VST Motor PVT. Ltd., CHENNAI V. ITO, CORPORATE WARD - 3 (4), CHENNAI

ITA 2336/CHNY/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4077 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 16-08-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIJAYLAPRABHAJCITD R
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Rule 8D
• Section: 40(a)(ia); 201

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI , ! ' # $% BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT & SHRI M. BALAGANESH, ACCOUNTANT MEMBER ./ I.T.A.NO.2336/CHNY/2019 / ASSESSMENT YEAR :2013-14 M/S.VST MOTORS PVT LTD., NO.199,(OLD NO.144) ANNA SALAI, CHENNAI 600 002. VS. THE INCOME TAX OFFICER, CORPORATE WARD-3(4), CHENNAI. [PAN AABCV 6 244 R ] ( &' / APPELLANT) ( ()&' /RESPONDENT) / APPELLANT BY : MR.R.VIJAYARAGHAVAN,ADVOCATE /RESPONDENT BY : M/S.VIJAYLAPRABHA,JCIT,D.R / DATE OF HEARING : 25 .02.2020 ! / DATE OF PRONOUNCEMENT : 28 .02.2020 $' / O R D E R PER M. BALAGANESH, ACCOUNTANT MEMBER: THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-7, CHENNAI IN ITA NO.101(T)/C.I.T(A)-7/2016-17, DATED 25.06.2019 FOR THE ASSESSMENT YEAR 2013-14. ITA NO.2336/CHNY/2019 :- 2 -: 2. THE GROUND NO.1 IS GENERAL IN NATURE AND THEREFORE, THE ASSESSEE IS NOT PRESSING THIS GROUND. THE LD.COUNSEL FURTHER SUBMITTED BEFORE THIS TRIBUNAL THAT THE ASSESSEE IS NOT PRESSING THE GROUND NO.2. THE LD. DEPARTMENTAL REPRESENTATI VE HAD NO OBJECTION TO DISMISS THESE GROUNDS AS NOT PRESSED. ACCORDINGLY GROUNDS NOS.1 & 2 ARE DISMISSED AS NOT PRESSED. 3. GROUND NOS.3 TO 3.2 RAISED BY THE ASSESSEE ARE WITH REGARD TO CLAIMING OF DEDUCTION OF .7,61,428/- IN RESPECT OF EMPLOYEES CONTRIBUTION TO PF AND ESI, WHICH WERE REMITTED BY THE ASSESSEE BEYOND THE DUE DATES PRESCRIBED IN THE RESPECTIVE A CTS, BUT BEFORE THE DUE DATE OF FILING OF THE RETURN. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND FROM THE DAT E OF REMITTANCES MADE FOR EACH OF THE MONTH AS DETAILED IN PAGES 1& 2 OF THE ASSESSMENT ORDER THAT EMPLOYEES CONTRIBUTION TOWAR DS PF AND ESI HAD BEEN DULY REMITTED BY THE ASSESSEE WITHIN T HE END OF THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2013-14, THOUGH THE SAME WERE REMITTED BEYOND THE DUE DATES PRESCRIBED UNDER THE RESPECTIVE ACTS. WE FIND THIS ISSUE IS ALREADY DECI DED IN FAVOUR OF THE ASSESSEE BY THE HONBLE JURISDICTIONAL HIGH COU RT IN THE CASE ITA NO.2336/CHNY/2019 :- 3 -: OF C.I.T, CHENNAI VS. M/S.INDUSTRIAL SECURITY & IN TELLIGENCE INDIA PVT LTD., IN TAX CASE (APPEAL) NOS.585 AND 586 OF 2015 & M.P. NO.1 OF 2015 DATED 24.07.2015 WHEREIN IT WAS HELD T HAT IF THE EMPOYEES CONTRIBUTION TOWARDS PF AND ESI HAD BEEN REMITTED BY THE ASSESSEE BEFORE THE DUE DATE OF FILING OF THE R ETURN OF INCOME, THE ASSESSEE WOULD BE ENTITLED FOR DEDUCTION. RESP ECTFULLY FOLLOWING THE SAME, THE GROUNDS NOS.3 TO 3.2 RAISED BY THE ASSESSEE ARE ALLOWED. 5. GROUND NOS. 4 TO 4.5 RAISED BY THE ASSESSEE ARE WITH REGARD TO CHALLENGING THE ACTION OF THE LEARNED CIT (A) IN CONFIRMING THE DISALLOWANCE OF .9,21,424/- MADE UNDER SECTION 40(A)(IA) OF THE ACT IN RESPECT OF PAYMENTS MADE TO M/S.TATA MOTORS LTD., FOR A WEB ENABLED SOFTWARE IN SIEBEL IN WHICH ALL MARKETING RELATED INFORMATION CAN BE STORED AND THE REPORTS RELATING TO MARKETING ACTIVITIES CAN BE GENERATED F ROM THE SYSTEM. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. A.R. VEHEMEN TLY PLEADED THAT THIS PAYMENT DOES NOT FALL WITHIN THE AMBIT OF FEE FOR PROFESSIONAL OR TECHNICAL SERVICES RENDERED BY M/S. TATA MOTORS LTD., AS THERE IS NO HUMAN INTERVENTION INVOLVED IN THE SAME. THE LD. A.R. ALSO PLEADED THAT THIS SOFTWARE IS ROUTINE SOFTWARE OF ITA NO.2336/CHNY/2019 :- 4 -: M/S.TATA MOTORS LTD., WHEREIN THE ASSESSEE WAS PERM ITTED TO USE THE SAME. IN ANY CASE, HE ARGUED THAT IN THE SECON D PROVISO TO SECTION 40(A)(IA) OF THE ACT READ WITH SECTION 201 OF THE ACT, IF THE PAYMENTS MADE BY THE ASSESSEE HAD BEEN DULY SUBJECT ED TO TAX IN THE HANDS OF THE RECIPIENT, I.E. M/S.TATA MOTORS LTD., THEN THE ASSESSEE CANNOT BE INVITED WITH THE DISALLOWANCE UN DER SECTION 40(A)(IA) OF THE ACT. WE FIND THIS IS A STATUTORY B ENEFIT PROVIDED IN THE STATUTE TO THE ASSESSEE AND ACCORDINGLY DEEM IT FIT AND APPROPRIATE, TO DIRECT THE LD. A.O TO VERIFY THE FA CT AS TO WHETHER M/S.TATA MOTORS LTD., HAD DULY OFFERED THE SAID SUM OF .9,21,424/- RECEIVED FROM THE ASSESSEE HEREIN AS I TS INCOME AND PAID TAXES DUE THEREON. IF IT IS FOUND TO BE CORREC T, NO DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT WOU LD COME INTO OPERATION IN THE HANDS OF THE ASSESSEE PAYER. ACCOR DINGLY, GROUNDS NOS.4 TO 4.5 RAISED BY THE ASSESSEE ARE ALL OWED FOR STATISTICAL PURPOSES. 7. THE GROUNDS NOS.5 TO 5.10 RAISED BY THE ASSESSE E ARE IN RESPECT OF CHALLENGING THE ACTION OF THE LEARNED CI T(A) IN CONFIRMING THE DISALLOWANCE MADE UNDER SECTION.14A OF THE ACT R.W.RULE 8D(2) OF INCOME TAX RULES, 1962. ITA NO.2336/CHNY/2019 :- 5 -: 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASS ESSEE HAD RECEIVED DIVIDEND INCOME OF .1,82,22,465/- DURING THE YEAR AND CLAIMED THE SAME AS EXEMPT IN THE RETURN OF INCOME. THE ASSESSEE HAD NOT MADE ANY DISALLOWANCE VOLUNTARILY UNDER SECTION.14A OF THE ACT IN THE RETURN OF INCOME. THE LD. A.O. RESORTED TO INVOKE THE COMPUTATION MECHANISM PROVID ED IN RULE 8D(2) OF THE RULES AND ACCORDINGLY MADE DISALLOWANC E OF .4,60,217/- AND RAISED .39,040/- UNDER SECOND AND THIRD LIMBS THEREON RESPECTIVELY. ON APPEAL, LEARNED CIT(A) CON FIRMED THE ACTION OF THE ASSESSING OFFICER. 9. BEFORE US, THE LD. A.R. PLACED ON RECORD THE COP Y OF BALANCE SHEET OF THE ASSESSEE COMPANY AS ON 31.03.2 013 FROM WHERE IT IS EVIDENT THAT ASSESSEE IS HAVING OWN FUN DS TO THE TUNE OF .38.72 CRORES, WHEREAS THE TOTAL INVESTMENTS MADE B Y THE ASSESSEE IS ONLY .78 LAKHS. HENCE, IT CAN BE SAFELY PERSUMED AND CONCLUDED THAT THE INVESTMENTS WERE MADE ONLY O UT OF OWN FUNDS OF THE ASSESSEE IN THE LIGHT OF RATIO LAID DO WN BY HONBLE BOMBAY HIGH COURT IN THE CASE OF C.I.T VS. HDFC BAN K LTD. REPORTED IN 366 ITR 505. RESPECTFULLY FOLLOWING THE SAME, NO ITA NO.2336/CHNY/2019 :- 6 -: DISALLOWANCE OF INTEREST UNDER SECOND LIMB TO RULE 8D(2) OF THE RULES COULD BE MADE IN THE HANDS OF INSTANT CASE. 10. WITH REGARD TO ADMINISTRATIVE EXPENSES UNDER T HE 3 RD LIMB, BEFORE LD. A.R. FAIRLY CONCEDED FOR THE SAID DISALL OWANCE. ACCORDINGLY, GROUNDS NOS. 5 TO 5.10 RAISED BY THE A SSESSEE ARE PARTLY ALLOWED. 11. GROUND NO.5.11 RAISED BY THE ASSESSEE IS GENER AL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION 12. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2019, AT CHENNAI. SD/- SD/- ( ) (MAHAVIR SINGH) '#$ /VICE PRESIDENT %& '()* ) (M. BALAGANESH) # $% / ACCOUNTANT MEMBER +, / CHENNAI -. / DATED: 28 TH FEBRUARY,2020. K S SUNDARAM .*(( /0(10 / COPY TO: ( 1 . / APPELLANT 3. ( 2(34 / CIT(A) 5. 05)( 6 / DR 2. / RESPONDENT 4. ( 2 / CIT 6. )7(8 / GF