DCIT, CHENNAI V. Akshaya Pvt Ltd., CHENNAI

ITA 1840/CHNY/2014

• Counselvise Citation: 184021714 RSA 2014
• Duration Of Justice: 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2015
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 09-06-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 26-06-2014
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: A S SRIRAMAN
• Section: 80IB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . . . , . !' , # $ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NO.1840/MDS/2014 / ASSESSMENT YEAR : 2009-10 THE DY. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE I(1) CHENNAI VS. M/S AKSHAYA PVT. LTD NO.22, CAPITALE, 2 ND STREET NEHRU NAGAR, ADYAR CHENNAI 600 009 [PAN AAFCA 1708 D ] ( &' / APPELLANT) ( ()&' /RESPONDENT) / APPELLANT BY : DR. B. NISCHAL, JCIT /RESPONDENT BY : SHRI A.S. SRIRAMAN, ADVOCATE / DATE OF HEARING : 09-06-2015 ! / DATE OF PRONOUNCEMENT : -06-2015 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)(CENTRAL)- I, CHENNAI, DATED 31.3.2014 AND PERTAINS TO ASSESSMENT YEAR 2 009-10. ITA NO.1840/14 :- 2 -: 2. THE FIRST ISSUE ARISES FOR CONSIDERATION IS DISALLO WANCE MADE BY THE ASSESSING OFFICER U/S 40A(2) OF THE ACT IN RESPECT OF PAYMENT OF RENT. 3. DR.B.NISCHAL, LD. DEPARTMENTAL REPRESENTATIVE SUBMI TTED THAT THE ASSESSEE-COMPANY HAD PAID RENT @ ` 83/- PER SQ FT FOR A PORTION OF THE BUILDING AT PERUNGUDI TO AKSHAYA HOMES WHEREIN THE MANAGING DIRECTOR OF THE ASSESSEE-COMPANY IS A PROPRIETOR. ANOTHER PART OF THE BUILDING WAS LET OUT TO M/S HOME SOLUTIONS RETAIN I NDIA PVT. LTD FOR A RENT OF ` 70/- PER SQ FT. AFTER COMPARING BOTH THE RENTAL P AYMENTS, THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THE ASSESSEE HAS PAID RENT TO AKSHAYA HOMES IN VIOLATION OF SECTION 40A(2 ) OF THE ACT WHEREIN THE MANAGING DIRECTOR OF ASSESSEE-COMPANY I S A PROPRIETOR. ACCORDINGLY, THE PAYMENT MADE TO AKSHAYA HOMES WAS DISALLOWED U/S 40A(2)(B) OF THE ACT. ON A QUERY FROM THE BENCH WHETHER THE COPIES OF AGREEMENTS ENTERED INTO WITH THE PARTIES ARE AV AILABLE, THE LD. DR POINTED OUT THAT THE COPIES ARE NOT AVAILABLE ON RE CORD. 4. ON THE CONTRARY, SHRI A.S.SRIRAMAN, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER, AFTE R COMPARING THE NATURE OF THE BUILDING FOUND THAT THE PREMISES LET OUT TO MANAGING DIRECTOR OF THE ASSESSEE-COMPANY SHRI T.CHITTYBABU INCLUDES CAFETERIA/GARDEN, INTERIOR DECORATION AND OTHER AME NITIES. WHEREAS ITA NO.1840/14 :- 3 -: THE PREMISES LET OUT TO THIRD PARTY M/S HOME SOLUTI ONS RETAIL INDIA PVT. LTD IS ONLY A BARE BUILDING WITHOUT ANY INTERIORS . THEREFORE, WHAT WAS RECEIVED FROM THE MANAGING DIRECTOR IS THE FAIR MAR KET RENT, HENCE, THERE IS NO QUESTION OF ANY DISALLOWANCE. THE LD. COUNSEL SUBMITTED THAT THE COPIES OF THE AGREEMENTS COULD NOT BE FILE D BEFORE THE TRIBUNAL. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE MANAGING DIRECTOR LET OUT A PORTION OF THE BUILDING TO THE ASSESSEE-C OMPANY @ ` 83/- PER SQ FT. HOWEVER, THE VERY SAME BUILDING WAS LET OUT TO M/S HOME SOLUTIONS RETAIL INDIA PVT. LTD @ ` 70/- PER SQ FT. THE ASSESSING OFFICER FOUND THAT THE PAYMENT MADE BY THE ASSESSE E TO THE MANAGING DIRECTOR IS VERY HIGH WHEN COMPARED TO PAY MENT RECEIVED BY THE VERY SAME MANAGING DIRECTOR FROM THIRD PARTY . THE ASSESSEE CLAIMS THAT WHAT WAS LET OUT TO ASSESSEE-COMPANY IS INCLUSIVE OF CAFETERIA/GARDENS AND OTHER INTERIOR DECORATIONS. HOWEVER, COPIES OF THE AGREEMENTS ARE NOT AVAILABLE BEFORE THIS TRIBUN AL. THEREFORE, THIS TRIBUNAL IS UNABLE TO EXAMINE THE NATURE OF THE BUI LDING WHICH WAS LET OUT TO THE ASSESSEE-COMPANY AND M/S HOME SOLUTIONS RETAIL INDIA PVT. LTD. IN THE ABSENCE OF ANY MATERIAL ON RECORD, THIS TRIBUNAL IS UNABLE TO EXPRESS ANY OPINION ON THE MATTER. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ENTIRE ISSU E IS REMANDED BACK ITA NO.1840/14 :- 4 -: TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSIN G OFFICER SHALL REEXAMINE THE ISSUE AFRESH IN THE LIGHT OF THE AGRE EMENTS, THE NATURE OF THE BUILDING AND THE FACILITIES AVAILABLE THEREO N, THAT MAY BE FILED BY THE ASSESSEE AND THEREAFTER DECIDE THE MATTER I N ACCORDANCE WITH LAW AFTER GIVING A REASONABLE OPPORTUNITY OF HEARIN G TO THE ASSESSEE. 6. THE NEXT ISSUE FOR CONSIDERATION IS WITH REGARD TO DISALLOWANCE MADE UNDER RULE 8D OF THE INCOME-TAX R ULES. 7. WE HEARD THE LD. DR AND THE LD. COUNSEL FOR THE ASS ESSEE. THE CLAIM OF THE ASSESSEE APPEARS TO BE THAT ENOUGH RESERVES AND SURPLUS ARE AVAILABLE AND THE INVESTMENTS WERE MADE FROM THE AVAILABLE FUNDS. THE CIT(A) FOUND THAT FOR THE ASS ESSMENT YEAR 2009- 10, THE RESERVES AND SURPLUS WERE AVAILABLE TO THE EXTENT OF ` 21,68,43,723/- WHEREAS THE INVESTMENT WAS MADE TO T HE EXTENT OF ` 2,26,29,001/-. IT IS NOT KNOWN WHETHER THE RESERVE S AND SURPLUS ARE AVAILABLE IN LIQUID CASH SO AS TO ENABLE THE ASSES SEE TO MAKE INVESTMENT FOR EARNING THE EXEMPTED INCOME. IN THE ABSENCE OF ANY MATERIAL ON RECORD, THIS TRIBUNAL IS OF THE CONSIDE RED OPINION THAT THE ASSESSING OFFICER HAS TO RECONSIDER THE ISSUE AFRES H WITH REGARD TO THE AVAILABLE FUNDS WITH THE ASSESSEE FOR MAKING INVES TMENT IN EARNING THE EXEMPTED INCOME. ACCORDINGLY, THE ORDERS OF TH E LOWER AUTHORITIES ARE SET ASIDE AND THE ISSUE OF DISALLOWANCE MADE UN DER RULE 8D IS ITA NO.1840/14 :- 5 -: REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RECONSIDER THE ISSUE AFRESH WITH REGA RD TO THE AVAILABILITY OF FUNDS WITH THE ASSESSEE AND THEREAFTER DECIDE T HE SAME IN ACCORDANCE WITH LAW AFTER GIVING A REASONABLE OPPOR TUNITY OF HEARING TO THE ASSESSEE. 8. THE LAST ISSUE FOR CONSIDERATION IS WITH REGARD TO DEDUCTION U/S 80IB OF THE ACT PROPORTIONATELY IN RESPECT OF T HE RESIDENTIAL UNITS WHICH ARE LESS THAN 1500 SQ FT. 9. WE HEARD THE LD. DR AND THE LD. COUNSEL FOR THE AS SESSEE. THE CIT(A), BY FOLLOWING THE JUDGMENT OF THE HON'BL E MADRAS HIGH COURT IN THE CASE OF VISWAS PROMOTERS PVT. LTD VS A CIT, 255 CTR 149, FOUND THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80IB ON PROPORTIONATE BASIS. THE ONLY CONTENTION OF THE LD . DR IS THAT THE REVENUE HAS FILED AN APPEAL BEFORE THE HON'BLE APEX COURT AND SPECIAL LEAVE PETITION IS PENDING. IT IS NOT THE CASE OF T HE REVENUE THAT THE JUDGMENT OF THE HON'BLE MADRAS HIGH COURT WAS STAYE D BY THE HON'BLE APEX COURT. MERE PENDENCY OF THE SLP BEFORE THE A PEX COURT IS NOT A GROUND FOR NOT FOLLOWING THE JUDGMENT OF THE HON'BL E MADRAS HIGH COURT. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDER ED OPINION THAT THE CIT(A) HAS RIGHTLY ALLOWED DEDUCTION U/S 80IB OF T HE ACT ON PROPORTIONATE BASIS. ITA NO.1840/14 :- 6 -: 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH OF JUNE, 2015, AT CHENNAI. SD/- SD/- ( . !' ) (A. MOHAN ALANKAMONY) # / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 19 TH JUNE, 2015 RD &' ()*) / COPY TO: 1 . / APPELLANT 3. +,' / CIT(A) 5. )-. / / DR 2. / RESPONDENT 4. + / CIT 6. .01 / GF