, , IN THE INCOME TAX APPELLATE TRIBUNAL , C B ENCH, CHENNAI . . . , ., # BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI S.JAYARAMAN, ACCOUNTANT MEMBER / I.T.A. NO.2823/CHNY/2018 '' /ASSESSMENT YEAR : 2008-09 M/S.V.RAMAKRISHNA & SONS PVT. LTD, NO.2, DR.P.V.CHERIAN CRESCENT, EGMORE, CHENNAI-600 008. VS THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-3(4), CHENNAI-600034. PAN: AAACV2307A ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. SAROJ KUMAR PARIDA, ADVOCATE /RESPONDENT BY : MR. R.CLEMENT RAMESH KUMAR, ADDL.CIT /DATE OF HEARING : 27.02.2019 /DATE OF PRONOUNCEMENT : 28 .02.2019 / O R D E R PER S.JAYARAMAN, AM: THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER O F COMMISSIONER OF INCOME TAX (APPEALS)-11, CHENNAI, IN ITA NO. 438 /13-14 DATED 24.07.2018 FOR ASSESSMENT YEAR 2008-09. 2. M/S.V.RAMAKRISHNA & SONS PVT. LTD., THE ASSESSEE , AN INVESTMENT COMPANY, DERIVES INCOME FROM DIVIDEND ON THE SHARES INVESTED DURING THE TENURE OF MANAGING AGENCY AND ALSO THE INTEREST ON ADVANCES MADE TO THE MANAGED COMPANY. WHILE MAKING THE ASSESSMENT FOR THE ASSESSMENT YEAR 2008-09, THE ASSESSING OFFICER DISA LLOWED 5% ON ITS 2 ITANO.2823/CHNY/2018 DIVIDEND INCOME OF RS.2,91,87,428/- UNDER SECTION 1 4A. FURTHER, HE REFUSED TO ALLOW THE ASSESSEES DEPRECIATION AND RE PAIRS CLAIM ON ITS BUILDING. AGGRIEVED , THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE LD.CIT(A) DISMISSED THE APPEAL. AGGRIEVED, THE ASSESSEE FILED THIS APPEAL WITH THE FOLLOWING GROUNDS:- 1 THE ORDER OF THE COMMISSIONER OF INCOME TAX (APP EALS) IS CONTRARY TO LAW, FACTS AND CIRCUMSTANCES OF THE CASE. 2 THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING DISALLOWANCE UNDER SECTION 14A OF AN AMOUNT OF RS 1 459371/-AS EXPENDITURE RELATABLE TO EARNING THE DIVIDEND INCOM E. 2.1. THE APPELLANT SUBMITS THAT NO INTEREST EXPENDI TURE HAS BEEN CHARGED IN THE PROFIT & LOSS ACCOUNT AND THEREFORE ALLOCATION OF SUCH EXPENDITURE AS RELATING TO EARNING OF DIVIDEND INCO ME DOES NOT ARISE. 2.2. THE APPELLANT SUBMITS THAT THERE WERE NO EXPEN SES INCURRED BY THE ASSESSEE IN EARNING DIVIDEND INCOME AND THERE WERE NO ADMINISTRATIVE OR PERSONAL EXPENSES WHICH COULD BE SAID TO BE EXPE NSES FOR EARNING SUCH DIVIDEND, DISALLOWANCE OF ESTIMATED EXPENSES A S HAVING BEEN INCURRED FOR EARNING DIVIDEND INCOME IS NOT WARRANT ED. 2.3. THE APPELLANT SUBMITS THAT OBJECT BEHIND INSER TION OF SECTIONL4A, CLARIFIES THAT EXPENSES INCURRED CAN BE ALLOWED ONL Y TO EXTENT THEY ARE RELATABLE TO EARNING OF TAXABLE INCOME. AS THE ASSE SSEE HAD SUFFICIENT FUNDS AVAILABLE WITH IT, WHICH WAS MORE THAN AMOUNT IT INVESTED FOR EARNING DIVIDEND INCOME, AND ALT EXPENDITURE INCURR ED WAS ONLY TOWARD EARNING TAXABLE INCOME, DISALLOWANCE TO EXTENT OF 5 % OF DIVIDEND INCOM WAS NOT WARRANTED. 2.4. THE APPELLANT RELIES ON THE DECISION IN CIT VS . HERO CYCLES LTD. 323 ITR 518. 3. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED I N CONFIRM DISALLOWANCE OF DEPRECIATION AND REPAIRS TO BUILDIN G. 3. THE LD.AR INVITED OUR ATTENTION TO THE COPY OF T HE PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31.03.2008 AND SUBMITTE D THAT THE ASSESSEES INCOME COMPRISED RS. 2,91,87,428/- DIVID END INCOME AND 3 ITANO.2823/CHNY/2018 RS.20,33,354/- INTEREST INCOME FROM OTHERS AGAINST WHICH THE ASSESSEE INCURRED RS.2,97,804/- TOWARDS RENT, RATES & TAXES, REPAIRS & MAINTENANCE TO THE BUILDING OWNED BY IT, REMUNERATI ON OF AUDITORS, PROFESSIONAL CHARGES, MISCELLANEOUS EXPENSES, DEPR ECIATION ETC. AND EARNED PROFIT OF RS.3,09,22,978/-. THE ASSESSEE HA S NOT INCURRED ANY FINANCIAL CHARGES ON THE EARNING OF DIVIDEND INCO ME, ALTHOUGH THE ASSESSEE CLAIMED TOTAL EXPENSES AT RS.2,97,804/-, THE ASSESSING OFFICER DISALLOWED RS.14,59,371/- UNDER SECTION 14A AND HENCE THE LD AR PLEADED THAT DISALLOWANCE MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD.CIT(A) BE DELETED. PER CONTRA, LD.DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES . 4. WE HEARD RIVAL SUBMISSIONS. WHEN THE ASSESSEE H AS INCURRED A TOTAL AMOUNT OF RS. 2,97,804/- FOR EARNING OF ITS INCOME, THE DISALLOWANCE CANNOT BE MADE UNDER SECTION 14A A T RS. 14,59,371/-. IN THE FACTS AND CIRCUMSTANCES, WE REMIT THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR A FRESH EXAMINATION IN ACCORDANCE WITH LAW. THE ASSESSEE SHALL LAY ALL MATERIALS WHICH ARE I N SUPPORT OF ITS CONTENTION BEFORE THE ASSESSING OFFICER AND COMPLY WITH THE REQUIREMENTS OF THE ASSESSING OFFICER IN ACCORDANCE WITH LAW. THE ASSESSING OFFICER AFTER AFFORDING ADEQUATE OPPORTUN ITY TO THE ASSESSEE SHALL PASS A SPEAKING ORDER . 4 ITANO.2823/CHNY/2018 5. WITH REGARD TO THE DISALLOWANCE MADE ON THE DEPR ECIATION AND REPAIRS CLAIM, THE LD.AR SUBMITTED THAT THE ASSESSE E INCURRED THESE EXPENDITURE IN MAINTAINING COMPANYS BUILDING FOR EARNING ITS INCOME. THOUGH THE ASSESSEES CLAIM WAS ALLOWED IN THE EARL IER YEARS, VIZ. ASSESSMENT YEARS 2003-04 & 2004-05 IN ITA NOS.35 & 119/2008-09 DATED 17.09.2010, THE ASSESSING OFFICER AS WELL AS THE LD.CIT(A) DID NOT ALLOW THE ASSESSEES CLAIM FOR THIS ASSESSMENT YEAR . PER CONTRA, THE LD.DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES . 6. WE HEARD RIVAL SUBMISSIONS. SINCE THE ASSESSEE IS A COMPANY, EARNING ITS INCOME AND ITS IMPUGNED CLAIM WAS ALLOW ED IN THE EARLIER ASSESSMENT YEARS, WE FIND MERIT IN THE SUBMISSIO NS OF THE LD.AR AND HENCE DIRECT THE ASSESSING OFFICER TO ALLOW ASSESS EES CLAIM OF DEPRECIATION AND REPAIRS ON THE BUILDING OWNED AND USED BY IT FOR BUSINESS PURPOSES. 7. IN THE RESULT, THE ASSESSEES APPEAL IS TREAT ED AS ALLOWED. ORDER PRONOUNCED ON 28 TH FEBRUARY, 2019. SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) (S.JAYARAMAN) ( ! / JUDICIAL MEMBER) ( ! / ACCOUNTANT MEMBER) /CHENNAI, $ /DATED 28 TH FEBRUARY, 2019 SOMU 5 ITANO.2823/CHNY/2018 () *) /COPY TO: 1. APPELLANT 2. RESPONDENT 3. + () /CIT(A) 4. + /CIT 5. ) / /DR 6. 2 /GF