Appeal details
Counselvise Citation
[2021] 107 COUNSELVISE.COM (IT) 6556 (ITAT-HYDERABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 9 month(s) 22 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
07-09-2021
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
DB-B
Next Hearing Date
30-08-2021
Assessment Year
2014-2015
Appeal Filed On
16-11-2018
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD (THROUGH VIRTUAL CONFERENCE) BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER IT A NO S . 2186 & 2187 /H/20 18 ASSESSMENT YEAR S : 2 0 14 - 15 & 2015 - 16 ANDHRA PRADESH INDUSTRIAL INFRASTRUCTURE CORPORATION LTD., HYDERABAD. PAN AABCA 9029K VS 1) INCOME - TAX OFFICER, WARD - 1( 3 ), HYDERABAD. 2) INCOME - TAX OFFICER, WARD - 1( 2 ), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI B. SATYANARAYANA MURTHY REVENUE BY: SHRI ROHIT MUJUMDAR DATE OF HEARING: 30/08/2021 DATE OF PRONOUNCEMENT: 07 /09/2021 O R D E R PER L.P. SAHU, A.M. : BOTH THESE APPEAL S FILED BY THE ASSESSEE ARE DIRECTED AGAINST CIT(A) - 1 , HYDERABAD S SEPARATE ORDER S DATED 06 /0 9 /2021 FOR AY S 20 4 - 15 & 2015 - 16 INVOLVING PROCEEDINGS U/S 143(3) OF THE INCOME - TAX ACT, 1961; IN SHORT THE ACT . I TA NO S . 2186 & 2187 / /HYD /20 18 M/S AP INDUSTRIAL INFRASTRUCTURE CORPORATION LTD., VIJAYAWADA. : - 2 - : 2. WE NOTICE AT THE OUTSET THAT ASSESSEE S INSTANT APPEAL S SUFFER FROM 2 DAYS DELAY IN FILING BEFORE THE ITAT. TO THIS EFFECT, THE LD. AR OF THE ASSESSEE FILED AN AFFIDAVIT WHEREIN IT WAS AFFIRMED THAT DUE TO SOME RITUALS CONSEQUENT TO THE DEMISE OF HIS CLOSE RELATIVE DID NOT ATTENT ATTEND OFFI CE, WHICH CAUSED THE IMPUGNED DELAY IN FILING OF THE INSTANT APPEAL S . CASE LAW COLLECTOR LAND ACQUISITION VS MST. KATIJI & ORS, 1987 AIR 1353 (SC) AND UNIVERSITY OF DELHI VS. UNION OF INDIA, CIVIL APPEAL NO. 9488 & 9489/2019 DATED 17 DECEMBER, 2019, HOL D THAT SUCH A DELAY; SUPPORTED BY COGENT REASONS, DESERVES TO BE CONDONED SO AS TO MAKE WAY FOR THE CAUSE OF SUBSTANTIAL JUSTICE. WE ACCORDINGLY HOLD THAT ASSESEE IMPUGNED DELAY IS NEITHER INTENTIONAL NOR DELIBERATE BUT DUE TO THE CIRCUMSTANCES BEYOND IT S CONTROL. THE SAME STANDS CONDONED. CASE S ARE NOW TAKEN UP FOR ADJUDICATION ON MERITS. 3. IN BOTH THE APPEALS, THE ONLY GROUND IS REGARDING DISALLOWANCE OF EXPENDITURE U/S 14A R.W.R. 8D. 4 . THE FACTS AS TAKEN FROM AY 2014 - 15 ARE THAT DURING THE ASSES SMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS DERIVED DIVIDEND INCOME OF RS.2,90,87,000/ - FROM INVESTMENT IN EQUITIES AND CLAIMED THE SAME AS EXEMPT FROM TAX. IT IS ALSO SEEN FROM THE BALANCE SHEET THAT THE ASSESSEE HAS INVESTMENTS IN EQUITIES I TA NO S . 2186 & 2187 / /HYD /20 18 M/S AP INDUSTRIAL INFRASTRUCTURE CORPORATION LTD., VIJAYAWADA. : - 3 - : TO THE TUNE OF RS.32397.64 LAKHS AS ON 31 - 03 - 2013 AND R.S.32399.54 LAKHS AS ON 31.03.2014, INCOME ARISING THERE FROM WOULD NOT FORM PART OF THE TOTAL INCOME. SINCE THE ASSESSEE HAS INVESTMENTS, INCOME ARISING FROM WHICH IS EXEMPT IN NATURE, DI SALLOWANCE U/S.14A OF THE IT ACT, 1961 IS SQUARELY APPLICABLE. THE ASSESSING OFFICER RELYING ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO LTD VS. DY. CIT (2010) REPORTED IN 328 ITR 81, CALCULATED THE DISALLOWANCE O F EXPENDITURE AS PER RULE 80 U/S.14A AT RS. 1,61,49,300/ - . 5 . WHEN THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A), THE CIT(A) CONFIRMED THE ORDER OF AO. 6 . AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 7 . BEFORE US, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE IN AY 2013 - 14 IN ITA NO. 1002/HYD/2018, ORDER DATED 20/01/2021, A COPY OF WHICH IS FILED ON RECORD. 8 . THE LD. DR, ON THE OTHER HAND, NEITHER CONTROVERTED THE SUBMISSION OF THE LD. AR NOR BROUGHT ANY CONTRARY DECISION IN THIS REGARD. I TA NO S . 2186 & 2187 / /HYD /20 18 M/S AP INDUSTRIAL INFRASTRUCTURE CORPORATION LTD., VIJAYAWADA. : - 4 - : 9 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN ASSESSEES OWN CA SE FOR AY 2013 - 14 CITED SUPRA, THE COORDINATE BENCH HAS HELD AS UNDER: 6. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD AS WELL AS GOING THROUGH THE ORDERS OF REVENUE AUTHORITIES, WE OBSERVE THAT RULE 8D(2)(III) IS CLEAR THAT DISALLOW ANCE SHOULD BE MADE UNDER THE SAID RULE ON THOSE INVESTMENTS, ON WHICH THE ASSESSEE EARNS EXEMPT INCOME, BUT, NOT ON THE ENTIRE INVESTMENTS. IN THIS CONNECTION, WE REFER TO THE DECISION I N THE CASE OF TRANSPORT CORPORATION OF INDIA LTD. IN ITA NO. 117/HYD/ 2016 VIDE ORDER DATED 21 ST SEPTEMBER, 2016, WHEREIN THE COORDINATE BENCH OF THIS TRIBUNAL HAS HELD AS UNDER: 11.1 WHILE CAREFULLY READING THE RULE 8D(2)(II), THE FORMULA GIVEN ARE: A X B/C WHERE A = AMOUNT OF EXPENDITURE BY WAY OF INTEREST OTHER THAN THE AMOUNT OF INTEREST INCLUDED IN CLAUSE (I) INCURRED DURING THE PREVIOUS YEAR: B = THE AVERAGE OF VALUE OF INVESTMENT, INCOME FROM WHICH DOES NOT OR SHALL NOT FORM PART OF THE TOTAL INCOME, AS APPEARING IN THE BALANCE SHEET OF THE ASSESSEE, ON THE FIRST DAY AND THE LAST DAY OF THE PREVIOUS YEAR; C = THE AVERAGE OF TOTAL ASSETS AS APPEARING IN THE BALANCE SHEET OF THE ASSESSEE, ON THE FIRST DAY AND THE LAST DAY OF THE PREVIOUS YEAR;IN PARTICU LAR, THE NOTES FOR B CLEARLY STATES THAT THE AVERAGE VALUE OF INVESTMENT, INCOME FROM WHICH DOES NOT OR SHALL NOT FORM PART OF THE TOTAL INCOME. IT IS CLEAR THAT WE HAVE TO INCLUDE THOSE INVESTMENTS WHICH HAS GENERATED INCOME AND EXCLUDE THOSE INVESTMENT S, WHICH HAVE NOT GENERATED INCOME. IN THE PRESENT CASE, AO HAD TAKEN THE TOTAL I TA NO S . 2186 & 2187 / /HYD /20 18 M/S AP INDUSTRIAL INFRASTRUCTURE CORPORATION LTD., VIJAYAWADA. : - 5 - : INVESTMENT INSTEAD OF THOSE INVESTMENTS, WHICH HAVE GENERATED INCOME. ACCORDINGLY, WE DIRECT THE AO TO CALCULATE THE DISALLOWANCE OF INTEREST AS BELOW ( AS PER RULE 8D): INTER EST X INVESTMENT( WHICH GENERATED INCOME) AVERAGE TOTAL ASSETS THE MAIN REASON IS THAT AS PER SECTION 14A, NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME, WHICH IS EXEMPT FROM TAX. THE RE LEVANCE IS THE EXPENDITURE IN RELATION TO INCOME. THE QUANTIFICATION HAS TO BE UNDERTAKEN IN RELATION TO THE EXEMPT INCOME. THE INVESTMENT WHICH HAS NOT GENERATED EXEMPT INCOME SHOULD BE EXCLUDED FROM THE CALCULATION OF RATIO TO DETERMINE THE DISALLOWANCE. 11.2 SIMILARLY, FOR THE ADMINISTRATIVE EXPENSES, 0.5% OF AVERAGE INVESTMENTS FROM WHICH THE EXEMPT INCOME IS RECEIVED SHOULD BE CONSIDERED INSTEAD OF AVERAGE OF THE TOTAL INVESTMENTS. 11.3 CONSIDERING THE ABOVE DISCUSSION, WE DIRECT THE AO TO RECALCULATE THE DISALLOWANCE AS PER RULE 8D AS PER THE ABOVE GUIDANCE. ACCORDINGLY, GROUND RAISED BY ASSESSEE IS ALLOWED. AS THE ISSUE UNDER CONSIDERATION IS MATERIALLY IDENTICAL TO THAT OF THE SAID CASE, FOLLOWING THE CONCLUSIONS DRAWN THEREIN WE DIRECT THE AO TO RECALCULATE THE DISALLOWANCE AS PER RULE 8D AS PER THE GUIDELINES GIVEN AS ABOVE IN THE CASE OF TRANSPORT CORPORATION OF INDIA AND CALCULATE THE DISALLOWANCE OF EXPENDITURE UNDER RULE 8D(2)( III) TAKING THE AVERAGE INVESTMENT FROM WHICH THE EXEMPT INCOME IS RECEIVED. FOLLOWING THE ABOVE DECISION, WE DIRECT THE AO TO CALCULATE THE DISALLOWANCE UNDER RULE 8D(2)(III) IN LINE WITH THE ABOVE DECISION. THE ASSESSEE IS DIRECTED NOT TO I TA NO S . 2186 & 2187 / /HYD /20 18 M/S AP INDUSTRIAL INFRASTRUCTURE CORPORATION LTD., VIJAYAWADA. : - 6 - : TAKE ANY UNNE CESSARY ADJOURNMENTS FOR EARLY DISPOSAL OF THE APPEAL. NEEDLESS TO SAY THAT REASONABLE OPPORTUNITY MAY BE GIVEN TO THE ASSESSEE. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE IN THIS REGARD ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 9 .1 AS THE I SSUE IN DISPUTE IS MATERIAL LY IDENTICAL TO THE ABOVE DECISION OF THE COORDINATE BENCH IN ASSESSEE S OWN CASE FOR AY 2013 - 14, RESPECTFULLY FOLLOWING THE SAME, WE DIRECT THE AO TO CALCULATE THE DISALLOWANCE UNDER RULE 8D(2)(III) IN LINE WITH THE ABOVE DECISION. THE ASSESSEE IS DIRECTED NOT TO TAKE ANY UNNECESSARY ADJOURNMENTS FOR EARLY DISPOSAL OF THE AP PEAL. NEEDLESS TO SAY THAT REASONABLE OPPORTUNITY MAY BE GIVEN TO THE ASSESSEE. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE IN THIS REGARD IN BOTH THE APPEALS ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 10 . IN THE RESULT, BOTH THE APPEALS UNDER C ONSIDERATION ARE ALLOWED FOR STATISTICAL PURPOSES IN ABOVE TERMS. A COPY OF THIS COMMON ORDER BE PLACED IN THE RESPECTIVE CASE FILES. PRONOUNCED IN THE OPEN COURT ON 7 TH SEPTEMBER, 2021 . SD/ - SD/ - ( S.S. GODARA ) (L . P . SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDE RABAD, DATED : 7 TH SEPTEMBER , 20 2 1 . I TA NO S . 2186 & 2187 / /HYD /20 18 M/S AP INDUSTRIAL INFRASTRUCTURE CORPORATION LTD., VIJAYAWADA. : - 7 - : K V C OPY TO : 1 M/S AP INDUSTRIAL INFRASTRUCTURE CORPORATION LTD., C/O VENUGOPAL & CHENOY, CAS., 4 - 1 - 889/16/2, TILAK ROAD, HYDERABAD 500 001 2 ITO, WARD 1(3), HYDERABAD 3 ITO, WARD 1(2), HYDERABAD 3 C I T(A) 1 , HYDERABAD. 4 PR. CIT - 1 HYDERABAD. 5 ITAT, DR, HYDERABAD. 6 GUARD FILE. S.NO. DETAILS DATE 1 DRAFT DICTATED ON 2 DRAFT PLACED BEFORE AUTHOR 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 5 APPROVED DRAFT COMES TO THE SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 7 FILE SE NT TO BENCH CLERK 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER
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