Powermatic Packaging Pvt. Ltd., CHENNAI V. ITO, CHENNAI

ITA 2482/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8190 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 26-08-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Keywords: Rule 8D
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 14A; 115JB

Judgement Text

, A/SMC , IN THE INCOME TAX APPELLATE TRIBUNAL A/SMC BENCH, CHENNAI . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ./I.T.A.NO.2482/MDS/2016 ( / ASSESSMENT YEAR :2012-13) M/S.POWERMATIC PACKAGING (P) LTD., DP 34,INDUSTRIAL ESTATE,GUINDY CHENNAI-600 032. VS. THE INCOME TAX OFFICER, CORPORATE WARD 5(2), CHENNAI. PAN:AACCP4735A ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : MR.R. KUMAR, ADVOCATE / RESPONDENT BY : MR. SHIVA SRINIVAS , JCIT ! ' #$ / DATE OF HEARING : 30 . 11 .201 6 %& #$ /DATE OF PRONOUNCEMENT : 09 . 0 1 .201 7 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED B Y THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-3, CHENNA I, DATED 30.06.2016 IN ITA NO.35/2015-16/CIT(A)-3. ITA NO.2482/MDS/2016 :-2-: 2. THE MAIN GRIEVANCE OF THE ASSESSEE IN THIS APPE AL IS WITH REGARD TO SUSTENANCE OF DISALLOWANCE OF ` 2,63,265/- MADE BY THE AO INVOKING THE 3 RD LIMB OF RULE 8D OF THE INCOME TAX RULES, 1962. 3. THE FACTS OF THE ISSUE ARE THAT THE ASSESSEE MA DE AN INVESTMENT OF ` 5,26,53,000/- TO M/S.LORDS MINT LTD. ACCORDING TO ASSESSEE, SINCE INCOME EARNED FROM THIS INVESTMENT IS EXEMPTED FROM INCOME TAX, THE ASSESSEE WAS ASKED TO EXPLAIN WHY DISALLOWANCE U/S.14A R.W.R.8D SHOULD NOT BE MADE. I N RESPONSE, THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS NOT EARNED ANY DIVIDEND INCOME FROM THE INVESTMENT DURING THE YEAR UNDER CO NSIDERATION. THE AO DID NOT AGREE WITH THE SUBMISSIONS OF ASSESSEE A ND INVOKED THE PROVISIONS OF THE SECTION 14A R.W.R 8D OF THE RULE S. AGGRIEVED, THE ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A), W HO CONFIRMED THE DISALLOWANCE MADE IN ACCORDANCE WITH RULE 8D R.W.S .14A OF THE ACT. AGGRIEVED WITH THE ORDER OF LOWER AUTHORITIES, THE ASSESSEE CAME BEFORE US. ITA NO.2482/MDS/2016 :-3-: 4. AT THE TIME OF HEARING, LD.A.R SUBMITTED THAT T HE ASSESSEE IS LIABLE TO PAY TAX AT BOOK PROFIT U/S.115JB OF THE A CT AND ACCORDING TO HIM, PROVISIONS OF THE SECTION 14A HAVE NO APPLICAT ION WHILE COMPUTING THE BUSINESS PROFIT U/S.115JB OF THE ACT. HE RELIED ON THE JUDGEMENT OF M/S.BRAKES INDIA LTD. VS. DCIT IN 46 I TR (TRI) 212(CHENNAI). 5. ON THE OTHER HAND, LD.D.R RELIED ON THE ORDER OF CIT(A) AND ALSO SUBMITTED THAT THE AO APPLIED PROVISIONS OF TH E SECTION 14A R.W.R.8D BOTH IN NORMAL COMPUTATION OF INCOME OF AS SESSEE AND BOOK PROFIT U/S.115JB OF THE ACT. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. AS RIGHTLY POINTED OUT BY THE LD.A.R, THIS ISSUE CAME FOR CONSIDERATION BEFORE THIS TRIBUNAL IN THE CASE OF M /S.BRAKES INDIA LTD. VS. DCIT CITED SUPRA WHEREIN HELD AS FOLLOWS:- ITA NO.2482/MDS/2016 :-4-: WE HAVE HEARD BOTH PARTIES AND PERUSED THE MATERIA L ON RECORD. THIS ISSUE OF DISALLOWANCE MADE BY THE ASSESSING OF FICER FOR THIS ASSESSMENT YEAR BY INVOKING THE PROVISIONS OF SECTI ON 14A READ WITH RULE 8D, WAS IN NORMAL COMPUTATION ALSO. IN OUR OPI NION, DISALLOWANCE MADE UNDER SECTION 14A READ WITH RULE 8D CANNOT BE ADDED WHILE COMPUTING THE BOOK PROFIT UNDER SECTION 115JB OF THE ACT THAT THE DISALLOWANCE IS ONLY FOR THE PURPOSE O F COMPUTING TAXABLE INCOME OF THE ASSESSEE IN THE NORMAL COURSE . THERE IS NO PROVISION IN THE ACT TO ADD THESE KIND OF DISALLOWA NCE WHILE COMPUTING BOOK PROFIT UNDER SECTION 115JB AND IT CA NNOT CHANGE THE BOOK PROFIT ON THIS COUNT. THEREFORE, EVEN IF THERE IS AN ADDITION IN VIEW OF PROVISION UNDER SECTION 14A READ WITH RULE 8D, THAT CANNOT BE ADDED BACK TO COMPUTE THE BOOK PROFIT UNDER SECT ION 115JB. THIS GROUND IS ALLOWED. IN VIEW OF THE ABOVE ORDER OF THE TRIBUNAL, WE ARE OF THE OPINION THAT BY COMPUTING THE BOOK PROFIT, THERE CANNOT BE APPLI CATION OF SECTION 14A READ WITH RULE 8D OF RULES. SINCE THE ASSESSEE S INCOME WAS COMPUTED U/S.115JB OF THE ACT AND THE APPLICATION O F SEC.14A OF THE ITA NO.2482/MDS/2016 :-5-: ACT WHILE COMPUTING THE NORMAL INCOME OF ASSESSEE D OES NOT ARISE. ACCORDINGLY, THIS GROUND IS PARTLY ALLOWED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09 TH JANUARY, 2017 AT CHENNAI. SD/- ( ) ( CHANDRA POOJARI ) /ACCOUNTANT MEMBER CHENNAI, DATED THE 09 TH JANUARY, 2017. K S SUNDARAM. ' #)* +*# / COPY TO: 1 . / APPELLANT 3. ! ,# () / CIT(A) 5. */0 #1 / DR 2. / RESPONDENT 4. ! ,# / CIT 6. 02 3' / GF