M/S VIKI INDUSTREIS PVT LTD, CHENNAI V. ACIT CORPORATE CIRCLE 3 (2), CHENNAI

ITA 1680/CHNY/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4264 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 16-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALMALSAWMA PACHUAU
• Assessee Lawyers: D ANAND
• Keywords: Revenue expenditure
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , , ' # BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.1680/CHNY/2018 & '& / ASSESSMENT YEAR : 2013-14 M/S VIKI INDUSTRIES PVT. LTD., NO.1, KRISHNA STREET, NUNGAMBAKKAM, CHENNAI - 600 034. PAN : AAACV 2003 P V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 3(2), CHENNAI - 600 034. ()*/ APPELLANT) (+,)*/ RESPONDENT) )* - . / APPELLANT BY : SHRI D. ANAND, ADVOCATE +,)* - . / RESPONDENT BY : SH. LALMALSAWMA PACHUAU, JCIT / - 0' / DATE OF HEARING : 09.10.2018 12' - 0' / DATE OF PRONOUNCEMENT : 25.10.2018 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -11, CHENN AI, DATED 27.02.2018 AND PERTAINS TO ASSESSMENT YEAR 2013-14. 2 I.T.A. NO.1680/CHNY/18 2. THE FIRST ISSUE ARISES FOR CONSIDERATION IS DISA LLOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 14A OF THE I NCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 3. SHRI D. ANAND, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSING OFFICER DISALLOWED 2,27,304/- BY APPLYING THE PROVISIONS OF RULE 8D OF INCOME-TAX RULES, 1962. T HE LD.COUNSEL FURTHER SUBMITTED THAT THE ASSESSEE EARNED DIVIDEND INCOME OF 19,125/- ONLY. THEREFORE, ACCORDING TO THE LD. COU NSEL, THE DISALLOWANCE HAS TO BE RESTRICTED TO THE INCOME EAR NED BY THE ASSESSEE. 4. WE HEARD SH. LALMALSAWMA PACHUAU, THE LD. DEPART MENTAL REPRESENTATIVE ALSO. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS EARNED ONLY 19,125/- AS DIVIDEND INCOME. IN VIEW OF THE JUDGME NT OF MADRAS HIGH COURT IN REDINGTON (INDIA) LTD. V. A DDL. CIT (2017) 77 TAXMANN.COM 257, THE ASSESSING OFFICER CANNOT DI SALLOW OR MAKE ADDITION IN AIR. THE MADRAS HIGH COURT FOUND THAT THE DISALLOWANCE HAS TO BE RESTRICTED ONLY TO THE EXTEN T OF DIVIDEND INCOME EARNED BY THE ASSESSEE. THEREFORE, THE DISA LLOWANCE HAS TO BE RESTRICTED ONLY TO THE EXTENT OF 19,125/-. ACCORDINGLY, ORDERS 3 I.T.A. NO.1680/CHNY/18 OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO DISALLOW ONLY 19,125/- TOWARDS EXPENDITURE FOR EARNING THE EXEMPTED INCOME. 5. THE NEXT ISSUE ARISES FOR CONSIDERATION IS DISAL LOWANCE OF ADVERTISEMENT AND BRAND PROMOTION EXPENSES. 6. SHRI D. ANAND, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE VERY SAME ISSUE WAS CONSIDERED BY THIS TRI BUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2012-13 IN I.T.A. NO.852/CHNY/2017 DATED 18.06.2018. REFERRING TO TH E ORDER OF THE CIT(APPEALS), THE LD.COUNSEL SUBMITTED THAT THE CIT (APPEALS) SIMPLY FOLLOWED THE ORDER OF THE CIT(APPEALS) FOR A SSESSMENT YEAR 2012-13. THE ORDER OF THE CIT(APPEALS) FOR ASSESSM ENT YEAR 2012- 13 WAS REVERSED BY THIS TRIBUNAL AND FOUND THAT SIM ILAR EXPENSES INCURRED BY THE ASSESSEE TOWARDS ADVERTISEMENT AND BRAND PROMOTION ARE REVENUE EXPENDITURE. 7. WE HEARD SH. LALMALSAWMA PACHUAU, THE LD. DEPART MENTAL REPRESENTATIVE ALSO. THE LD. D.R. VERY FAIRLY SUBM ITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY ORDER OF THIS TRIBUNAL 4 I.T.A. NO.1680/CHNY/18 FOR ASSESSMENT YEAR 2012-13. AN IDENTICAL EXPENDIT URE INCURRED FOR ADVERTISEMENT AND BRAND PROMOTION WAS FOUND TO BE R EVENUE IN NATURE BY THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2012-13. SINCE THE SAME EXPENDITURE IS SUBJEC T MATTER OF APPEAL FOR THE YEAR UNDER CONSIDERATION, THIS TRIBU NAL IS OF THE CONSIDERED OPINION THAT IT HAS TO BE TREATED AS REV ENUE EXPENDITURE IN VIEW OF THE ORDER OF THE CO-ORDINATE BENCH OF TH IS TRIBUNAL FOR ASSESSMENT YEAR 2012-13. 8. IN VIEW OF THE ABOVE DISCUSSION, WE ARE UNABLE T O UPHOLD THE ORDERS OF THE LOWER AUTHORITIES. THE ORDERS OF BOT H THE AUTHORITIES BELOW ARE SET ASIDE AND THE ADDITION MADE BY THE AS SESSING OFFICER AS CONFIRMED BY THE CIT(APPEALS) IS DELETED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 25 TH OCTOBER, 2018 AT CHENNAI. SD/- SD/- ( ) ( . . . ) (S. JAYARAMAN) (N.R.S. GANESAN) ' / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 25 TH OCTOBER, 2018. KRI. 5 I.T.A. NO.1680/CHNY/18 - +056 76'0 /COPY TO: 1. )*/ APPELLANT 2. +,)*/ RESPONDENT 3. / 80 () /CIT(A)-11, CHENNAI 4. PRINCIPAL CIT, CHENNAI-3, CHENNAI 5. 69 +0 /DR 6. :& ; /GF.