M/s Health Asyst Private Limited , Bangalore V. Deputy Commissioner of INcome TAx Circle-3(1)(2), Bangalore

ITA 2482/BANG/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5030 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 23-11-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SWAPNA DAS JT BENGALURU
• Keywords: Earning of tax free income
• Section: 143(3); 14A; 154; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P. BOAZ , ACCOUNTANT MEMBER I TA NO. 2482/BANG/2017 ASSESSMENT YEAR : 2013 - 14 HEALTH ASYST PVT. LTD., J 05, GROUND FLOOR, HAL AIRPORT ROAD, BENGALURU 560 008. PAN: AAACH 6375A VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 3(1)(2), BENGALURU. APPELLANT RESPONDENT APPELLANT BY : NONE RE SPONDENT BY : SMT. SWAPNA DAS , JT.CIT(DR)(ITAT), BENGALURU. DATE OF HEARING : 27 .06 .201 8 DATE OF PRONOUNC EMENT : 08 .08.2018 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDE R DATED 20.09.2017 OF THE CIT(APPEALS)-III, BENGALURU RELATING TO ASSE SSMENT YEAR 2013-14. 2. THIS APPEAL WAS FIXED FOR HEARING ON 19.03.2018 AND NOTICE OF HEARING FOR THE SAID DATE WAS DULY SERVED ON THE AS SESSEE. THE ASSESSEE HAD FILED WRITTEN SUBMISSIONS DATED 16.03.2018. ON 19.03.2018, THE CASE WAS ADJOURNED TO 27.06.2018. ON BOTH THE DATES OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE. WE THEREFORE PR OCEED TO DECIDE THE APPEAL AFTER HEARING THE SUBMISSIONS OF THE LD. DR AND THE WRITTEN SUBMISSIONS FILED BEFORE THE TRIBUNAL BY THE ASSESS EE. ITA NO. 2482/BANG/2017 PAGE 2 OF 4 3. THE ONLY ISSUE TO BE ADJUDICATED IN THIS APPEAL IS AS TO WHETHER THE DISALLOWANCE MADE U/S. 14A R.W. RULE 8D(2)(III) OF THE ACT CAN BE SUSTAINED? 4. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINE SS OF PROVIDING SOFTWARE SERVICES. IN THE ORDER OF ASSESSMENT COMP LETED U/S. 143(3) OF THE INCOME-TAX ACT, 1961 [THE ACT] DATED 13.01.2016, THE AO AFTER NOTICING THAT THE ASSESSEE HAD EARNED EXEMPT INCOME OF RS.54 ,39,803, COMPUTED EXPENDITURE INCURRED IN EARNING EXEMPT INCOME UNDER RULE 8D(2)(III) OF THE RULES AT RS.3,89,338. THE AFORESAID AMOUNT WAS ADD ED TO THE TOTAL INCOME OF THE ASSESSEE. 5. LATER ON, THE AO NOTICED THAT HE HAD OMITTED TO CHARGE INTEREST U/S. 234C OF THE ACT. HE THEREFORE PASSED AN ORDER U/S. 154 OF THE ACT DATED 5.3.2016 CHARGING INTEREST U/S. 234C OF THE ACT. 6. THE ASSESSEE PREFERRED AN APPEAL AGAINST THE ORD ER U/S. 154 OF THE ACT BEFORE THE CIT(APPEALS). THE APPEAL WAS FILED BEFORE THE CIT(A) ON 7.4.2016 MANUALLY AND 6.6.2016 IN E-FORM. IN FORM 35 ASSESSEE HAS STATED THAT THE APPEAL IS FILED AGAINST THE ORDER U /S. 154 OF THE ACT DATED 08.03.2016 R.W. ORDER U/S. 143(3) DATED 13.01.2016. AS WE HAVE ALREADY SEEN, IN THE ORDER U/S. 154 OF THE ACT THERE WAS NO DISALLOWANCE OF EXPENDITURE U/S. 14A OF THE ACT AND THEREFORE THE S AID DISALLOWANCE CANNOT BE THE SUBJECT MATTER OF APPEAL BEFORE THE CIT(APPE ALS). THE CIT(APPEALS) THEREFORE DISMISSED THE APPEAL OF THE ASSESSEE WITH THE FOLLOWING OBSERVATIONS:- 4.0 THROUGH THE APPEAL UNDER CONSIDERATION, THE AP PELLANT HAS CHALLENGED AN ORDER U/S 154 OF THE ACT AS PASSED BY THE AO ON 08.03.2016. THE ONLY ISSUE INVOLVED IN THE RECTIFIC ATION WAS CHARGING OF INTEREST U/S 234C OF THE ACT AS THE SAM E WAS NOT ITA NO. 2482/BANG/2017 PAGE 3 OF 4 WORKED OUT BY THE AO IN THE ORDER PASSED U/S 143(3) OF THE ACT. HOWEVER, IT IS NOTED THAT THE GROUNDS OF APPEAL DO NOT RELATE TO THIS ISSUE. THE GROUNDS OF APPEAL RELATE TO DISALLO WANCE MADE U/S 14A OF THE ACT BY THE AO IN THE ASSESSMENT ORDER PA SSED U/S 143(3) OF THE ACT ON 13.01.2016. THE APPELLANT-ARGU ED THAT THIS DISALLOWANCE SHOULD NOT HAVE BEEN MADE. THE SUBMISS IONS OF THE APPELLANT HAVE DULY BEEN CONSIDERED. HOWEVER, AS NO TED ABOVE, THE ISSUE ITSELF IS NOT ARISING OUT OF ORDER U/S 15 4 OF THE ACT. AN ISSUE ARISING OUT OF ORDER U/S 143(3) OF THE ACT CA N ONLY BE CHALLENGED BY FILING AN APPEAL AGAINST SUCH ORDER. CONSIDERING ABOVE, THERE IS NO MERIT IN THE SUBMISSIONS OF THE APPELLANT AND ALL THE GROUNDS OF APPEAL ARE DISMISSED. 7. AGGRIEVED BY THE ORDER OF CIT(APPEALS), THE ASSE SSEE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. IN THE GROU NDS OF APPEAL, THE ASSESSEE HAS CONTENDED THAT IT HAD FILED APPEAL ONL Y AGAINST THE ORDER U/S. 143(3). THIS IS CONTRARY TO WHAT IS STATED IN FORM 35 FILED BEFORE THE CIT(APPEALS). WE ARE THEREFORE OF THE VIEW THAT TH E CIT(APPEALS) WAS JUSTIFIED IN DISMISSING THE APPEAL OF THE ASSESSEE ON THE GROUND THAT THE ISSUE OF DISALLOWANCE U/S. 14A OF THE ACT WAS NOT S UBJECT MATTER OF THE PROCEEDINGS U/S. 154 OF THE ACT AND THEREFORE THE S AID ISSUE CANNOT BE RAISED IN THE APPEAL FILED BEFORE THE CIT(APPEALS). EVEN OTHERWISE, WE FIND THAT THE ASSESSEE HAS NOT MADE ANY CLAIM BEFORE THE AO THAT NO EXPENSES WERE INCURRED IN EARNING THE TAX-FREE INCOME. THE AVAILABILITY OF OWN FUNDS AS STATED BY THE ASSESSEE IN THE WRITTEN SUBMISSION S IS NOT RELEVANT BECAUSE THE DISALLOWANCE IS MADE ONLY OUT OF OTHER EXPENSES UNDER RULE 8D(2)(III) OF THE I.T. RULES. IN THE GIVEN FACTS A ND CIRCUMSTANCES, WE FIND NO MERIT IN THIS APPEAL BY THE ASSESSEE. CONSEQUENTLY, THE SAME IS DISMISSED. ITA NO. 2482/BANG/2017 PAGE 4 OF 4 8. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS DIS MISSED. PRONOUNCED IN THE OPEN COURT ON THIS 08 TH DAY OF AUGUST, 2018. SD/- SD/- ( JASON P. BOAZ ) ( N.V. VASUDEVAN ) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 08 TH AUGUST, 2018. / D ESAI S MURTHY / COPY TO: 1. THE APP ELL ANT 2. THE RESPONDENT 3. THE C IT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.