Balakh Holdings (P) Ltd., CHENNAI V. ACIT, CHENNAI

ITA 1904/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8125 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-12-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 27-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: S SRIDHAR
• Keywords: Earning of tax free income
• Section: 143(3); 14A; 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . . . , . , % BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.1904/MDS/2015 ( / ASSESSMENT YEAR: 2010-11) M/S. BAALAKH HOLDINGS (P) LTD. HALLMARK TOWERS, IV FLOOR, 550/136, TTK ROAD, ALWARPET, CHENNAI - 600 018. VS THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-I(2), CHENNAI - 34. PAN: AABCB2378N ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. S.SRIDHAR, ADVOCATE /RESPONDENT BY : MR.P.RADHAKRISHNAN, JCIT /DATE OF HEARING : 8 TH DECEMBER, 2015 /DATE OF PRONOUNCEMENT : 5 TH FEBRUARY, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM: THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) CHENNAI DATED 27.05.2015 IN ITA NO.228/12-13/A-III PASSED UNDER SECTION 143(3) READ WITH SECTION 250 OF THE ACT. 2. THE ONLY GROUND RAISED BY THE ASSESSEE IN ITS APPEA L IS THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN CONFIRMING THE DISALLOWANCE MADE BY THE LE ARNED ASSESSING OFFICER INVOKING THE PROVISIONS OF SECTIO N 14A 2 ITA NO.1904/MDS/2015 READ WITH RULE 8D OF THE ACT IN RELATION TO EXPENSE S INCURRED FOR EARNING EXEMPT INCOME. 3. BRIEF FACTS ARE THAT ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF REAL ESTATE, TRADING & INVESTMENT I N SHARES, FILED ITS RETURN OF INCOME ON 20.09.2010 FOR THE AS SESSMENT YEAR 2010-11 ADMITTING INCOME OF RS. 91,50,790/-. SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY AN D ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF TH E ACT ON 8.2.2013 WHEREIN THE LEARNED ASSESSING OFFICER MADE ADDITIONS INVOKING PROVISIONS OF SECTION 14A READ W ITH RULE 8D OF RULES FOR RS. 14,26,353/-. 4. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEED INGS, IT WAS OBSERVED BY THE LEARNED ASSESSING OFFICER TH AT THE ASSESSEE HAD MADE INVESTMENT IN ASSETS, INCOME FROM WHICH IS EXEMPT FROM TAX TO THE TUNE OF RS 9,20,95,621/- AS ON 31.03.2009 AND RS.16,80,59,350/- AS ON 31.03.2010. RELYING IN THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF CHEMINVEST LTD VS. ITO IN ITA NO.87/DEL/2008 DATED 5.8.2009 THE LEARNED ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 14A OF THE ACT AND RULE 8D AN D 3 ITA NO.1904/MDS/2015 DISALLOWED RS.14,26,353/- BEING EXPENSES INCURRED T OWARDS EARNING EXEMPT INCOME. 5. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) IN HIS DETAILED ORDER CONFIRMED THE ORDER OF THE LEARNED ASSESSING OFFICER. 6. BEFORE US, THE LEARNED AUTHORIZED REPRESENTATIVE ARGUED BY STATING THAT THE ASSESSEE HAD ITSELF VOLU NTARILY MADE CERTAIN DISALLOWANCES TOWARDS EXPENSES INCURRE D FOR EARNING EXEMPT INCOME WHICH WAS NOT CONSIDERED BY T HE LEARNED ASSESSING OFFICER AND WITHOUT RECORDING ANY SATISFACTION; HE MECHANICALLY INVOKED THE PROVISION S OF SECTION 14A OF THE ACT WHICH IS BAD IN LAW. THE LEA RNED AUTHORIZED REPRESENTATIVE RELIED IN THE DECISIONS O F THE HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS . TAIKISHA ENGINEERING INDIA LTD. (370 ITR 338) AND IN THE C ASE OF CIT VS. I.P. SUPPORT SERVICES INDIA P.LTD. IN ITA NO.28 3 OF 2014 DATED 24.09.2015. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE O THER HAND ARGUED IN SUPPORT OF THE ORDER OF THE REVENUE. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS AVAILABLE ON RECORD. AS RIGHT LY POINTED 4 ITA NO.1904/MDS/2015 OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE, IN TH E DECISIONS CITED HEREINABOVE, IT HAS BEEN CATEGORICA LLY HELD THAT REVENUE OUGHT TO HAVE CONSIDERED THE SUBMISSIO NS OF THE ASSESSEE BEFORE INVOKING THE PROVISIONS OF SECT ION 14A OF THE ACT. IN THE CASE BEFORE US, SINCE THE LEARNED A SSESSING OFFICER HAS NEITHER CONSIDERED THE PRAYER OF THE AS SESSEE NOR RECORDED ANY EXPLANATION AS TO WHY THE VOLUNTARY DISALLOWANCE MADE BY THE ASSESSEE WAS UNREASONABLE AND UNSATISFACTORY, WE HEREBY REMIT BACK THE MATTER TO THE FILE OF THE LEARNED ASSESSING OFFICER FOR DE NOVO CONSIDERA TION AND TO PASS APPROPRIATE ORDER IN THE LIGHT OF THE DECIS ION OF THE HONBLE HIGHER JUDICIARY CITED HEREINABOVE. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH FEBRUARY, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 5 TH FEBRUARY, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF .