M/S. INDIAN OCEAN GARNET SANDS CO. PVT. LTD., TUTICORIN V. ACIT, CIRCLE - 1, TUTICORIN

ITA 2165/CHNY/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8403 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 22-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A SUNDARARAJAN CIT
• Assessee Lawyers: MRS K HEMALATHA
• Keywords: Earning of tax free income; Tax effect; Rule 8D
• Section: 143(3); 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH : CHENNAI , . , [BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ] !' ./I.T.A. NOS.2165 & 2166/CHNY/2019. #$% &$ / ASSESSMENT YEARS : 2014-15 & 2015-2016. M/S. INDIAN OCEAN GARNET SANDS COMPANY PVT. LTD, NO.146, PALAYAMKOTTAI ROAD, TUTICORIN 628 003. VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE -1, TUTICORIN. [PAN AAACI 4083Q] ( / APPELLANT) ( /RESPONDENT) !' '( ) * / APPELLANT BY : MRS. K. HEMALATHA, C.A. +,'( ) * /RESPONDENT BY : SHRI. A. SUNDARARAJAN, ADDL. CIT # - ) . /DATE OF HEARING : 21-01-2020 /0&% ) . /DATE OF PRONOUNCEMENT : 21-01-2020 / O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER THESE ARE APPEALS FILED BY THE ASSESSEE DIRECTED AG AINST DIFFERENT ORDERS OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-1, MADURAI, (CIT(A) FOR SHORT) DATED 07.06.2019 FOR THE ASSESSMENT YEARS 2014-2015 AND 2015-2016. ITA NO.2165 & 2166 /2019 :- 2 -: 2. SINCE, THE IDENTICAL FACTS AND ISSUES ARE INVOLVED IN THESE APPEALS, WE PROCEED TO DISPOSE OF THE SAME VIDE THI S COMMON ORDER. 3. FOR THE SAKE OF CONVENIENCE AND CLARITY THE FACTS R ELEVANT TO THE APPEAL IN ITA NO.2165/CHNY/2019 FOR ASSESSMENT YEAR 2014-15 ARE STATED HEREIN. 4. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL : 1 THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO THE LAW, FACTS AND CIRCUMS TANCES OF THE CASE. 2. FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 6,53,36 1/- U/S 14A R.W.R RULE 8D OF THE INCOME TAX ACT,1961 (TAX EFFECT RS. 2,11,960/-). 3. FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF RS.2,11,960 /- U/S 14A OF THE ACT, WITHOUT APPRECIATING THE FACT THAT THE APP ELLANT HAD NOT EARNED ANY DIVIDEND INCOME DURING THE SUBJECT ASSES SMENT YEAR. 4. FOR THAT THE LEARNED COMMISSIONER ERRED IN NOT A PPRECIATING THE FACT THE INVESTMENTS WERE MADE OUT OF OWN FUNDS. 5. FOR THAT THE LEARNED COMMISSIONER ERRED IN NOT A PPRECIATING THE FACT THE INVESTMENTS WERE MADE OUT OF OWN FUNDS. 6. FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING LEVY OF INTEREST OF RS. 2,347/- U/S 234C OF THE ACT. ITA NO.2165 & 2166 /2019 :- 3 -: 5. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE APPELLANT NAMELY M/S. INDIAN OCEAN GARNET SANDS COMPANY PVT. LTD IS A COMPANY INCORPORATED UNDER THE PROVI SIONS OF THE COMPANIES ACT, 1956. IT IS ENGAGED IN THE BUSINES S OF PROCESSING AND EXPORT OF GARNET SAND. THE RETURN OF INCOME FOR THE AY 2014-15 WAS FILED ON 26.09.2014 DISCLOSING TOTAL INCOME OF RS. 2,61,79,530/-. AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT W AS COMPLETED BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE I , TUTICORIN (HEREINAFTER CALLED AO) VIDE ORDER DATED 14.11.20 17 PASSED U/S. 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) AFTER DISALLOWING A SUM OF G6,53,361/- INVOKING THE PROVI SIONS OF SECTION 14A OF THE ACT. 6. BEING AGGRIEVED BY THE ABOVE ASSESSMENT ORDER, AN APPEAL WAS PREFERRED BEFORE THE LD.CIT(A) WHO VIDE IMPUGNE D ORDER CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 7. BEING AGGRIEVED, THE APPELLANT IS IN APPEAL BEFORE US IN THE PRESENT APPEAL. IT IS SUBMITTED BEFORE US THAT ASS ESSEE HAD NOT EARNED EXEMPT INCOME DURING THE PREVIOUS YEAR RELEV ANT TO THE ITA NO.2165 & 2166 /2019 :- 4 -: ASSESSMENT YEAR UNDER CONSIDERATION AND THEREFORE R ESORT TO THE PROVISIONS OF SECTION 14A OF THE ACT CANNOT BE MAD E. 8. ON THE OTHER HAND, THE LD. SR. DEPARTMENTAL REPRES ENTATIVE PLACED RELIANCE ON THE ORDERS OF LOWER AUTHORITIES. 9. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD. THE ONLY ISSUE INVOLVED IN THE PRESENT APP EAL RELATES TO DISALLOWANCE MADE U/S.14A OF THE ACT. THE LAW IS SETTLED TO THE EXTENT THAT IN THE ABSENCE OF ANY EXEMPT INCOME EAR NED DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR UNDER CO NSIDERATION, RESORT TO THE PROVISIONS OF SECTION 14A OF THE ACT CANNOT BE MADE. RELIANCE IN THIS REGARD CAN BE MADE ON THE DECISION OF HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF REDINGTON (INDIA) LTD. VS. ACIT (2017) 77 TAXMANN.COM 257. IN THE CIRCUMSTANCES, THE ORDER OF THE LD. CIT(A) CANNOT BE UPHELD AND WE, REVERSE THE ORDER OF LD. C IT(A) ON THIS ISSUE. THE APPEAL OF THE ASSESSEE STANDS ALLOWED. ITA NO.2166/CHNY/2019 FOR ASSESSMENT YEAR 2015-16 10. SINCE, THE FACTS IN THE PRESENT APPEAL ARE IDENTIC AL TO THE FACTS IN ITA NO.2165/CHNY/2019, FOR ASSESSMENT YEAR 2014- 15, FOR THE REASONS MENTIONED THEREIN, WE ALLOW THE APPEAL AS I N THE SAME LINES ITA NO.2165 & 2166 /2019 :- 5 -: INDICATED IN APPEAL ITA NO.2165/CHNY/2019 SUPRA. HE NCE, THE ABOVE CAPTIONED APPEAL FILED BY THE ASSESSEE STANDS ALLO WED. 11. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE I N ITA NOS. 2165 & 2166/CHNY/2019 FOR ASSESSMENT YEARS 2014-15 AND 2015-16 ARE ALLOWED. ORDER PRONOUNCED ON 21 ST DAY OF JANUARY, 2020, AT CHENNAI. SD/- SD/- ( . ! ) (DUVVURU RL REDDY) ' #$ /JUDICIAL MEMBER ( ) (INTURI RAMA RAO) /ACCOUNTANT MEMBER 1 #- / CHENNAI 2# / DATED:21ST JANUARY, 2020. KV 3 ) +.4 5' !6 5&. / COPY TO: 1 . !' '( / APPELLANT 3. 7. (!' ) / CIT(A) 5. 5 :; +.#< / DR 2. +,'( / RESPONDENT 4. 7. / CIT 6. ;$ =- / GF