Tenneco Automotive India Pvt. Ltd., CHENNAI V. ACIT Company Circle III(1), Chennai

ITA 2218/CHNY/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6435 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 24-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN
• Assessee Lawyers: R KUMAR
• Keywords: Earning of tax free income; Rule 8D
• Section: 271(1)(c); 143(3); 14A; 250

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: CHENNAI . . . , ! ' , # '$ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ ITA NO.2218/CHNY/2018 % &% /ASSESSMENT YEAR: 2008-09 M/S. TENNECO AUTOMOTIVE INDIA PVT. LTD., C/O. SRI. T.N.SEETHARAMAN, ADVOCATE, # 384 (OLD NO.196), LLOYDS ROAD, CHENNAI 600 086. VS. ASST. COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-III(1), CHENNAI. [PAN: AABCT 3125D] ( '( /APPELLANT) ( )*'( /RESPONDENT) '( + , / APPELLANT BY : SHRI R.KUMAR, ADVOCATE )*'( + , /RESPONDENT BY : SHRI B. SAGADEVAN, JCIT - + . # /DATE OF HEARING : 16.01.2019 /0& + .# / DATE OF PRONOUNCEMENT : 18.02.2019 / O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED A GAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -11, CHENNAI (HEREINAFTER CALLED AS CIT(A)) DATED 29.06.2018 F OR THE ASSESSMENT YEAR (AY) 2008-09. 2. THE APPELLANT RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (AP PEALS) IS ERRONEOUS IN LAW AND AGAINST JUDICIAL DISCIPLINE. ITA NO.2218/CHNY/2018 (AY: 2008-09) :- 2 -: 2. THE COMMISSIONER (APPEALS) ERRED IN EXERCISING H IS POWER OF ENHANCEMENT AND DISALLOWING RS.9,97,955/- INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT R.W.RULE 8D (AND INITIATI NG PENALTY PROCEEDINGS U/S 271(1)(C) FOR CONCEALING PARTICULA RS OF INCOME.) 3. THE APPELLANT SUBMITS THAT IT IS AN UNDISPUTED F ACT THAT IT HAD NOT EARNED ANY INCOME FROM DIVIDENDS, OR ANY OTHER EX EMPT INCOME DURING THE YEAR; MOREOVER THE APPELLANT HAD NOT INC URRED I CLAIMED ANY EXPENDITURE AT ALL BY WAY OF INTEREST; ON SUCH FACTS SECTION 14A OF THE ACT IS UNDOUBTEDLY INAPPLICABLE. 4. THE COMMISSIONER (APPEALS) GROSSLY ERRED IN NOT FOLLOWING THE BINDING JUDGMENTS OF THE JURISDICTIONAL MADRAS HIGH COURT IN REDINGTON (INDIA) LTD., VS ADDL.CIT (2017) 392 1W 6 33 MD) AND CIT VS CHETTINAD LOGISTICS (P) LTD., REPORTED IN (2017) 8OTAXMANN.COM.221 (MAD) HOLDING THAT ...THE PROVIS IONS OF SECTION 14A OF THE INCOME TAX ACT, 1961 READ WITH RULE 8D O F THE INCOME TAX RULES, 1962 COULD NOT BE MADE APPLICABLE IN THE ABS ENCE OF EXEMPT INCOME. SECTION 14A WAS RELATABLE TO THE EARNING OF ACTUAL INCOME AND NOT NOTIONAL OR ANTICIPATED INCOME. 5. THE COMMISSIONER (APPEALS) ERRED IN CITING DECIS IONS OF VARIOUS OTHER COURTS AND ORDERS WHICH HAVE BEEN REFERRED TO IN THE JUDGMENTS OF THE JURISDICTIONAL HIGH COURT AND HELD AS FACTUALLY DISTINGUISHABLE. 6. THE COMMISSIONER (APPEALS) ERRED IN RELYING ON C IRCULAR NO.5/2014 DT:11.02.2014 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES, WHICH HAS BEEN CONSIDERED IN BOTH THE JUDGME NTS OF THE JURISDICTIONAL HIGH COURT CITED IN GROUND NO.4 ABOV E AND HELD TO BE UNACCEPTABLE. 7. THE APPELLANT IS ADVISED THAT THE FINDINGS OF TH E HONBLE MADRAS HIGH COURT ARE FORTIFIED BY THE JUDGMENT OF THE HON BLE DELHI HIGH COURT IN PRINCIPAL CIT VS IL AND FS ENERGY DEVELOPM ENT CO. LTD., (2017) 399 ITR 483 (DELHI) FOLLOWING JUDGMENTS OF V ARIOUS OTHER HIGH COURTS IN ASSESSEES FAVOUR AND FURTHER HOLDING THA T CBDT CIRCULAR NO.5 OF 2014 DT.11.02.2014 COULD NOT OVERRIDE THE E XPRESS PROVISIONS OF SECTION 14A READ WITH RULE 8D. 8. THE APPELLANT IS ADVISED TO SUBMIT THAT THE JUDG MENTS OF THE APEX COURT CITED BY THE COMMISSIONER (APPEALS) IN THE CO NCLUDING PARA (PARA 8 AT PAGE 8) OF THE IMPUGNED ORDER ARE CASES IN WHICH THE ASSESSEES HAD EARNED DIVIDEND INCOME IN THE CONCERN ED YEAR AND ARE THUS DISTINGUISHABLE ON FACTS; THE SAID JUDGMEN TS DO NOT IN ANY WAY OVERRULE THE JUDGMENTS OF THE JURISDICTIONAL HI GH COURT AS MISCONSTRUED BY THE COMMISSIONER (APPEALS). ITA NO.2218/CHNY/2018 (AY: 2008-09) :- 3 -: 9. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING THE APPELLANT PRAYS THAT THE HONBLE TRIBUN AL BE PLEASED TO ALLOW THE APPEAL AND RENDER JUSTICE. 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE APPELLANT IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT. THE RETURN OF INCOME FOR THE AY 2008-09 WAS FILED ON 29.09.2008 ADMITTING NIL INCOME. AGAINST THE S AID RETURN OF INCOME, THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE INC OME TAX ACT, 1961 (IN SHORT THE ACT) VIDE ORDER DATED 11.10.2010 AT A TOTAL INCOME OF RS.36,39,584/- AFTER DISALLOWING THE TRAVELLING AND CONVEYANCE EXPENDITURE TO THE EXTENT OF RS. 64,37,524/- AND OF FICE GENERAL EXPENDITURE OF RS. 1,32,144/-. 4. BEING AGGRIEVED BY THE ABOVE ADDITIONS, AN APPEA L WAS PREFERRED BEFORE LD. CIT(A), WHO VIDE IMPUGNED ORDER DIRECTED THE AO TO DELETE THE ADDITIONS MADE IN THE ASSESSMENT, HOWEVER HE ENHANC ED THE ASSESSMENT BY DIRECTING THE AO TO MAKE A DISALLOWAN CE U/S. 14-A OF THE ACT OF RS. 9,97,955/-. BEING AGGRIEVED, THE APPELL ANT IS IN APPEAL BEFORE US IN THE PRESENT APPEAL. 5. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. IT IS STATED BEFORE US THAT THE APPELLANT H AD NOT EARNED ANY EXEMPT INCOME, THEREFORE, THE QUESTION OF INVOKING THE PROVISIONS OF S. 14-A OF THE ACT DOES NOT ARISE. RELIANCE IN THIS R EGARD WAS PLACED ON THE ITA NO.2218/CHNY/2018 (AY: 2008-09) :- 4 -: DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT V. CHETTINAD LOGISTICS (P.) LTD. [2018] 95 TAXMANN.COM 250 (SC), WHEREIN THE HON'BLE SUPREME COURT DISMISSED THE SLP FILED AGAINST THE J UDGMENT OF HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT V. CHTTINAD LOGISTICS (P.) LTD. [2017] 80 TAXMANN.COM 221 (MAD.) THAT THE PROVISION OF S. 14A CANNOT BE INVOKED, WHERE NO EXEMPT INCOME WAS EARNED BY THE A SSESSEE DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR U NDER CONSIDERATION. THUS, THE LAW IS SETTLED THAT IN THE ABSENCE OF EXE MPT INCOME, THE PROVISIONS OF S.14-A OF THE ACT CANNOT BE INVOKED. IN THE CIRCUMSTANCES, THE ORDER OF ENHANCEMENT MADE BY THE LD. CIT(A) CAN NOT BE UPHELD AND WE, REVERSE THE ORDER OF LD. CIT(A) ON THIS ISSUE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THE 18 TH DAY OF FEBRUARY, 2019 IN CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ! ' ) (INTURI RAMA RAO) # /ACCOUNTANT MEMBER /CHENNAI, 1 /DATED: 18 TH FEBRUARY, 2019. EDN, SR. P.S + ).23 43&. /COPY TO: 1. '( /APPELLANT 4. - 5. /CIT 2. )*'( /RESPONDENT 5. 36 ). /DR 3. - 5. ( )/CIT(A) 6. 7% 8 /GF