M/s. Sical Multimodal and Rail Transport Ltd., CHENNAI V. ACIT, CHENNAI

ITA 2565/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7412 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-02-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 01-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Keywords: Proportionate interest; Rule 8D; Set aside
• 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

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , !.. # $%, ' () BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.2565/MDS/2016 + ,+ / ASSESSMENT YEAR : 2010-11 M/S SICAL MULTIMODAL AND RAIL TRANSPORT LIMITED, SOUTH INDIA HOUSE, 73, ARMENIAN STREET, CHENNAI - 600 001. PAN : AALCS 0399 C V. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE VI(3), CHENNAI - 600 034. (.// APPELLANT) (01.// RESPONDENT) ./ 2 3 / APPELLANT BY : SH. R. VIJAYARAGHAVAN, ADVOCATE 01./ 2 3 / RESPONDENT BY : SHRI SUPRIYO PAL, JCIT # 2 4' / DATE OF HEARING : 28.02.2017 56, 2 4' / DATE OF PRONOUNCEMENT : 29.03.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -15, CHENN AI, DATED 12.07.2016 AND PERTAINS TO ASSESSMENT YEAR 2010-11. 2 I.T.A. NO.2565/MDS/16 2. SH. R. VIJAYARAGHAVAN, THE LD.COUNSEL FOR THE AS SESSEE, SUBMITTED THAT THE ONLY ISSUE ARISES FOR CONSIDERAT ION IS DISALLOWANCE OF ` 4,27,221/-. ACCORDING TO THE LD. COUNSEL, THE INVESTED TO THE EXTENT OF ` 12,57,55,617/- IN THE JOINT VENTURE COMPANY, NAMELY, M/S SICAL HAMBUJA LOGISTICS PVT. L TD. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF INTEREST BY TAKING A CLUE FROM RULE 8D OF INCOME-TAX RULES, 1962. ACCORDING TO THE LD. COUNSEL, THE BORROWED FUNDS WERE INVESTED IN THE JO INT VENTURE COMPANY FOR THE PURPOSE OF BUSINESS, THEREFORE, THE RE CANNOT BE ANY DISALLOWANCE IN VIEW OF THE JUDGMENT OF APEX CO URT IN S.A. BUILDERS LTD. V. CIT (288 ITR 1). ACCORDING TO THE LD. COUNSEL, RULE 8D IS APPLICABLE ONLY IN RESPECT OF INVESTMENT MADE FOR EARNING EXEMPTED INCOME. SINCE THE ASSESSEE INVESTED THE F UNDS FOR THE PURPOSE OF BUSINESS IN THE JOINT VENTURE COMPANY AN D NOT FOR THE PURPOSE OF EARNING ANY EXEMPTED INCOME, ACCORDING T O THE LD. COUNSEL, THE PROVISIONS OF RULE 8D CANNOT BE MADE A PPLICABLE TO THE ASSESSEE. 3. ON THE CONTRARY, SHRI SUPRIYO PAL, THE LD. DEPAR TMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE INVESTE D IN THE JOINT VENTURE COMPANY FROM AND OUT OF BORROWED FUNDS, THE REFORE, THE 3 I.T.A. NO.2565/MDS/16 ASSESSING OFFICER BY TAKING CLUE UNDER RULE 8D, DIS ALLOWED THE PROPORTIONATE INTEREST TO THE EXTENT OF ` 47,27,221/-. ACCORDING TO THE LD. D.R., SINCE THE INVESTMENT WOULD RESULT IN INCOME WHICH IS NOT TAXABLE UNDER THE INCOME-TAX ACT, THE ASSESSING OFFICER HAS RIGHTLY APPLIED THE PROVISIONS OF RULE 8D OF THE IN COME-TAX RULES, 1962, THEREFORE, THE CIT(APPEALS) HAS RIGHTLY CONFI RMED THE ADDITION MADE BY THE ASSESSING OFFICER. 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 INVESTMENT WAS ADMITTEDLY MADE IN THE JOINT VENTURE COMPANY. WHEN THE ASSESSEE INVESTED IN THE JOINT V ENTURE COMPANY SO AS TO FACILITATE THE JOINT VENTURE COMPA NY AND ITS BUSINESS, THIS TRIBUNAL IS OF THE CONSIDERED OPINIO N THAT THE PROVISIONS OF RULE 8D CANNOT BE MADE APPLICABLE AT ALL. IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE OR THE JOINT VENTURE COMPANY MISUSED THE BORROWED FUNDS. WHEN THE ASSESSEE ADMI TTEDLY INVESTED IN THE JOINT VENTURE COMPANY FOR THE PURPO SE OF BUSINESS, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE RE CANNOT BE ANY DISALLOWANCE OF INTEREST ON THE BORROWED FUNDS. TH EREFORE, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AS CONFI RMED BY THE 4 I.T.A. NO.2565/MDS/16 CIT(APPEALS) TO THE EXTENT OF ` 47,27,221/- IS NOT JUSTIFIED. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES AR E SET ASIDE AND THE ADDITION OF ` 47,27,221/- IS DELETED. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 29 TH MARCH, 2017 AT CHENNAI. SD/- SD/- ( ! . . # $% ) ( . . . ) (D.S. SUNDER SINGH) (N.R.S. GANESAN) ' / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 8 /DATED, THE 29 TH MARCH, 2017. KRI. 2 04$9 :9,4 /COPY TO: 1. ./ /APPELLANT 2. 01./ /RESPONDENT 3. # ;4 () /CIT(A)-15, CHENNAI-34 4. # ;4 /CIT-6, CHENNAI-34 5. 9< 04 /DR 6. !+ = /GF.