ITO Corporate Ward 2(4), CHENNAI V. India Cements Capital Limited, CHENNAI

ITA 2563/CHNY/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6909 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 03-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR M SRINIVASA RAO
• Assessee Lawyers: V SWAMINATHAN
• Keywords: Earning of tax free income; Tax effect; Rule 8D
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , . !', $ '% BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.2563/CHNY/2018 ' (' / ASSESSMENT YEAR : 2013-14 THE INCOME TAX OFFICER, CORPORATE WARD 2(4), CHENNAI - 600 034. V. M/S INDIA CEMENTS CAPITAL LIMITED, DHUN BUILDING, NO.827, ANNA SALAI, CHENNAI - 600 002. PAN : AAACA 3071 C (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : DR. M. SRINIVASA RAO, CIT ,-*+ . / / RESPONDENT BY : SHRI V. SWAMINATHAN, FCA 0 . 1$ / DATE OF HEARING : 07.02.2019 23( . 1$ / DATE OF PRONOUNCEMENT : 01.03.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -6, CHENNA I, DATED 29.06.2018 AND PERTAINS TO ASSESSMENT YEAR 2013-14. 2. DR. M. SRINIVASA RAO, THE LD. DEPARTMENTAL REPRE SENTATIVE, SUBMITTED THAT THE REVENUE FILED THE PRESENT APPEAL IN VIEW OF AUDIT 2 I.T.A. NO.2563/CHNY/18 REPORT EVEN THOUGH THE TAX EFFECT IS LESS THAN 20 LAKHS. ACCORDING TO THE LD. D.R., THE CIT(APPEALS) DIRECTED THE ASSE SSING OFFICER TO VERIFY WHETHER THE ASSESSEE HAD ITS OWN FUNDS FOR M AKING INVESTMENT FOR EARNING THE DIVIDEND INCOME. ACCORD ING TO THE LD. D.R., THE CIT(APPEALS) IS NOT JUSTIFIED IN RESTRICT ING THE DISALLOWANCE TO THE EXTENT OF EXEMPTED INCOME EARNED BY THE ASSE SSEE. 3. ON THE CONTRARY, SHRI V. SWAMINATHAN, THE LD. RE PRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE CIT(APPEALS) D IRECTED THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE UNDE R SECTION 14A OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') TO TH E EXTENT OF EXEMPTED INCOME BY FOLLOWING THE ORDERS OF THIS TRI BUNAL. ACCORDING TO THE LD. REPRESENTATIVE, THE MADRAS HIG H COURT IN THE CASE OF REDINGTON (INDIA) LTD. V. ADDL. CIT (2017) 77 TAXMANN.COM 257 EXAMINED THIS ISSUE AND FOUND THAT PROVISIONS O F SECTION 14A AND RULE 8D OF INCOME-TAX RULES, 1962 CANNOT BE MAD E APPLICABLE ON VACUUM. THE MADRAS HIGH COURT FURTHER FOUND THA T THERE CANNOT BE ANY DISALLOWANCE WHERE THERE IS NO EXEMPT INCOME . THEREFORE, ACCORDING TO THE LD. REPRESENTATIVE, THE CIT(APPEAL S) HAS RIGHTLY DIRECTED THE ASSESSING OFFICER TO RESTRICT THE DISA LLOWANCE TO THE EXTENT OF EXEMPTED INCOME EARNED BY THE ASSESSEE. 3 I.T.A. NO.2563/CHNY/18 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS EARNED EXEMPTED INCOM E. THE CIT(APPEALS) DIRECTED THE ASSESSING OFFICER TO REST RICT THE DISALLOWANCE TO THE EXTENT OF EXEMPTED INCOME EARNE D BY THE ASSESSEE. THE MADRAS HIGH COURT IN THE CASE OF REDI NGTON (INDIA) LTD. (SUPRA) FOUND THAT THERE CANNOT BE ANY DISALLO WANCE UNDER SECTION 14A READ WITH RULE 8D ON VACUUM AND THERE C ANNOT BE ANY DISALLOWANCE ON THE ASSUMED INCOME IN THE ABSENCE O F EXEMPT INCOME. IN VIEW OF THE ABOVE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE COURT ON 1 ST MARCH, 2019 AT CHENNAI. SD/- SD/- (. !' ) ( . . . ) (S. JAYARAMAN) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 1 ST MARCH, 2019. 4 I.T.A. NO.2563/CHNY/18 KRI. . ,167 87(1 /COPY TO: 1. *+/ APPELLANT 2. ,-*+/ RESPONDENT 3. 0 91 () /CIT(A)-6, CHENNAI 4. PRINCIPAL CIT- 2, CHENNAI 5. 7: ,1 /DR 6. ' ; /GF.