Shriram Housing Fiance Ltd., CHENNAI V. DCIT, CHENNAI

ITA 2748/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4608 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 13-04-2017
• Assessment Year: 2013-2014
• Appeal Filed On: 23-09-2016
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: R SIVARAMAN
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C B ENCH, CHENNAI . , ! ' . #$ , % & BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A.NO.2748/MDS/2016 ( / ASSESSMENT YEAR: 2013-14) M/S. SHRIRAM HOUSING FINANCE LIMITED, MOOKAMBIKA COMPLEX, NO.4, LADY DESIKA ROAD, MYLAPORE, CHENNAI 600 004. VS THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE WARD 6(1), CHENNAI. PAN: AAPCS3213D ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI R. SIVARAMAN, ADVOCATE /RESPONDENT BY : SHRI A.V. SREEKANTH, JCIT /DATE OF HEARING : 13.04.2017 ! /DATE OF PRONOUNCEMENT : 04 . 05.2017 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS)- 15, CHENNAI DATED 19.07.2016 IN ITA NO.338/CIT(A)-1 5/15-16 FOR THE ASSESSMENT YEAR 2013-14 PASSED U/S.250(6) R.W.S . 143(3) OF THE ACT. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN ITS A PPEAL, HOWEVER THE CRUX OF THE ISSUE IS THAT THE LD. CIT(A ) HAS ERRED IN INVOKING THE PROVISIONS OF SECTION 14A READ WITH RU LE 8D OF THE RULES AND THEREBY DISALLOWED THE EXPENDITURE OF RS. 5,29,831/-. 2 ITA NO.2748/MDS/2016 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A LIMITED COMPANY ENGAGED IN THE BUSINESS OF HOUSING FINANCE, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2013-1 4 ON 27.09.2013. THE CASE WAS SELECTED UP FOR SCRUTINY UNDER CASS AND FINALLY ORDERS U/S. 143(3) WAS PASSED ON 25.03. 2016 WHEREIN THE LD.AO INVOKED THE PROVISIONS OF SECTION 14A REA D WITH RULE 8D (I, II, & III) AND THEREBY DISALLOWED RS.6,59,06 2/- AFTER REJECTING THE CLAIM OF THE ASSESSEE THAT IT HAD ONLY INCURRED EXPENDITURE OF ONLY RS.1,29,231/- WHICH IS ATTRIBUTABLE FOR EARNI NG EXEMPT INCOME AS DETAILED HEREIN BELOW:- PARTICULARS AMOUNT GROSS SALARY 79,520 BONUS 700 SALARY PER MONTH 820,220 SALARY PER ANNUM 962,640 SALARY PER DAY 2,637 NO. OF DAYS 49 TOTAL DISALLOWANCE AMOUNT (2637*49) 1,29,231 ACCORDINGLY THE LD.A.O MADE ADDITION OF RS. RS .5,29,839/- IN THE CASE OF THE ASSESSEE. 4. ON APPEAL, THE LD.CIT(A) HELD THAT THE LD.AO HAD GIVEN DETAILED REASONS FOR MAKING DISALLOWANCE U/S.14A RE AD WITH RULE 8D AND THEREFORE HE CONFIRMED THE ADDITION OF RS.5, 29,839/- MADE BY HIM . 3 ITA NO.2748/MDS/2016 5. BEFORE US THE LD.AR SUBMITTED THAT THE ASSESSEE HAD ITSELF DISALLOWED EXPENSES THAT IS ATTRIBUTABLE FOR EARNIN G EXEMPT INCOME FOR RS.1,29,231/- AND THE DETAILS FOR THE SA ME WAS ALSO FURNISHED. THEREFORE FURTHER ADDITION OF RS.5,29,83 9/- IS NOT WARRANTED. HENCE IT WAS PLEADED THAT THE SAME MAY BE DELETED. 6. ON THE OTHER HAND THE LD. DR SUBMITTED THAT THE ASSESSEE HAD MADE INVESTMENTS TO THE EXTENT OF RS.3,34,49,07 6/- FOR EARNING DIVIDEND INCOME WHICH IS EXEMPTED FROM TAX. HENCE IT WAS ARGUED THAT THE LD.AO HAD RIGHTLY WORKED OUT TH E DISALLOWANCE WHICH IS IN ACCORDANCE WITH RULE 8D OF THE RULES. IT WAS THEREFORE REQUESTED THAT THE ORDER OF THE LD.AO MAY BE CONFIRMED. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS ON RECORD. THOUGH THE ASSESSEE HAD F URNISHED DETAILS OF CERTAIN SALARY EXPENSES THAT IS ATTRIBUT ABLE FOR EARNING EXEMPT INCOME FOR MAKING DISALLOWANCE U/S. 14A OF T HE ACT, SUCH DISALLOWANCE ALONE WILL NOT SUFFICE BECAUSE ALLOCAT ION OF OTHER OVERHEADS WHICH IS ATTRIBUTABLE FOR EARNING EXEMPT INCOME HAS ALSO TO BE TAKEN INTO CONSIDERATION FOR DISALLOWANC E U/S.14A OF THE 4 ITA NO.2748/MDS/2016 ACT. FURTHER THE COMPLETE DETAILS OF THE SALARY EX PENDITURE WITH RESPECT TO ALL THE PERSONNEL INVOLVED IN THE DECISI ON MAKING PROCESS FOR MANAGING THE MUTUAL FUNDS OF THE ASSESS EE IS ALSO NOT DISCLOSED BY THE ASSESSEE. THEREFORE THE CLAIM OF THE ASSESSEE THAT IT HAD ONLY INCURRED RS.1,29,231/- WHICH IS AT TRIBUTABLE FOR EARNING EXEMPT INCOME IS NOT ACCEPTABLE. HENCE THE LD.AO HAS RIGHTLY COMPUTED THE DISALLOWANCE IN ACCORDANCE WIT H RULE 8D OF THE RULES WHICH HAS BEEN UPHELD BY THE LD.CIT(A). FOR THE ABOVE STATED REASONS, WE DO NOT FIND IT NECESSARY TO INTE RFERE WITH THE ORDER OF THE LD.CIT(A) WITH THIS ISSUE. 8. IN THE RESULT APPEAL OF THE ASSESSEE IS DISMISSE D. ORDER PRONOUNCED IN THE COURT ON THE 04 TH MAY, 2017. SD/- SD/- ( ! ' . #$ ) ( . ) ( DUVVURU RL REDDY ) ( A. MOHAN ALANKAMONY ) ' #$ /JUDICIAL MEMBER #$ / ACCOUNTANT MEMBER %' /CHENNAI, &# /DATED 04 TH MAY, 2017 JR # () *) /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. - ( )/CIT(A) 4. - /CIT 5. )./ 0 /DR 6. /1 /GF