Acsys Investments P Ltd., CHENNAI V. DCIT, CHENNAI

ITA 2776/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90587 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 28-05-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 10-11-2014
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL A BENCH, CHE NNAI , . ! ! ! ! , ' ' ' ' #$ #$ #$ #$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI V. DURGA RAO, JUDICIAL MEMBER I.T.A. NO. 2776MDS/2014 ASSESSMENT YEAR : 2007-08 M/S. ACSYS INVESTMENTS P. LTD., EARLIER KNOWN AS ACSYS SOFTWARE INDIA P. LTD., F. 79A, SPENCER PLAZA, 759, ANNA SALAI, CHENNAI 600 002. [PAN: AAACA6235E] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(1), CHENNAI 600 034. ( %& %& %& %& /APPELLANT ) ( '(%& '(%& '(%& '(%& / RESPONDENT ) %& ) * / APPELLANT BY : SHRI R. VIJAYARAGHAVAN, ADVOCATE '(%& ) * / RESPONDENT BY : SHRI P. RADHAKRISHNAN, JCIT ) + / DATE OF HEARING : 28.05.2015 ,-. ) + /DATE OF PRONOUNCEMENT : 30.06.2015 / / / / / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) I, CHENN AI DATED 26.08.2014 RELEVANT TO THE ASSESSMENT YEAR 2007-08. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S ENGAGED IN THE BUSINESS OF SOFTWARE DEVELOPMENT. IT HAS FILED THE RETURN OF INCOME BY DECLARING TOTAL INCOME OF .3,85,48,850/-. THE RETURN FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) AND AFTER DUE PR OCESS, THE ASSESSMENT I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NO. .. .2776 2776 2776 2776/M/1 /M/1 /M/1 /M/14 44 4 2 WAS COMPLETED UNDER SECTION 143(3) OF THE INCOME TA X ACT BY DETERMINING TOTAL INCOME AT .4,01,96,768/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER, BY INVOKING RUL E 8D TO SECTION 14A OF THE ACT DISALLOWED AN AMOUNT OF .16,30,180/- BY OBSERVING THAT THE ASSESSEE HAS RECEIVED AN AMOUNT OF .12,21,22,324/- AS DIVIDEND DURING THE YEAR, WHICH HAS BEEN CLAIMED AS EXEMPT UNDER SECTIO N 10(34) OF THE ACT. UNDER THE PROVISIONS OF SECTION 14A OF THE ACT, NO EXPENDITURE INCURRED FOR THE PURPOSE OF EARNING DIVIDEND INCOME AND LONG TER M CAPITAL GAIN HAS BEEN CLAIMED AS EXEMPT, THE ASSESSEE HAS NOT ATTRIBUTED ANY PORTION OF THE EXPENDITURE MADE BY THE ASSESSEE COMPANY TOWARDS TH E SAME. THE ASSESSEE INCURS ROUTINE EXPENDITURE TO MAINTAIN ITS ESTABLISHMENT AND TOWARDS ADMINISTRATION AND, A PORTION OF WHICH CAN BE ATTRIBUTED TOWARDS THE ACTIVITY OF EARNING DIVIDEND AND LONG TERM CAPITAL GAINS. 3. ON APPEAL, THE LD. CIT(A), BY FOLLOWING THE DEC ISION OF THE TRIBUNAL IN THE CASE OF FFE MINERALS LTD. IN I.T.A. NO. 672/MDS /2006 DATED 25.10.2007 AND THE DECISION OF THE HONBLE MADRAS HIGH COURT I N THE CASE OF SIMPSON & CO. LTD. IN TCA NO. 2621 OF 2006, DIRECTED THE ASSE SSING OFFICER TO WORK OUT THE DISALLOWANCE @ 2% OF GROSS EXEMPT INCOME RECEIV ED. HOWEVER, IF THE WORKING OF 2% OF GROSS EXEMPT INCOME EXCEEDS THE AM OUNT DISALLOWED BY THE ASSESSING OFFICER, THE ASSESSING OFFICER IS DIR ECTED TO RESTRICT THE DISALLOWANCE ALREADY MADE BY HIM. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NO. .. .2776 2776 2776 2776/M/1 /M/1 /M/1 /M/14 44 4 3 4. AFTER HEARING BOTH SIDES, WE FIND THAT THE TRI BUNAL HAS OBSERVED THAT 2% OF THE GROSS EXEMPT INCOME RECEIVED AS REASONABL E IN THE CASE OF FFE MINERALS LTD. (SUPRA) AND THE HONBLE JURISDICTIONA L HIGH COURT HAS ALSO GAVE SIMILAR FINDING IN THE CASE OF SIMPSONS & CO. LTD. THEREFORE, THE LD. CIT(A) HAS RIGHTLY DIRECTED THE ASSESSING OFFICER T O WORK OUT THE DISALLOWANCE @ 2% OF GROSS EXEMPT INCOME RECEIVED B Y THE ASSESSEE. THUS, WE FIND NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A) AND ACCORDINGLY, THE APPEAL FILED BY THE ASSESSEE S TANDS DISMISSED. 16. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS DISMISSED. ORDER PRONOUNCED ON TUESDAY, THE 30 TH OF JUNE, 2015 AT CHENNAI. SD/ - SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER CHENNAI, DATED, THE 30.06.2015 VM/- / ) ''+01 21.+ /COPY TO: 1. %& / APPELLANT, 2. '(%& / RESPONDENT, 3. 3 ( ) /CIT(A), 4. 3 /CIT, 5. 14 ''+' /DR & 6. 5! 6 /GF.