Tube Investments of India Ltd., CHENNAI V. DCIT, CHENNAI

ITA 1452/CHNY/2014

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9858 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2015
• Appeal Filed By: Assessee
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 27-05-2014
• Court: TRIBUNAL
• Department Lawyers: JOE SEBASTIN
• Assessee Lawyers: ANUP KUMAR
• Keywords: Earning of tax free income
• Section: 14A; 263; 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . . . , . !' , # $ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NOS.1452 & 1453/MDS/2014 / ASSESSMENT YEARS : 2008-09 & 2009-10 M/S TUBE INVESTMENTS OF INDIA LTD DARE HOUSE NO.234, NSC BOSE ROAD CHENNAI 600 001 VS. THE DY. COMMISSIONER OF INCOME-TAX LARGE TAX PAYER UNIT CHENNAI [PAN AAACT 1249 H ] ( &' / APPELLANT) ( ()&' /RESPONDENT) / APPELLANT BY : SHRI ANUPKUMAR, CA /RESPONDENT BY : SHRI JOE SEBASTIN, CIT / DATE OF HEARING : 26 - 0 5 - 2015 ! / DATE OF PRONOUNCEMENT : 26 - 0 6 - 2015 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THESE APPEALS OF THE ASSESSEE ARE DIRECTED AGAINS T RESPECTIVE ORDERS OF THE ADMINISTRATIVE COMMISSION ER PASSED U/S 263 OF THE INCOME-TAX ACT, 1961 FOR THE ASSESSMENT YEAR S 2008-09 AND 2009-10. ITA NO.1452 & 1453/14 :- 2 -: 2. SHRI ANUPKUMAR, LD. REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT WHILE COMPUTING DISALLOWANCE UNDER R ULE 8D OF THE INCOME-TAX RULES, IN RESPECT OF EXPENDITURE INCURRE D BY THE ASSESSEE FOR EARNING THE EXEMPT INCOME, THE ASSESSING OFFICE R FAILED TO CONSIDER THE VALUE OF THE INVESTMENT WITH REGARD TO EARNING OF THE EXEMPT INCOME. THE ASSESSING OFFICER HAS ALSO FAIL ED TO CONSIDER THAT SOME OF THE INVESTMENTS HAVE NOT YIELDED ANY PROFIT . THE ASSESSEE FILED APPEAL WHICH IS PENDING BEFORE THE CIT(A). I N THE MEANTIME, AN APPLICATION U/S 154 OF THE ACT WAS FILED BEFORE TH E ASSESSING OFFICER. THE ASSESSING OFFICER HAVING FOUND THAT THERE WAS S OME JUSTIFICATION IN THE CLAIM OF THE ASSESSEE ALLOWED THE CLAIM OF THE ASSESSEE BY ORDER U/S 154 OF THE ACT. 3. THE LD. REPRESENTATIVE FURTHER SUBMITTED THAT THE ADMINISTRATIVE COMMISSIONER IN THE GUISE OF EXERCIS ING HIS JURISDICTION U/S 263 OF THE ACT FOUND THAT THE ISSUE DECIDED BY THE ASSESSING OFFICER IS A DEBATABLE ONE AND ACCORDINGLY HE FOUND THAT THE RECTIFICATION CANNOT BE MADE. THE LD. REPRESENTATI VE FURTHER SUBMITTED THAT AS PER THE JUDICIAL DECISION INCLUDING THE DE CISION OF THE CHENNAI BENCH OF THIS TRIBUNAL, THE INVESTMENT MADE FOR EAR NING THE EXEMPT INCOME ALONE HAS TO BE CONSIDERED FOR THE PURPOSE O F DISALLOWANCE ITA NO.1452 & 1453/14 :- 3 -: UNDER RULE 8D. SIMILARLY, THE INVESTMENT WHICH DOES NOT RESULT ANY EXEMPT INCOME HAS TO BE EXCLUDED. THIS IS SETTLED ISSUE, THEREFORE, NOT DEBATABLE ONE. 4. WE HEARD SHRI JOE SEBASTIAN, LD. DEPARTMENTAL REPRESENTATIVE ALSO. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. SEC TION 14A OF THE ACT R.W.RULE 8D PROVIDES FOR DISALLOWANCE OF EXPENDITUR E INCURRED BY THE ASSESSEE FOR EARNING THE EXEMPT INCOME. IN THE ORI GINAL ASSESSMENT, THE ASSESSING OFFICER COMPUTED DISALLOWANCE UNDER R ULE 8D BY TAKING THE ENTIRE INVESTMENT MADE BY THE ASSESSEE. HOWEV ER, IN THE PROCEEDINGS U/S 154 OF THE ACT, THE ASSESSING OFFI CER EXCLUDED THE INVESTMENT WHICH DOES NOT RESULT ANY EXEMPT INCOME AND HAS TAKEN ONLY THOSE INVESTMENT WHICH REALLY EARNED EXEMPT IN COME. IT IS NOT IN DISPUTE THAT AGAINST THE ORIGINAL DISALLOWANCE MADE BY THE ASSESSING OFFICER THE ASSESSEE HAS FILED APPEAL BEFORE THE CIT(A) AND THE SAME IS PENDING. WHEN THE ASSESSEE HAS FILED APPEAL BE FORE THE CIT(A), THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT REC OMPUTATION OF THE DISALLOWANCE UNDER RULE 8D IS NOT JUSTIFIED. THE R EVENUE MAY NOT HAVE ANY REMEDY IF THE ADMINISTRATIVE COMMISSIONER FAILED TO EXERCISE ITA NO.1452 & 1453/14 :- 4 -: JURISDICTION U/S 263 OF THE ACT. WHETHER THE ACTUA L INVESTMENT FOR EARNING EXEMPT INCOME ALONE HAS TO BE TAKEN INTO CO NSIDERATION OR THE ENTIRE VALUE OF THE INVESTMENT HAS TO BE TAKEN INTO CONSIDERATION IS A MATTER TO BE CONSIDERED IN THE FACTS AND CIRCUMSTAN CES OF EACH CASE. NO DOUBT, SOME OF THE BENCHES OF THIS TRIBUNAL FOUN D THAT THE EXPENDITURE ON INVESTMENT WHICH DOES NOT RESULT ANY EXEMPT INCOME HAS TO BE EXCLUDED WHILE COMPUTING THE DISALLOWANCE UNDER RULE 8D. HOWEVER, SOME OF THE HIGH COURTS INCLUDING THE CBDT SAY THAT THE ENTIRE BORROWED FUNDS HAS TO BE TAKEN INTO CONSIDER ATION. THEREFORE, AS RIGHTLY OBSERVED BY THE CIT, THE ISSUE IS A DEBA TABLE ONE. MOREOVER, THE ASSESSEE HAS ALREADY FILED AN APPEAL BEFORE THE CIT(A). THE POWER OF THE CIT(A) IS VERY WIDE. THEREFORE, T HE ASSESSEE CAN RAISE ALL THE ISSUES INCLUDING THE INVESTMENT TO BE TAKEN INTO CONSIDERATION FOR COMPUTING THE DISALLOWANCE UNDER RULE 8D BEFORE THE CIT(A). THEREFORE, AT THIS JUNCTURE, EXERCISE OF P OWER U/S 154 IS NOT CALLED FOR AND THE CIT HAS RIGHTLY REVISED THE ORDE R OF THE ASSESSING OFFICER. THIS TRIBUNAL DO NOT FIND ANY INFIRMITY I N THE ORDER OF THE CIT. ACCORDINGLY, THE SAME IS CONFIRMED. 6. IN THE RESULT, THE APPEALS OF THE ASSESSEE STAND DISMISSED. ITA NO.1452 & 1453/14 :- 5 -: ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH OF JUNE, 2015, AT CHENNAI. SD/- SD/- ( . !' ) (A. MOHAN ALANKAMONY) # / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 26 TH JUNE, 2015 RD &' ()*) / COPY TO: 1 . / APPELLANT 3. +,' / CIT(A) 5. )-. / / DR 2. / RESPONDENT 4. + / CIT 6. .01 / GF