M/S. ZEELAND ACRES PVT. LTD., CHENNAI V. ITO, CORPORATE WARD - 3 (3), CHENNAI

ITA 1731/CHNY/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0282 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 03-06-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R ANITHA
• Assessee Lawyers: G BASKAR
• Keywords: Earning of tax free income; Fair market value
• Section: 14A; 250

Judgement Text

, SMC , IN THE INCOME TAX APPELLATE TRIBUNAL A SMC BENCH : CHENNAI , BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER ./ I.T.A. NO : 1731/CHNY/2019 ! / ASSESSMENT YEAR : 2014-15 M/S. ZEELAND ACRES PVT. LTD., OLD NO. 19, NEW NO. 72, RAJAH ANNAMALAI BUILDING, MARSHALLA ROAD, III FLOOR, EGMORE, CHENNAI 08. [PAN: AAACZ 1667M] VS. INCOME TAX OFFICER, CORPORATE WARD 3(3), CHENNAI. ( $ / APPELLANT) ( %&$ /RESPONDENT) / APPELLANT BY : SHRI. G. BASKAR, ADVOCATE /RESPONDENT BY : MS. R. ANITHA, JCIT / DATE OF HEARING : 23.06.2020 / DATE OF PRONOUNCEMENT : 23.06.2020 / O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E COMMISSIONER OF INCOME TAX (APPEALS)-11, CHENNAI IN ITA NO. 234/16- 17 DATED 03.04.2019 FOR ASSESSMENT YEAR 2014-15. :-2-: ITA NO: 1731/CHNY/2019 2. SHRI. G. BASKAR, ADVOCATE REPRESENTED ON BEHALF OF THE ASSESSEE AND MS. R. ANITHA, JCIT REPRESENTED ON BEHALF OF THE RE VENUE. 3. IT WAS SUBMITTED BY THE LD. AR THAT IN RESPECT OF GROUND NOS. 1.1 TO 1.5, THE ISSUE WAS IN RESPECT OF DETERMINATION OF THE FAIR MARKET VALUE OF THE SHARES TRANSFERRED. IT WAS A SUBMISSION THAT THE L D. CIT(A) IN PARA 9 OF PAGE 11 OF HIS ORDER HAS DIRECTED THE AO TO RE-WORK THE FAIR MARKET VALUE AS ON 10.03.2014. THE LD. AR PLACED BEFORE ME A COPY OF THE ORDER GIVING EFFECT TO THE LD. CIT(A) DATED 16.05.2019, WHEREIN THE ADDITI ON U/S. 56(2)(VII) R.W.R. 11UA HAS BEEN RE-WORKED IN THE ANNEXURE. HE DREW M Y ATTENTION TO THE FAIR MARKET VALUE DETERMINED AT RS. 143/-. IT WAS A SUB MISSION THAT THE ASSESSEE HAD CLAIMED RS. 140/- ONLY. IT WAS A FURTHER SUBMI SSION THAT THERE WAS AN ERROR IN THE COMPUTATION AGAINST WHICH THE ASSESSEE HAS FILED A RECTIFICATION APPLICATION. IT WAS A SUBMISSION THAT CONSEQUENT T O THE ORDER GIVING EFFECT TO THE ORDER OF THE LD. CIT(A) BY THE AO, THE ISSUE HA S BECOME ACADEMIC IN NATURE. 4. IN REPLY, THE LD. DR DID NOT RAISE ANY OBJECTIO N. IT WAS AGREED THAT THE ISSUE HAS BECOME ACADEMIC IN NATURE. :-3-: ITA NO: 1731/CHNY/2019 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS THROUGH VIDEO CONFERENCE. AS THE ISSUES RAISED IN GROUND 1.1 TO 1.5 HAS ADMITTED LY BECOME ACADEMIC IN NATURE, THE SAID GROUNDS STAND DISMISSED AS INFRUCT UOUS. 6. IN RESPECT OF THE GROUNDS 2.1 AND 2.2, IT WAS SU BMITTED BY THE LD. AR THAT THE ISSUE WAS AGAINST THE ACTION OF THE LD. CI T(A) IN CONFIRMING THE DISALLOWANCE MADE BY INVOKING SECTION 14A R.W.R. 8D . THE LD. AR DREW MY ATTENTION TO THE PARA 4 OF PAGE 2 OF THE ASSESSMENT ORDER, WHEREIN THE AO HAS RECORDED THAT THE ASSESSEE IS NOT IN RECEIPT OF ANY EXEMPT INCOME BY WAY OF THE INVESTMENT. IT WAS A SUBMISSION BY THE LD. A R THAT THE LD. CIT(A) HAD RELIED UPON THE CIRCULAR ISSUED BY THE CBDT IN CIRC ULAR NO. 5 OF 2014 DATED 11.02.2014. IT WAS A SUBMISSION THAT THE ISSUE WAS SQUARELY COVERED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CHETTINAD LOGISTICS REPORTED IN 95 TAXMANN.COM 250 (SC), WHEREIN IT HAS BEEN HELD THAT IF THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME, THEN NO DISALLOWANCE U/S. 14A IS CALLED FOR. 7. IN REPLY, THE LD. DR VEHEMENTLY SUPPORTED THE OR DER OF THE LD. CIT(A). SHE RELIED ON THE CIRCULAR ISSUED BY THE CBDT, RELI ED UPON BY THE LD. CIT(A). IT WAS A SUBMISSION THAT THE DISALLOWANCE U/S. 14A R.W.R. 8D WAS MANDATORY WHETHER THE ASSESSEE EARNED EXEMPT INCOME OR NOT. :-4-: ITA NO: 1731/CHNY/2019 8. I HAVE CONSIDERED RIVAL SUBMISSIONS THROUGH VIDE O CONFERENCE. THE ASSESSEE IN THE PRESENT CASE HAS NOT EARNED ANY EXE MPT INCOME, AS HAS BEEN RECORDED BY THE AO IN THE ASSESSMENT ORDER. THIS B EING SO, I AM OF THE VIEW THAT THE DECISION OF THE SUPREME COURT IN THE CASE OF CHETTINAD LOGISTICS, (SUPRA) SQUARELY APPLIES IN THE PRESENT CASE AND AS THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME DURING THE RELEVANT ASSESS MENT YEAR, NO DISALLOWANCE U/S. 14A IS CALLED FOR. IN THE CIRCUM STANCES, THE ADDITION MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) BY INVOKI NG PROVISIONS OF SECTION 14A STANDS DELETED. GROUNDS 2.1 AND 2.2 OF THE ASS ESSEES APPEAL STANDS ALLOWED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON 23 RD JUNE, 2020 AT CHENNAI. SD/- ( ) (GEORGE MATHAN) ! ) / JUDICIAL MEMBER / CHENNAI # / DATED: 23 RD JUNE, 2020 JPV '( )( / COPY TO: 1 . / APPELLANT 3. * () / CIT(A) 5. ( / / DR 2. / RESPONDENT 4. * / CIT 6. 2 / GF