DCIT, CHENNAI V. M/s. Good Leather Shoes Pvt. Ltd., CHENNAI

ITA 2788/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8068 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2017
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 26-09-2016
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: M KARUAKARAN
• Keywords: Commercial expediency
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI , ! ' . #$ % &' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO.2788/MDS./2016 / ASSESSMENT YEAR : 2013-14 THE DCIT, CORPORATE CIRCLE 2(1), CHENNAI 600 034. VS. M/S.GOOD LEATHER SHOES PVT. LTD., 47,THIRUVENGADAM STREET, PERIAMENT, CHENNAI 600 003. [PAN AAACG 8998 G ] ( () / APPELLANT) ( *+() /RESPONDENT) / APPELLANT BY : SHRI SHIVA SRINIVAS, JCIT D.R /RESPONDENT BY : SHRI M.KARUAKARAN,ADVOCATE / DATE OF HEARING : 22 - 12 - 2016 / DATE OF PRONOUNCEMENT : 25 - 01 - 2017 , / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-6 DA TED 20.07.2016 PERTAINING TO ASSESSMENT YEAR 2013-14 2. THE FIRST GROUND IN ITS APPEAL IS WITH REGARD T O DELETION OF DISALLOWANCE MADE U/S.14A OF THE ACT BY LD.CIT(A). ITA NO.2788/156 :- 2 -: 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY CARRYING ON BUSINESS IN EXPORT OF SHOES AND SHOE UP PERS. THE ASSESSEE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2013-14 ON 28.09.2012 ADMITTING AN INCOME OF 8,81,99,000/-. SU BSEQUENTLY, THE CASE WAS TAKEN UP FOR SCRUTINY UNDER CASS AND THE A SSESSMENT U/S.143(3) DATED 12.09.2014 WAS COMPLETED DETERMINI NG THE TOTAL INCOME AT 9,32,20,980/- AFTER MAKING INTER ALIA TH E FOLLOWING ADDITIONS WHICH ARE DISPUTED IN THIS APPEAL. I) DISALLOWANCE U/.14A : ` 44,05,870/- II) DISALLOWNACE OF EPF & ESI ` 5,75,435/- 3.1. REGARDING DISALLOWANCE U/S.14A, THE AO FOUND THAT THE ASSESSEE HAD MADE INVESTMENTS IN THE FOLLOWING COMP ANIES AS ON 31 ST MARCH 2012 AS UNDER:- M/S.GOOD SHOE COMPONENTS PVT LTD., ` 8,88,47,700/- M/S.VENKAT SHOES PVT LTD. ` 7,84,781/- DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE SU BMITTED THAT THE INVESTMENTS ARE MADE ONLY FOR BUSINESS EXPANSION AN D NOT FOR EARNING DIVIDEND. THE CONTENTION OF THE ASSESSEE WAS NOT A CCEPTED BY LD. ASSESSING OFFICER. THE LD. ASSESSING OFFICER INVOKE D THE PROVISIONS OF THE SECTION 14A OF THE ACT, EVEN IF NO DIVIDEND IS EARNED AND CLAIMED AS EXEMPT DURING THE YEAR UNDER CONSIDERATION AND HAD EFFECTED A DISALLOWANCE OF ` 44,05,870/- U/S.14A R.W.R 8D OF THE INCOME TAX ITA NO.2788/156 :- 3 -: RULES, 1962. AGGRIEVED, THE ASSESSEE CARRIED THE AP PEAL BEFORE THE LD.CIT(A). 3.2. ON APPEAL, THE LD.CIT(A) FOLLOWING THE DECISI ON OF CHENNAI TRIBUNAL IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2012-13 VIDE ORDER DATED 19.05.2016 ALLOWED THE CLAIM OF ASSESSE E. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. SIMILAR ISSUE CAME FOR CONSIDERATION BEFORE THIS TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.184/MDS./2016 WHEREIN THE TRIBUNAL HELD AS UNDER:- 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECO RD. INVESTMENTS MADE BY THE ASSESSEE IN SUBSIDIARY COMP ANIES ARE FOR COMMERCIAL EXPEDIENCY WITH AN INTENTION TO CARRY ON THE BUSINESS. SUCH INVESTMENTS IN SUBSIDIARY COMPA NIES CANNOT BE CONSIDERED TO BE FOR EARNING THE EXEMPTED INCOME. IN FACT, THE APEX COURT IN S.A BUILDERS LTD. IN (20 0&) 288 ITR 1(SC) EXAMINED THE ISSUE ELABORATELY AND FOUND THA T WHEN THE BORROWED FUNDS WERE INVESTED I SUBSIDIARY COMPA NIES, NO PORTION OF INTEREST CAN BE DISALLOWED ON THE GROUND THAT THE BORROWED FUNDS WERE DIVERTED OTHER THAN THE BUSINES S OF THE ASSESSEE COMPANY. THIS TRIBUNAL IS OF THE CONSIDERE D OPINION THAT THE SAME WOULD EQUALLY APPLICABLE WHEN THE INV ESTMENTS WERE MADE IN SISTER CONCERNS. THEREFORE, THE CIT(A) HAS RIGHTLY DELETED THE ADDITION MADE BY THE AO. IN VIEW OF THIS, WE DISMISS THE GROUND TAKEN BY THE REVENUE. ITA NO.2788/156 :- 4 -: 5. THE SECOND GROUND IN ITS APPEAL IS WITH REGARD TO DELETION OF DISALLOWANCE MADE U/S.2(24)(X) R.W.S.36(1)(VA) OF T HE ACT. 6. THE FACTS OF THE ISSUE ARE THAT THE AO FOUND T HAT THE EMPLOYEES CONTRIBUTIONS OF EPF OF ` 5,73,435/- & ESI OF ` 61,967/- WERE BELATEDLY DEPOSITED TOWARDS PROVIDENT FUND FOR THE MONTHS OF APRIL, MAY, AUGUST, OCTOBER, 2012 AND FEB.2013. HEN CE, THE AO DISALLOWED THE SAME. AGGRIEVED, THE ASSESSEE CARRIE D THE APPEAL BEFORE THE LD.CIT(A). ON APPEAL, LD.CIT(A) PLACING RELIANCE IN THE JUDGEMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. INUSTRIAL SECURITY & INTELLIGENCE INDIA PVT. LTD. IN (2015) ( 7) TMI 1063(MDI), ALLOWED THE CLAIM OF ASSESSEE. AGAINST THIS, THE RE VENUE IS IN APPEAL BEFORE US. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. SIMILAR ISSUE CAME FOR CONSIDERATION BEFORE THIS TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.184/MDS./2016 WHEREIN THE TRIBUNAL HELD AS UNDER:- 6. THE NEXT GROUND OF APPEAL IS WITH REGARD TO BELA TED DEPOSIT OF EMPLOYEES CONTRIBUTION TOWARDS PROVIDENT FUND AND ESI. THE CIT(APPEALS) BY PLACING RELIANCE ON THE JUDGMENT OF APEX COURT IN CIT V. ALOM EXTRUSIONS LIMITED (319 ITR 306) AND THE JUDGMENT OF MADRAS HIGH COURT IN CIT V. INDUSTRIAL SECURITY & INTELLIGENCE INDIA PVT. LTD. IN 585 AND 586 OF 2015 DATED 24.07.2015, ALLOWED THE CLAIM OF THE ASSESSEE HOLDI NG THAT WHEN THE ASSESSEE HAS DEPOSITED EMPLOYEES CONTRIBU TION ITA NO.2788/156 :- 5 -: TOWARDS PROVIDENT FUND AND ESI BEFORE THE DUE DATE FOR FILING OF RETURN OF INCOME UNDER SECTION 139(1) O THE ACT, TH E SAME HAS TO BE ALLOWED. THIS TRIBUNAL IS OF THE CONSIDERED O PINION THAT WHEN THE CIT(APPEAS AOWED THE CLAIM OF THE ASSESSEE ON THE BASIS OF JUDGMENT OF APEX COURT AND JUDGMENT OF MAD RAS HIGH COURT, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTE RFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SA ME IS CONFIRMED. IN VIEW OF ORDER OF TRIBUNAL IN ASSESSEE'S OWN CAS E , WE DISMISS THE GROUND TAKEN BY THE REVENUE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS D ISMISSED. ORDER PRONOUNCED ON 25 TH JANUARY, 2017, AT CHENNAI. SD/ - SD/ - ! ' # . $ %& ' ( DUVVURU RL REDDY ) ) % / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER () / CHENNAI *+ / DATED: 25 TH JANUARY, 2017. K S SUNDARAM +,-- ./-0/ / COPY TO: - 1 . / APPELLANT 3. - 1-!' / CIT(A) 5. /23- 4 / DR 2. / RESPONDENT 4. - 1 / CIT 6. 3&-5 / GF