M/s. Chemsworth Private Limited, Bangalore V. ITO, Ward-11(1), Bangalore

ITA 1415/BANG/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8539 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-02-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 10-08-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A R V SREENIVA SAN J
• Keywords: Source of fund
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC - B BENCH : BANGALORE BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO. 1415/BANG/2016 ASSESSMENT YEAR : 2009-10 M/S. CHEMSWORTH PRIVATE LTD., KEMWELL HOUSE, 11, TUMKUR ROAD, BENGALURU 560 022. PAN: AAACC 8007C VS. THE INCOME TAX OFFICER, WARD 11(1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : NONE RESPONDENT BY : SHRI A.R.V. SREENIVASAN, JCIT(DR) DATE OF HEARING : 16.02.2017 DATE OF PRONOUNCEMENT : 23.02.2017 O R D E R THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST TH E ORDER OF CIT (APPEALS), BENGALURU-2, BENGALURU DATED 10.06.2016 FOR THE ASSESSMENT YEAR 2009-10. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: - 1. THE ASSESSMENT ORDER U/S. 143(3) PASSED BY THE LEARNED ASSESSING OFFICER (AO) AND THE APPELLATE ORDER PASS ED BY THE HONORABLE COMMISSIONER OF INCOME-TAX (APPEALS) BENGALURU-2, BENGALURU (THE CIT(A)) ARE BAD IN LAW AND ARE REQUIRED TO BE SET ASIDE. ITA NO.1415/BANG/2016 PAGE 2 OF 4 2. THE AO ERRED IN CONCLUDING AND THE CIT(A) ERRED IN CONFIRMING, IN THE ABSENCE OF ANY FINDING THAT ANY EXPENSE WAS INCURRED BY THE APPELLANT WHICH CALLED FOR DISALLOWANCE U/S 14A READ WITH RULE 8D WHICH ARE NO T APPLICABLE IN CASE OF THE APPELLANT. 3. THE CIT (A) AND AO OUGHT TO HAVE REALIZED, AFTER VERIFICATION OF BOOKS AND RECORDS, THAT APPELLANT H AS NOT PAID ANY INTEREST FOR FUNDS USED FOR ITS INVESTMENT S OR INCURRED ANY OTHER EXPENDITURE ATTRIBUTABLE TO EARN ING OF EXEMPTED INCOME AND THAT DIVIDEND RECEIVED IS ON INVESTMENTS MADE IN EARLIER YEARS AND IS OUT OF ITS OWN SOURCE OF FUNDS AND THAT EXPENDITURE IN RESPECT OF CAPITAL GAIN INCOME IN THE FORM OF DEMAT CHARGES AND SECURI TY TRANSACTION TAX ARE ALREADY DISALLOWED IN THE COMPU TATION. 4. THE CIT (A) DID NOT CONSIDER THE WRITTEN SUBMISSION MADE ON REMAND REPORT OF AO AND THE AO DID NOT REPLY ON GROUNDS OF APPEAL MADE BY THE APPELLANT BEFORE CIT (A) ON WHICH REMAND REPORT WAS SOUGHT. 5. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, THE APPELLANT PRAYS THAT THE ASSES SMENT ORDER PASSED BY THE AO AND THE APPELLATE ORDER PASS ED BY THE CIT(A) MAY BE SET ASIDE AND THIS APPEAL MAY BE ALLOWED. 3. NONE APPEARED ON BEHALF OF THE ASSESSEE IN SPITE OF NOTICE AND HENCE, I PROCEED TO DISPOSE OF THIS APPEAL OF ASSES SEE EX PARTE QUA THE ASSESSEE. 4. THE LD. DR OF REVENUE SUPPORTED THE ORDERS OF AU THORITIES BELOW. I HAVE CONSIDERED THE SUBMISSIONS OF LD. DR OF REVENU E AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. I FIND THAT IT IS NOTED BY THE AO ON PAGE 4 OF THE ASSESSMENT ORDER THAT THE AVERAGE VALUE IN I NVESTMENT OF ASSESSEE IS RS.18,82,45,892 AND @ 0.5% OF THIS AVERAGE INVES TMENT, THE AO HAS ITA NO.1415/BANG/2016 PAGE 3 OF 4 WORKED OUT THE DISALLOWANCE AS PER RULE 8D(3) AT RS .9,41,230. BEFORE THAT, THE AO HAS NOTED THAT THE ASSESSEE HAS RECEIV ED AN AMOUNT OF RS.692.64 LAKHS AS DIVIDEND RECEIPTS WHICH HAS BEEN CLAIMED AS EXEMPT. COPY OF PROFIT & LOSS ACCOUNT OF ASSESSEE IS AVAILA BLE ON PAGE 4 OF PB, AS PER WHICH, THE ASSESSEE HAS CLAIMED DEDUCTION ON AC COUNT OF ESTABLISHMENT & MISCELLANEOUS EXPENSES OF RS.115. 16 LAKHS AND HENCE, THIS IS NOT A CASE OF ASSESSEE THAT DISALLOWANCE MA DE BY THE AO ON ACCOUNT OF ADMINISTRATIVE EXPENSES U/S. 14A AS PER RULE 8D IS MORE THAN THE ACTUAL AMOUNT OF SUCH EXPENSES DEBITED BY THE A SSESSEE IN THE PROFIT & LOSS ACCOUNT. IN MY CONSIDERED OPINION, THE DISALL OWANCE MADE BY THE AO AND CONFIRMED BY THE LD. CIT(APPEALS) IS IN LINE WI TH THE PROVISIONS OF SECTION 14A AND RULE 8D AND THEREFORE, I FIND NO IN FIRMITY IN THE ORDERS OF AUTHORITIES BELOW ON THIS ISSUE. HENCE, I DECLINE T O INTERFERE IN THE ORDER OF LD. CIT (APPEALS). 5. IN THE RESULT, THE APPEAL OF ASSESSEE IS DISMISS ED. PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF FEBRUARY, 2017. SD/- ( A.K. GARODIA ) ACCOUNTANT MEMBER BANGALORE, DATED, THE 23 RD FEBRUARY, 2017. / D ESAI S MURTHY / MS / ITA NO.1415/BANG/2016 PAGE 4 OF 4 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.