER DECIDE THE MATTER IN ACCORDANCE WITH LAW AND MERIT. 4 ITA NO.1372/CHNY/2018 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE AS INDICATED HEREIN ABOVE. ORDER PRONOUNCED ON THE 11 TH MARCH, 2019 AT CHENNAI. SD/- SD/- ( ) (DUVVURU R.L REDDY) /JUDICIAL MEMBER ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER /CHENNAI, /DATED 11 TH MARCH, 2019 RSR /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( )/CIT(A) 4. /CIT 5. /DR 6. /GF