Dy.Commissioner of Income Tax, Circle-16(2), Hyderabad V. Med Plus Health Services Private Limited, Hyderabad

ITA 1527/Hyd/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2402 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-03-2018
• Assessment Year: 2013-2014
• Appeal Filed On: 01-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N SWAPNA
• Assessee Lawyers: M D N V LAKSHMI PAVAN
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

ITA NOS 1527 AND 1528 OF 2017 MED PLUS HEALTH SERVICES P LTD HYDERABAD. PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER ITA NOS. 1527 & 1528/HYD/2017 (ASSESSMENT YEARS: 2013-14 & 2014-15) DCIT, CIRCLE 16 (2) HYDERABAD VS M/S. MEDPLUS HEALTH SERVICES PRIVATE LIMITED HYDERABAD PAN: AAECM 9412H (APPELLANT) (RESPONDENT) FOR REVENUE : SMT. N. SWAPNA, DR FOR ASSESSEE : SHRI M.D.N.V. LAKSHMI PAVAN O R D E R PER SMT. P. MADHAVI DEVI, J.M. BOTH ARE REVENUES APPEALS FOR THE A.YS 2013-14 & 2014-15 RESPECTIVELY AGAINST THE ORDER OF THE CIT ( A)-4, HYDERABAD, BOTH DATED 19.06.2017. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY, FILED ITS RETURN OF INCOME ON 26.09.2013 ADMITTING NIL TAXABLE INCOME, AFTER SET-OFF OF BROUGHT FORWARD BUSINESS L OSSES. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, T HE AO OBSERVED FROM THE BALANCE SHEET OF THE COMPANY, THA T THE ASSESSEE HAS MADE INVESTMENTS IN SHARES OF VARIOUS COMPANIES AMOUNTING TO RS.139,47,51,280 AS ON 31.03.2013. OBS ERVING THAT DATE OF HEARING: 23.03 . 201 8 DATE OF PRONOUNCEMENT: 23.03.2018 ITA NOS 1527 AND 1528 OF 2017 MED PLUS HEALTH SERVICES P LTD HYDERABAD. PAGE 2 OF 3 THESE INVESTMENTS ARE LIKELY TO YIELD DIVIDEND INCO ME, WHICH IS EXEMPT FROM TAXATION, HE PROPOSED TO MAKE THE DISAL LOWANCE U/S 14A OF THE ACT R.W. RULE 8D OF IT RULES, AS NO EXPE NDITURE WAS CLAIMED AND DISALLOWED BY THE ASSESSEE IN THE P&L A /C. THE ASSESSEE IN RESPONSE TO THE SHOW CAUSE NOTICE ISSUE D BY THE AO, FILED A REPLY STATING THAT THE COMPANY IS NOT HAVIN G ANY EXEMPT INCOME FOR THE A.YS 2013-14 & 2014-15 AND THEREFORE , NO DISALLOWANCE U/S 14A IS CALLED FOR. THE AO HOWEVER, WAS OF THE OPINION THAT IRRESPECTIVE OF WHETHER THE ASSESSEE H AS EARNED EXEMPT INCOME, THE PROVISIONS OF SECTION 14A ARE AP PLICABLE. HE FOLLOWED THE CBDT CIRCULAR NO.5/2014 FOR COMING TO THIS CONCLUSION AND ACCORDINGLY MADE THE DISALLOWANCE OF RS.1,20,25,633 FOR THE A.Y 2013-14 AND RS.2,59,93,1 97 FOR THE A.Y 2014-15. 3. AGGRIEVED, THE ASSESSEE PREFERRED APPEALS BEFORE THE CIT (A), WHO ALLOWED THE SAME BY FOLLOWING THE ITAT ORDERS IN THE CASE OF PRATHISTA INDUSTRIES LTD VS. DCIT IN ITA NO.1302/HYD/2015 FOR THE A.Y 2011-12 WHEREIN IT HAS FOLLOWED THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD, REPORTED IN (2015) 378 ITR 33 (DEL. ) TO HOLD THAT SECTION 14A WILL NOT APPLY WHERE NO EXEMPT INCOME IS RECEIVED OR IS RECEIVABLE DURING THE RELEVANT A.Y. OBSERVING TH AT THE ASSESSEE HAS NO DIVIDEND INCOME DURING THE RELEVANT A.Y, THE CIT (A) DELETED THE DISALLOWANCE AGAINST WHICH THE REVENUE IS IN APPEAL BEFORE US. 4. THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHO RITIES BELOW WHILE THE LEARNED COUNSEL FOR THE ASSESSEE HA S FILED BEFORE ITA NOS 1527 AND 1528 OF 2017 MED PLUS HEALTH SERVICES P LTD HYDERABAD. PAGE 3 OF 3 US A COPY OF THE ORDER OF THE TRIBUNAL IN ITA NO.14 29/HYD/2017 IN THE ASSESSEES OWN CASE FOR THE A.Y 2012-13 WHER EIN THE TRIBUNAL HAS DELETED THE DISALLOWANCE ON THE GROUND THAT THE ASSESSEE HAS NOT EARNED ANY DIVIDEND INCOME DURING THE RELEVANT A.Y. A COPY OF THE SAID ORDER IS FILED BEFORE US. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THIS ISSUE IS COVERED IN FAVOU R OF THE ASSESSEE BY THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD (SUPRA) AND ALSO THE HON'BLE MADRAS HIGH COURT IN THE CASE OF M/S. REDINGTON CO. IN T.C.A.NO.520 OF 2016 DATED 8.11.20 16. RESPECTFULLY FOLLOWING THE SAME, THE REVENUES APPEALS ARE DISMI SSED. 6. IN THE RESULT, REVENUES APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD MARCH, 2018. SD/- SD/- (D.S. SUNDER SINGH) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 23 RD MARCH 2018. VINODAN/SPS COPY TO: 1 DCIT CIRCLE 16(2) 2 ND FLOOR, B BLOCK IT TOWERS, AC GUARDS, MASAB TANK, HYDERABAD 2 M/S. MEDPLUS HEALTH SERVICES P LTD 5-9-13, F.NO.7 07, 7 TH FLOOR, TARAMANDAL COMPLEX, SAIFABAD, HYDERABAD 3 CIT (A) - 4 HYDERABAD 4 PR. CIT 4 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER