Tribe Investments and Services Pvt Ltd., CHENNAI V. DCIT, CHENNAI

ITA 1410/CHNY/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8787 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 20-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 09-06-2015
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: R VIJAYARAGHAVAN
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . . . , . !' , # $ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NOS.1410 & 1411/MDS/2015 / ASSESSMENT YEARS : 2009-10 & 2008-09 M/S TRIBE INVESTMENTS AND SERVICES PVT. LTD [FORMERLY VIJAYSHREE SPINNING MILLS PVT. LTD] NEW NO.8, OLD NO.36 ARCH BISHOP MATHIAS AVENUE CHENNAI 600 028 VS. THE DY. COMMISSIONER OF INCOME-TAX CORPORATE CIRCLE III(4) CHENNAI [PAN AAACV 2098 Q ] ( &' / APPELLANT) ( ()&' /RESPONDENT) / APPELLANT BY : SHRI R. VIJAYARAGHAVAN, ADVOCATE /RESPONDENT BY : SHRI P. RADHAKRISHNAN, JCIT / DATE OF HEARING : 20 - 06 - 2016 ! / DATE OF PRONOUNCEMENT : 05 - 08 - 2016 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER BOTH THE APPEALS OF THE ASSESSEE ARE DIRECTED AG AINST THE COMMON ORDER OF THE COMMISSIONER OF INCOME-TAX (AP PEALS)-11, CHENNAI, DATED 9.1.2015, FOR ASSESSMENT YEARS 2008- 09 AND 2009-10. SINCE COMMON ISSUE ARISES FOR CONSIDERATION IN BOTH THE APPEALS, WE HEARD THEM TOGETHER AND DISPOSING OF THE SAME BY TH IS COMMON ORDER. ITA NO. 1410 & 1411/15 :- 2 -: 2. SHRI R. VIJAYARAGHAVAN, LD. COUNSEL FOR THE ASSESSE E SUBMITTED THAT THE ASSESSING OFFICER DISALLOWED A S UM OF ` 17,72,964/- U/S 14A OF THE ACT FOR ASSESSMENT YEAR 2009-10 ON T HE GROUND THAT THESE ARE ALL INVESTMENT FOR EARNING THE EXEMPTED I NCOME. REFERRING TO SEC. 14A, THE LD. COUNSEL SUBMITTED THAT THE ASS ESSEE HAS PURCHASED SHARES LONG BACK AND THE DIVIDEND RECEIVED DOES NOT HAVE ANY DIRECT NEXUS WITH THE EXPENDITURE. ACCORDING TO THE LD. C OUNSEL FOR THE ASSESSEE, THE DIRECT EXPENDITURE RELATABLE TO EARN ING OF THE EXEMPTED INCOME ALONE HAS TO BE DISALLOWED. THE LD. COUNSEL FURTHER SUBMITTED THAT THE ASSESSEE HAS NOT INCURRED ANY EXPENDITURE EXCEPT FOR DEPOSITING THE DIVIDEND CHEQUE, THEREFORE, THERE C ANNOT BE ANY DISALLOWANCE. 3. ON THE CONTRARY, SHRI P. RADHAKRISHNAN, LD. DEPARTM ENTAL REPRESENTATIVE SUBMITTED THAT SEC. 14A OF THE ACT PROVIDES FOR METHOD OF COMPUTATION OF EXPENDITURE FOR EARNING THE EXEMP TED INCOME. THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER THAT NO EXPENDITURE WAS INCURRED. HAVING NOT SATISFIED WITH THE CONTENTION OF THE ASSESSEE, THE ASSESSING OFFICER COMPUTED THE DISALLOWANCE BY APPLYING RULE 8D OF THE INCOME TAX RULES. THEREFORE, THE CIT(A) HAS RIGHTLY CONFIRMED THE ORDER OF THE ASSESSING OFFICER. ITA NO. 1410 & 1411/15 :- 3 -: 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. AD MITTEDLY, THE ASSESSEE HAS INVESTED IN THE SHARES AND EARNED DIVI DEND INCOME WHICH IS EXEMPTED FROM TAXATION. FROM THE ORDER OF THE C IT(A), IT APPEARS THAT THE ASSESSEE HAS RECEIVED INCOME FROM COMPANI ES AND MUTUAL FUNDS AS DIVIDEND AND ALSO RECEIVED PROFIT ON SALE OF SHARES. THE ASSESSEE HAS ALSO DISCLOSED RENTAL RECEIPT TO THE E XTENT OF ` 9,16,100/-. THE ASSESSEE HAS DEBITED ONLY A SUM OF ` 41,91,531/- UNDER VARIOUS HEADS. THE ASSESSING OFFICER FOUND THAT THE INVEST MENT IN THE SHARES OF THE COMPANIES RESULTED IN DIVIDEND WHICH IS EXEM PTED FROM TAXATION. THEREFORE, BY APPLYING SEC. 14A R.W.R 8 D, THE ASSESSING OFFICER COMPUTED THE DISALLOWANCE OF ` 17,72,964/-. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHEN THE ASSESSEE H AS INVESTED FUNDS IN THE SHARES OF THE COMPANIES WHICH RESULTED IN EA RNING OF THE DIVIDEND INCOME, THE ASSESSING OFFICER HAS TO NECES SARILY COMPUTE THE DISALLOWANCE BY APPLYING RULE 8D. IN THIS CASE, AD MITTEDLY, THE ASSESSING OFFICER COMPUTED THE DISALLOWANCE BY APPL YING RULE 8D, THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPIN ION THAT THE CIT(A) HAS RIGHTLY CONFIRMED THE ORDER OF THE ASSESSING OF FICER. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE W ITH THE ORDER OF THE CIT(A). ACCORDINGLY, THE SAME IS CONFIRMED. ITA NO. 1410 & 1411/15 :- 4 -: 5. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH AUGUST, 2016, AT CHENNAI. SD/- SD/- ( . !' ) (A. MOHAN ALANKAMONY) # / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 5 TH AUGUST, 2016 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF