DCIT, Virudhunagar V. M/s. Rajapalayam Mills Ltd., Rajapalayam

ITA 1536/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57960 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-02-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 09-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K GOPALAKRISHNA SR
• Assessee Lawyers: V JAGADISAN
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH B CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AN D SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NO. 1536/MDS/2011 ASSESSMENT YEAR : 2008-09 THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-I, VIRUDHUNAGAR. V. M/S. RAJAPALAYAM MILLS LTD., PAC RAMASAMY RAJA SALAI, RAJAPALAYAM-626 117. (PAN:AAACR8897F) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K. GOPALAKRISHNA, SR. AR RESPONDENT BY : SHRI V. JAGADISAN, FCA DATE OF HEARING : 23-02-2012 DATE OF PRONOUNCEMENT : 2 3-02-2012 O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(AP PEALS)-II, MADURAI IN ITA NO 414/2010-11 DATED 16-06-2011 FOR THE ASSESSMENT YEA R 2008-09. 2. SHRI K. GOPALAKRISHNA, LEARNED SR. DR REPRESENTE D ON BEHALF OF THE REVENUE AND SHRI V. JAGADISAN, FCA REPRESENTED ON B EHALF OF THE ASSESSEE. 3. IT WAS SUBMITTED BY THE LEARNED DR THAT THERE AR E TWO ISSUES IN THE APPEAL OF THE REVENUE, THE FIRST BEING AGAINST THE DELETION OF THE ADDITION MADE BY INVOKING THE PROVISIONS OF SECTION 14A OF THE IN COME TAX ACT, 1961 AND THE SECOND BEING AGAINST THE DELETION OF THE ADDITION O N ACCOUNT OF THE EXPENDITURE INCURRED TOWARDS POOJA EXPENSES. IT WAS SUBMITTE D THAT IN THE COURSE OF I.T.A. NO. 1536/MDS/2011 2 ASSESSMENT, THE ASSESSING OFFICER HAD NOT INVOKED T HE PROVISIONS OF SECTION 14A. HOWEVER, THE ASSESSING OFFICER HAD DISALLOWED 2% OF THE DIVIDEND INCOME AND HAD TREATED THE SAME AS THE EXPENDITURE INCURRED FO R THE PURPOSE OF EARNING THE DIVIDEND INCOME. IT WAS SUBMITTED THAT THE LEARNE D CIT(A) HAD DELETED THE ADDITION. THE LEARNED DR DREW OUR ATTENTION TO THE ORDER OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SHRI VISHNU S HANKAR MILLS LTD. IN ITA NO. 1592/MDS/2004 DATED 10-03-2006 WHEREIN THE TRIBUNAL HAS UPHELD THE TREATMENT OF 2% OF THE DIVIDEND INCOME AS DISALLOWA BLE. IT WAS SUBMITTED THAT THE LEARNED CIT(A) HAD DELETED THE ADDITION BY FOLL OWING THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V. PRIN TERS HOUSE (P) LTD REPORTED IN 188 TAXMAN 70. IN REGARD TO THE DISALLOWANCE OF TH E EXPENDITURE TOWARDS POOJA EXPENSES, HE VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICE. IT WAS THE SUBMISSION THAT THE EXPENDITURE WAS NOT INC URRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS. 4. IN REPLY, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ORDER OF THE LEARNED CIT(A) IS LIABLE TO BE UPHELD. IT WAS THE SUBMISSION THAT IN REGARD TO THE 2% DISALLOWANCE AS NO SPECIFIC EXPENDITURE HAS BEEN FOUND FOR EARNING THE EXEMPTED INCOME, NO DISALLOWANCE CAN BE MADE. IN REGARD TO THE POOJA EXPENSES IT WAS SUBMITTED THAT THE POOJA EXPENDIT URE WAS INCURRED TO MEET THE EXPENSES INCURRED FOR CONDUCTING VARIOUS POOJA IN THE FACTORY PREMISES OF THE ASSESSEE. I.T.A. NO. 1536/MDS/2011 3 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IT I S NOTICED THAT THE ISSUE OF DISALLOWANCE UNDER SECTION 14A IS SQUARELY COVERED BY THE DECISION OF THE CO- ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SHRI VISHNU SHANKAR MILLS LTD., REFERRED TO SUPRA. IN THE CIRCUMSTANCES, RESPECTFU LLY FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL, THE FINDING OF THE LEARNED CIT(A) ON THIS ISSUE STANDS REVERSED. 6. IN REGARD TO THE POOJA EXPENSES IT IS NOTICED THAT THE EXPENSES ARE IN CONNECTION WITH THE BUSINESS ACTIVITIES OF THE ASSE SSEE INSOFAR AS THE POOJA IS CONDUCTED INSIDE THE FACTORY PREMISES AND IN THE NA TURE OF EMPLOYEE WELFARE MEASURE. IN THE CIRCUMSTANCES, THE ORDER OF THE LE ARNED CIT(A) IS ON A RIGHT FOOTING AND DOES NOT CALL FOR ANY INTERFERENCE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED. 8. THE ORDER WAS PRONOUNCED IN THE COURT ON 23/02/2 012. SD/- SD/- (ABRAHAM P. GEORGE) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 23 RD FEBRUARY, 2012. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE