ACIT Corporate Range 1 (OSD), CHENNAI V. Dharani Sugars & Chemical Limited, CHENNAI

ITA 2445/CHNY/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5049 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 05-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI ... , , # BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ I.T.A. NO. 2445/MDS/2017 / ASSESSMENT YEAR : 2012-13 ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE RANGE -1(OSD), CHENNAI 600 034. VS. M/S. DHARANI SUGARS & CHEMICALS LIMITED, 57, PGP HOUSE STERLING ROAD, NUNGAMBAKKAM, CHENNAI 600 034. [PAN: AAACD 1281F] ( / APPELLANT) ( / RESPONDENT) % & / APPELLANT BY : MRS. RUBY GEORGE, CIT )*% & / RESPONDENT BY : NONE & /DATE OF HEARING : 28.12.2017 & /DATE OF PRONOUNCEMENT : 10.01.2018 /O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: THE REVENUE FILED THIS APPEAL AGAINST THE ORDER O F COMMISSIONER OF INCOME TAX (APPEALS)-5, CHENNAI IN ITA NO. 93/CI T(A)-5/2014-15 DATED 28.07.2017 FOR ASSESSMENT YEAR 2012-13. :-2-: ITA NO. 2245/MDS/2017 2. M/S. DHARANI SUGARS & CHEMICALS LTD., THE ASSESS EE, IS ENGAGED IN THE BUSINESS OF SUGARS. IN THE ASSESSMENT MADE FOR ASS ESSMENT YEAR 2012-13, THE ASSESSING OFFICER DISALLOWED INTEREST U/S. 14A R.W.R. 8D AT RS. 38,87,936/-. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A) THE ASSESSEE PLEADED THAT IT EARNED EXEMPT INCOME ( DIVIDEND INCOME) AT RS. 69,500/- ONLY. THE CIT(A) RELYING ON, INTER ALIA, THE DELHI HIGH COURT DECISION IN THE CASE OF JOINT INVESTMENT PVT. LTD., VS CIT I N ITA NO. 117/2015, THIS TRIBUNAL DECISIONS IN THE CASES OF KAL AIRWAYS PVT. LTD., VS DCIT IN ITA NOS. 2846 & 2847/MDS2016 DATED 29.06.2017 & APEX LABORAT ORIES PVT. LTD., VS ACIT, LTU(APPEALS)-II, CHENNAI, [2017] 80 TAXMANN. COM 236 THE MADRAS HIGH COURT DECISIONS IN THE CASES OF REDINGTON (IND IA) LIMITED VS ACIT, CHENNAI [2017] 77 TAXMANN.COM 257 AND CIT, CENTRAL( 1), CHENNAI VS CHETTINAD LOGISTICS PVT. LTD., [2017] 80 TAXMANN.CO M 221 DIRECTED THE AO TO RESTRICT THE DISALLOWANCE TO THE EXTENT OF EXEMPT I NCOME EARNED BY THE ASSESSEE DISALLOWANCE U/S. 14A R.W.R. 8D. 3. AGGRIEVED, THE REVENUE FILED THIS APPEAL WITH TH E FOLLOWING GROUNDS: 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO LAW, FACTS AND CIRCUMSTANCES OF THE CASE. 2.1 THE LEARNED CIT(A) ERRED IN HOLDING THAT DISALL OWANCE U/S. 14A SHALL BE LIMITED TO THE EXTENT OF EXEMPT INCOME EAR NED, WITHOUT APPRECIATING THE FACT THAT, WHEN EXEMPT INCOME BEARING INVESTMEN TS ARE HELD BY THE ASSESSEE, FOR WHICH CERTAIN EXPENDITURE WOULD HAVE BEEN DEFINITELY INCURRED BY THE ASSESSEE, THE PROVISIONS OF SECTION 14A R.W.R. 8D WILL GET TRIGGERED, AND :-3-: ITA NO. 2245/MDS/2017 FURTHER THERE IS NO SUCH PROVISION IN THE ACT TO RE STRICT THE 14A DISALLOWANCE TO THE EXTENT OF EXEMPT INCOME EARNED. 2.2 THE LEARNED CIT(A) ERRED IN FOLLOWING THE DECIS ION OF THE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF M /S. REDINGTON (INDIA) LIMITED, WITHOUT APPRECIATING THE FACT THAT THE DECISION OF THE HONBLE HIGH COURT PERTAINS TO THE AY 2007-08, WHICH IS PRIOR TO INTRO DUCTION OF RULE 8D, AND THE CASE IN HAND RELATED TO THE AY 2012-13, THEREBY A D ECISION OF THE HONBLE HIGH COURT IN THE PRE 8D ERA CANNOT BE APPLIED TO A CASE IN THE POST 8D ERA, WHICH PROPOSES DISALLOWANCE ON THE BASIS OF INVESTMENTS, AND NOT BASED ON EXEMPT INCOME EARNED. 2.3 THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THE BOARDS CIRCULAR IN 5/2014 DATED 11.02.2014, WHICH CLEARLY EXPLAINS THAT THE PROVISIONS OF SECTION 14A R.W.R. 8D ARE APPLICABLE EVEN IN A S ITUATION, WHEN THE ASSESSEE DOES NOT EARN ANY EXEMPT INCOME, BUT EXEMPT INCOME BEARING INVESTMENTS ARE HELD BY THE ASSESSEE, AND IN THIS CASE, THE ASSESSE E HAVING EARNED EXEMPT INCOME, THE DISALLOWANCE SHALL HAVE TO BE EFFECTED UNDER RULE 8D ONLY. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 4. THE DR PRESENTED THE CASE ON THE LINES OF THE OR DER OF THE AO AND ON THE GROUNDS OF APPEAL. NONE WAS PRESENT FOR THE AS SESSEE, THOUGH, THE HEARING NOTICE IS SERVED BY AN ACKNOWLEDGEMENT DUE WHICH IS ON RECORD. 5. WE HEARD THE DR AND GONE THROUGH THE ORDERS OF T HE LOWER AUTHORITIES. SINCE, THE ORDER OF THE CIT(A) IS BASED ON THE DECI SIONS OF THE JURISDICTIONAL HIGH COURT AS WELL AS THE CO-ORDINATE BENCH OF THIS TRIBUNAL, APART FROM THE DECISIONS OF OTHER HIGH COURT AND OTHER CO-ORDINATE BENCHES. WE FIND NO :-4-: ITA NO. 2245/MDS/2017 REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) AN D THE GROUNDS OF REVENUES APPEAL ARE DISMISSED. 6. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED ON WEDNESDAY, THE 10 TH DAY OF JANUARY, 2018 AT CHENNAI. SD/- ( . . . ) (N.R.S. GANESAN) ! ' /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) ' /ACCOUNTANT MEMBER /CHENNAI, 0 /DATED: 10 TH JANUARY, 2018 JPV & )12 32 /COPY TO: 1. %/ APPELLANT 2. )*% /RESPONDENT 3. 4 ( )/CIT(A) 4. 4 /CIT 5. 2 ) /DR 6. 7 /GF