Dy. Commissioner of Income Tax, Circle-2(1), Hyderabad, Hyderabad V. Jasper Industries Private Limited, Hyderabad, Hyderabad

ITA 1403/Hyd/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5984 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-05-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 04-08-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M SITHARAM
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

ITA NO 1403 OF 2017 JASPER INDUSTRIES P LTD HYDERABAD. PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.1403/HYD/2017 (ASSESSMENT YEAR: 2011-12) DY. COMMISSIONER OF INCOME TAX, CIRCLE 2(1) HYDERABAD VS M/S. JASPER INDUSTRIES PRIVATE LIMITED HYDERABAD PAN: AAACJ5760H (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI M.SITHARAM, DR FOR ASSESSEE : SHRI P. MURALI MOHAN RAO O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS THE APPEAL FILED BY THE REVENUE FOR THE A.Y 2011-12 AGAINST THE ORDER OF THE CIT (A)-1, GUNTUR, DATED 11.05.2017. THE ONLY ISSUE IN THIS APPEAL IS AGAINS T THE ORDER OF THE CIT (A) IN RESTRICTING THE DISALLOWANCE U/S 14A OF THE ACT TO THE EXTENT OF EXEMPT INCOME EARNED DURING THE YEAR WHICH ACCORDING TO THE REVENUE IS CONTRARY TO BOARD CIRCU LAR NO.5/2014. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY, ENGAGED IN THE BUSINESS OF TRADING OF COMMERCIAL VE HICLES AND CARS, SALE OF SPARE PARTS & LUBRICANTS AND EARNING OF RENTAL INCOME DATE OF HEARING: 22.05 . 201 8 DATE OF PRONOUNCEMENT: 25.05.2018 ITA NO 1403 OF 2017 JASPER INDUSTRIES P LTD HYDERABAD. PAGE 2 OF 4 AND COMMISSION, FILED ITS RETURN OF INCOME FOR THE A.Y 2011-12 ON 29.09.2011 ADMITTING TOTAL INCOME OF RS.15,61,39,18 0. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THE A O OBSERVED FROM THE BALANCE SHEET OF THE ASSESSEE THAT THE ASS ESSEE HAD MADE INVESTMENTS IN COMPANIES TO THE TUNE OF RS.48, 64,11,000 AS ON 31.03.2011. OBSERVING THAT THE DIVIDEND INCOME A RISING FROM INVESTMENTS IS EXEMPT FROM TAX AND ALSO THAT THE AS SESSEE HAS INCURRED EXPENSES OF RS.13,07,88,000 TOWARDS INTERE ST, THE AO OBSERVED THAT THE DISALLOWANCE U/S 14A IS CALLED FO R. HE ACCORDINGLY WORKED OUT THE DISALLOWANCE UNDER RULE 8D AT RS.4,42,90,857 AND BROUGHT IT TO TAX. AGGRIEVED, TH E ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) WHO RESTRICT ED THE DISALLOWANCE TO THE EXEMPT INCOME EARNED BY THE ASS ESSEE AND FOR COMING TO THIS CONCLUSION, HE FOLLOWED THE DECISION S OF VARIOUS BENCHES OF ITAT AND ALSO THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF ACB INDIA LTD VS. ASSTT. CIT REPORTED IN (2 015) 62 TAXMANN.COM 71(DEL.). AGAINST THE RELIEF GRANTED BY THE CIT (A), THE REVENUE IS IN APPEAL BEFORE US. 3. THE LEARNED DR SUPPORTED THE ORDER OF THE AO AND ALSO PLACED RELIANCE UPON THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL AT ITAT AMRITSAR IN THE CASE OF LALLY MOTO RS INDIA (P) LTD VS. PR. CIT REPORTED IN (2018) 93 TAXMANN.COM 39 (A MRITSAR TRIB.) WHEREAS THE LEARNED COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE UPON THE FOLLOWING DECISIONS: I) HON'BLE DELHI HIGH COURT IN THE CASE OF JT. INVE STMENTS (P) LTD VS. CIT IN ITA NO.117/2015 DATED 25 TH FEBRUARY, 2015. ITA NO 1403 OF 2017 JASPER INDUSTRIES P LTD HYDERABAD. PAGE 3 OF 4 II) ITAT HYDERABAD IN THE CASE OF KAMADHENU SUKRIT PVT LTD VS. ITO IN ITA NO.460/HYD/2017, DATED 22.11.2017 III) ITAT HYDERABAD IN THE CASE OF M/S. TGV PROJECT S & INVESTMENTS (P) LTD VS. ASSTT. CIT IN ITA NO.846/HYD/2016, DATED 28.02.2017. IV) HON'BLE HIGH COURT OF PUNJAB & HARYANA IN THE C ASE OF PR. CIT VS. EMPIRE PACKAGE (P) LTD REPORTED IN (201 7) 81 TAXMANN.COM 108 (P&H H.C) DATED 12 TH JANUARY, 2016. 4. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THIS ISSUE IS COVERED IN FA VOUR OF THE ASSESSEE BY THE DECISION OF THE HON'BLE DELHI HIGH COURT (SUPRA), WHEREIN IT HAS BEEN CLEARLY HELD THAT THE DISALLOWA NCE U/S 14A CANNOT EXCEED THE EXEMPT INCOME EARNED BY THE ASSES SEE. IN SIMILAR CASES, THE COORDINATE BENCHES OF THIS TRIBU NAL HAVE BEEN FOLLOWING THE DECISIONS OF VARIOUS HIGH COURTS TO T HE EFFECT THAT WHEN THERE IS NO EXEMPT INCOME, THERE CANNOT BE ANY DISALLOWANCE U/S 14A OF THE ACT AND FURTHER THAT TH E DISALLOWANCE U/S 14A CANNOT EXCEED THE EXEMPT INCOME EARNED BY T HE ASSESSEE. THEREFORE, WE SEE NO REASON TO INTERFERE WITH THE ORDER OF THE CIT (A). ACCORDINGLY, REVENUES APPEALS IS DISM ISSED. 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH MAY, 2018. SD/- SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 25 TH MAY 2018. VINODAN/SPS ITA NO 1403 OF 2017 JASPER INDUSTRIES P LTD HYDERABAD. PAGE 4 OF 4 COPY TO: 1 DY.CIT, CIRCLE 2(1) 5 TH FLOOR, ROOM NO.514, SIGNATURE TOWERS, KONDAPUR, HYDERABAD 2 M/S. JASPER INDUSTRIES PVT. LTD, GOLDEN EDIFICE, 1 ST FLOOR, OPP: VISWESWARAYYA STATUE, KHAIRATABAD, HYDERABAD 3 CIT (A) - 1 GUNTUR. 4 PR. CIT (CENTRAL), HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER