Dy. Commissioner of Income Tax , Circle-2(2), Hyderabad V. Telangana state Power Generation Corporation Limited, Hyderabad

ITA 1602/Hyd/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4217 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-B
• Next Hearing Date: 23-09-2021
• Assessment Year: 2016-2017
• Appeal Filed On: 04-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y.V.S.T. SAI
• Assessee Lawyers: M. CHANDRAMOULESWARA RAO
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER I.T.A. NO. 1602/HYD/2019 ASSESSMENT YEAR: 2016-17 DCIT, CIRCLE-2(2), HYDERABAD VS M/S.TELANGANA STATE POWER GENERATION CORPORATION LIMITED, HYDERABAD [PAN: AAFCT0257Q] (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI Y.V.S.T.SAI, CIT-DR FOR ASSESSEE : SHRI M.CHANDRAMOULESWARA RAO, AR DATE OF HEARING : 23-09-2021 DATE OF PRONOUNCEMENT : 06-10-2021 O R D E R PER S.S.GODARA, J.M. : THIS REVENUES APPEAL FOR AY.2016-17 ARISES FROM THE CIT(A)-2, HYDERABADS ORDER DATED 21-08-2019 PASSED IN CASE NO.10297/2018-19/CIT(A)-2, IN PROCEEDINGS U/S.143(3 ) OF THE INCOME TAX ACT, 1961 [IN SHORT, THE ACT]. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE REVENUE HAS RAISED THE FOLLOWING SUBSTANTIVE GROUNDS IN THE INSTANT APPEAL: 1.THE CIT(A) HAS IGNORED THE FINDINGS OF THE AO BR OUGHT OUT IN THE ASSESSMENT ORDER THAT PROVISION OF SEC.14A IS CLEAR LY APPLICABLE IN THE CASE OF THE ASSESSEE. 2.THE CIT(A) ERRED IN NOT NOTICING THE PROVISIONS O F SEC.14A WHICH START WITH EXPENDITURE INCURRED IN RELATION TO INC OME NOT INCLUDIBLE IN TOTAL INCOME AND NOT APPRECIATING THAT SUBSTITUTED RULE 8(D)(2)(II) AND ITA NO. 1602/HYD/2019 :- 2 -: ERSTWHILE RULE 8D(2)(III) ENVISAGES DISALLOWANCE ON AVERAGE OF INVESTMENT, INCOME FROM WHICH DOES NOT OR SHALL NOT FORM PART OF TOTAL INCOME. 3. THE CIT(A) HAS ERRED IN IGNORING CBDT CIRCULAR N O.5/2014 DATED 11.02.2014 WHICH HAS CLARIFIED UNAMBIGUOUSLY THE IN TENT OF THE LEGISLATURE, PURPOSE AND APPLICABILITY OF SEC.14A. 4.ANY OTHER GROUND THAT BE URGED AT THE TIME OF HEA RING. 3. AT THE OUTSET, LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT SINCE THERE IS NO DIVIDEND INCOME EARNED IN THE RELEVANT PREVIOUS YEAR THE CIT(A)S ORDER DELETING THE IMPUGNED SECTION 14A DISALLOWANCE R.W. RULE 8D DISAL LOWANCE MAY BE UPHELD. IN THIS CONNECTION, HE RELIED ON THE FO LLOWING CASE LAW: I. CIT VS. CHETTINAD LOGISTICS PVT. LTD., [80 TAXMANN.COM 221] (MADRAS); II. CIT VS. CORRTECH ENERGY PVT. LTD., [223 TAXMAN 130] (GUJ); III. CHEMINVEST LTD., VS. CIT (2015) [378 ITR 33] (DEL) THEIR LORDSHIPS HOLD THAT SECTION 14A READ WITH RULE 8 D APPLIES ONLY IN RELATION TO AN ASSESSEES EXEMPT INCOM E AND NOT OTHERWISE. IT IS AN ADMITTED FACT THAT THE ASSESSEE HAS NOT DERIVED ANY EXEMPT INCOME IN THE RELEVANT PREVIOUS YEA R. WE THEREFORE SUSTAIN THE ORDER OF CIT(A) UNDER CHALLENGE FOR THIS PRECISE REASON ALONE. 4. THIS REVENUES APPEAL IS DISMISSED IN ABOVE TERMS . ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH OCTOBER, 2021 SD/- SD/- (LAXMI PRASAD SAHU) (S.S.GO DARA) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 06-10-2021 TNMM ITA NO. 1602/HYD/2019 :- 3 -: COPY TO : 1.THE DCIT, CIRCLE-2(2), HYDERABAD. 2.M/S.TELANGANA STATE POWER GENERATION CORPORATION LIMITED, 3 RD FLOOR, A-BLOCK, VIDYUT SOUDHA, KHAIRATABAD, HYDERABAD. 3.CIT(APPEALS)-2, HYDERABAD. 4.PR.CIT-2, HYDERABAD. 5.D.R. ITAT, HYDERABAD. 6.GUARD FILE.