Asst. Commissioner of Income Tax, Circle-5(1), Hyderabad V. Aditya Hospitals , Hyderabad

ITA 299/Hyd/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0606 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 12-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Earning of tax free income
• Section: 142(1); 14A

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A , HYDERABAD BEFORE S MT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S . RIFAUR RAHMAN , ACCOUNTANT MEMBER ITA NO. 299 /HYD/201 8 ASSESSMENT YEAR: 20 14 - 15 ASST. COMMISSIONER OF INCOME - TAX, CIRCLE 5 ( 1 ) , HYDERABAD. VS. ADITYA HOSPITALS, HYDERABAD. PAN AAFFA 4363 D (APPELLANT) (RESPONDENT) REVENUE BY : SHRI K.J. RAO ASSESSEE BY : SHRI K.A. SAIPRASAD DATE OF HEARING : 06 - 0 8 - 201 8 DATE OF PRONOUNCEMENT : 1 9 - 0 9 - 201 8 O R D E R PER S . RIFAUR RAHMAN, A .M.: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF DATED 22 / 1 1 / 201 7 OF CIT(A) 4 , HYDERABAD, FOR AY 20 14 - 15 WHEREIN THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. T HE COMMISSIONER OF INCOME TAX (A) ERRED IN DELETING THE DISALLOWANCE UNDER SECTION 14A OF RS 34,09,750/ - . 2. THE COMMISSIONER OF INCOME TAX(A) ERRED IN IGNORING CEDI'S CIRCULAR NO.5 OF 2014 DATED 11.02.2014. 3. THE COMMISSIONER OF INCOME TAX (A) ERRED IN IGNORING THE SUPREME COURT DECISION IN THE CASE OF COMMISSIONER OF INCOME TAX VS WALFORT SHARE OF STOCK BROKERS P LTD (326ITR 1), WHEREIN IT WAS HELD THAT THE MANDATE OF SECTION 14A WAS TO CURB THE PRACTICE OF CLAIMING DEDUCTION OF EXPENSES INCURRED IN RE LATION TO EXEMPT INCOME AGAINST TAXABLE INCOME AND AT THE SA ME TIME AVAIL OF THE TAX INCENTIVE BY WAY OF EXEMPT INCOME WITHOUT MAKING ANY APPORTIONMENT OF EXPENSES INCURRED IN RELATION TO EXEMPT INCOME. 2 ITA NO. 299 /HYD/201 8 ADITYA HOSPITALS, HYD. 4. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME O F HEARING. 2. BRIEF FACTS OF THE CASE ARE, ASSESSEE A FIRM PROVIDING MEDICAL SERVICES, FILED ITS RETURN OF INCOME FOR AY 2014 - 15 ON 2 4 / 1 0/2014 ADMITTING A TOTAL INCOME OF RS. 4,21,01,520 / - , WHICH WAS PROCESSED U/S 143(1) OF THE INCOME - TAX ACT, 1961 ( IN SHORT THE ACT) . SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AND ACCORDINGLY NOTICES U/S 143(2) AND 142(1) WERE ISSUED. AFTER EXAMINING THE INFORMATION FILED BY THE ASSESSEE, THE AO C OMPLETED THE ASSESSMENT BY DISALLOWING AN AMOUNT OF RS. 34,09,750/ - READ WITH RULE 8D OF IT RULES. 3. WHEN THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) AGAINST THE ORDER OF AO, THE CIT(A) DELETED THE DISALLOWANCE MADE BY THE AO FOLLOWING THE DECISIO N OF THE ITAT IN THE CASE OF PRATHISTA INDUSTRIES LTD., VS. DCIT IN ITA NO. 1302/ H YD/2015 AND ALSO OBSERVED THAT THE ASSESSEE HAS NOT EARNED ANY DIVIDEND INCOME DURING THIS AY. 4. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 5 . CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. AS PER THE INFORMATION SUBMITTED BY THE ASSESSEE BEFORE THE CIT(A), THE CIT(A) CAME TO THE CONCLUSION THAT THE ASSESSEE HAS NOT RECEIVED ANY DIVIDEND INCOME FROM ANY COMPANY DURING THE FY 2013 - 1 4 RELEVANT TO THE AY 2014 - 15 AND ACCORDINGLY, HE DELETED THE DISALLOWANCE MADE U/S 14A RELYING ON THE DECISION OF ITAT HYDER A BAD IN THE CASE OF PRATHISTA INDUSTRIES LTD. (SUPRA). IT IS A SETTLED POSITION OF LAW THAT THE PROVISIONS OF SECTION 14A CAN BE APPLIED TO QUANTIFY THE EXPENSES IN RELATION TO EXEMPT INCOME. SINCE THE EXEMPT INCOME IS NIL, SECTION 14A WILL NOT APPLY. THE RULE 8D CAN BE APPLIED ONLY WHEN THERE IS DIFFICULTY IN FINDING THE EXPENDITURE RELATING TO EXEMPT 3 ITA NO. 299 /HYD/201 8 ADITYA HOSPITALS, HYD. INCOME. THE PROVISIONS OF SECTION 14A AND RULE 8D WILL NOT APPLY TO THE PRESENT CASE. IT IS THE CONSISTENT VIEW OF THE HYDERABAD BENCHES AND ACCORDINGLY WE UPHOLD THE ORDER OF CIT(A) AND DISMISS THE GROUNDS RAISED BY THE REVENUE IN THIS REGARD. 6 . IN THE RESULT, APPEAL OF THE REVE NUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 19 TH SEPTEMBER , 2018. SD/ - SD/ - ( P. MADHAVI DEVI ) (S . RIFAUR RAHMAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 19 TH SEPTEMBER , 2 018. KV COPY TO: - 1) A CIT, CIRCLE 5 ( 1 ), 3 RD FLOOR, D BLOCK, IT TOWERS, AC GUARDS, HYD. 2) M/S ADITYA HOSPITAL, H.NO. 4 - 1 - 15/16, TILAK ROAD, HYDERABAD. 3) CIT(A) 4 , HYDERABAD. 4) PR. CIT 4 , HYD . 5 ) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 6 ) GUARD FILE