M/s. Lakshmi Ring Travellers, CHENNAI V. ACIT, Coimbatore

ITA 2083/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57997 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 19-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: SHRI V JAGADISAN
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NO.2083(MDS)/2011 ASSESSMENT YEAR: 2008-09 M/S.LAKSHMI RING TRAVELLERS, THE ASSISTANT COMMISS IOER, # 34-A, KAMARAJ ROAD, VS. OF INCOME-TAX, COIMBATORE 641 018. COMPANY CIRCLE-I(1), COIMBATORE. PAN AAACL 3736 F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHRI V. JAGADISAN, FC A RESPONDENT BY : SHRI SHAJI P. JACOB, IRS, ADDL . COMMISSIONER OF INCOME-TAX DATE OF HEARING : 1 ST MARCH, 2012 DATE OF PRONOUNCEMENT : 2 ND MARCH, 2012 O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT: THIS APPEAL FILED BY THE ASSESSEE RELATES TO THE ASSESSMENT YEAR 2008-09. THE APPEAL IS DIRECTED AGAINST THE O RDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-I AT COIMBATORE PASSED ON ITA 2083/11 :- 2 -: 17.10.2011 AND ARISES OUT OF THE ASSESSMENT COMPLET ED UNDER SEC.143(3) OF THE INCOME-TAX ACT, 1961. 2. THE GROUNDS RAISED BY THE ASSESSEE IN THIS APP EAL READ AS BELOW : 1. THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF THE SUM OF ` 1,67,900/- IN TERMS OF PROVISIONS OF SECTION 14A READ WITH RULE 8 D IN COMPUTING ASSESSEES TOTAL INCOME. 2. THE COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE CONSIDERED THE GROUNDS OF APPEAL RAISED IN THE APPEAL ON THE BASIS OF PROVISIONS SET OUT IN SECTION 14A A ND THE CASES DECIDED ON THE INTERPRETATION OF SECTION 14A. 3. IN ANY EVENT THE REASONINGS OF THE COMMISSIONE R OF INCOME-TAX(APPEALS) FOR CONFIRMING THE DISALLOWANCE IS NOT LEGALLY TENABLE. 3. WE HEARD SHRI V. JAGADISAN, THE LEARNED CHARTERE D ACCOUNTANT APPEARING FOR THE ASSESSE AND SHRI SHAJI P. JACOB, THE LEARNED COMMISSIONER OF INCOME-TAX APPEARING FOR TH E REVENUE. 4. IT IS THE CASE OF THE LEARNED CA THAT THE ASSESS ING OFFICER MAY INVOKE THE PROVISIONS OF LAW STATED IN SEC.14A ONLY AFTER ITA 2083/11 :- 3 -: CONDUCTING NECESSARY ENQUIRIES INTO THE FACTUAL ASP ECTS OF THE ASSESSEES CASE. THE LEARNED CA SUBMITS THAT EVEN IF THE LAW AUTHORIZES THE ASSESSING OFFICER TO MAKE A DISALLOW ANCE ON PRESUMPTIVE BASIS, THE NECESSARY ENQUIRIES MAY BE C ONDUCTED BY HIM IN THE PRESENT CASE. THE ASSESSING OFFICER HAS STRAIGHTAWAY ADOPTED RULE 8D AND MADE THE DISALLOWANCE. THIS WA S MADE WITHOUT ANY FACTUAL ENQUIRY. THIS IS AGAINST THE L AW. THEREFORE, THE LEARNED CA SUBMITTED THAT THE ADDITION MUST BE HELD TO BE INVALID. 5. THE LEARNED COMMISSIONER, ON THE OTHER HAND, EXP LAINED THE SCHEME OF SEC.14A WHEREIN THE LAW HAS MADE A SPECIA L PROVISION FOR TREATING THE EXPENDITURE INCURRED IN RELATION TO IN COME NOT INCLUDIBLE IN TOTAL INCOME. THE LEARNED COMMISSIONER INVITED OUR ATTENTION TO SEC.14A(3) WHEREIN IT IS STATED THAT THE ASSESSING OFFICER HAS TO FOLLOW RULE 8D EVEN IN A CASE WHERE THE ASSESSEE CL AIMS THAT NO EXPENDITURE HAS BEEN INCURRED BY HIM IN RELATION TO THE INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT. 6. WE CONSIDERED THE ARGUMENTS OF BOTH THE SIDES IN DETAIL. SEC.14A(1) DECLARES THE LAW THAT THE EXPENDITURE IN CURRED BY THE ASSESSEE IN RELATION TO THE INCOME WHICH DOES NOT F ORM PART OF THE ITA 2083/11 :- 4 -: TOTAL INCOME UNDER THE ACT SHALL NOT BE ALLOWED AS A DEDUCTION IN COMPUTING THE TAXABLE INCOME OF THE ASSESSEE. SEC. 14A(2) PROVIDES FOR DETERMINING THE QUANTUM OF SUCH EXPEND ITURE WHICH SHALL NOT BE ALLOWED AS A DEDUCTION. THAT IS THE M ACHINERY PROVISION AS FAR AS SEC.14A IS CONCERNED. IN THAT PROVISION, IT HAS BEEN PROVIDED THAT IF THE ASSESSING OFFICER IS NOT SATIS FIED WITH THE CORRECTNESS OF THE COMPUTATIONS MADE BY AN ASSESSEE , HE SHALL COMPUTE THE QUANTUM IN ACCORDANCE WITH THE METHOD T HAT MAY BE PRESCRIBED. FOR THIS MATTER, RULE 8D HAS ALREADY B EEN PRESCRIBED. SUB-SEC.(3) FURTHER PROVIDES THAT EVEN IN A CASE WH ERE AN ASSESSEE CLAIMS THAT NO EXPENDITURE WAS INCURRED, THE ASSESS ING AUTHORITY HAS TO PRESUME THE INCURRING OF SUCH EXPENDITURE AS PRO VIDED UNDER SUB- SEC.(2) READ WITH RULE PRESCRIBED. THEREFORE, IT B ECOMES CLEAR THAT EVEN IN A CASE WHERE THE ASSESSEE CLAIMS THAT NO EX PENDITURE WAS SO INCURRED, THE STATUTE HAS PROVIDED FOR A PRESUMP TIVE EXPENDITURE WHICH HAS TO BE DISALLOWED BY FORCE OF THE STATUTE. IN A DISTANT MANNER, LITERALLY SPEAKING, IT MAY EVEN BE CONSIDER ED FOR THE PURPOSE OF CONVENIENCE AS A DEEMING PROVISION. WHE N SUCH DEEMING PROVISION IS MADE ON THE BASIS OF STATUTORY PRESUMPTION, THE REQUIREMENT OF FACTUAL EVIDENCE IS REPLACED BY STATUTORY ITA 2083/11 :- 5 -: PRESUMPTION AND THE ASSESSING OFFICER HAS TO FOLLOW THE CONSEQUENCES STATED IN THE STATUTE. IT MEANS THAT EVEN IN A CASE WHERE NO EXPENDITURE IS STATED TO HAVE BEEN INCURRE D, THE ASSESSING AUTHORITY HAS TO APPLY RULE 8D. AS THE STATUTORY P RESUMPTION SUBSTITUTES THE REQUIREMENT OF FACTUAL EVIDENCE, TH E QUESTION OF ENQUIRY DOES NOT ARISE. THEREFORE, WE ARE UNABLE T O AGREE WITH THE ARGUMENT OF THE LEARNED CA. 7. IN RESULT, THIS APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 2 ND OF MARCH, 2012 AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 2 ND MARCH, 2012. MPO* COPY TO: (1) PETITIONE R (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F.