M/s Chadha Super Cars Pvt. Ltd., Ludhiana V. Addl. CIT, Ludhiana

ITA 302/CHANDI/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7574 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 02-07-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 23-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANOJ KU MAR SR
• Assessee Lawyers: KULDEEP SINGH ITP
• Keywords: Earning of tax free income
• Section: 14A; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, A CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBE AND MS. ANNAPURNA GUPTA, ACCOUNTANTMEMBER ITA NO. 302/CHD/2015 ASSESSMENT YEAR : 2011-12 M/S CHADHA SUPER CARS PVT LTD., VS. THE ADDL. CIT , G.T.ROAD,VPO JUGIANA, RANGE-V, LUDHIANA LUDHIANA PAN NO. AABCC6944R (APPELLANT) (RESPONDENT) APPELLANT BY : SH. KULDEEP SINGH, ITP RESPONDENT BY : SH. MANOJ KUMAR,SR.DR DATE OF HEARING : 02.07.2018 DATE OF PRONOUNCEMENT : 02.07.2018 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSE SSEE AGAINST THE ORDER DATED 22.01.2015 OF THE COMMISSIONER OF I NCOME TAX(A)-2, LUDHIANA [HEREINAFTER REFERRED TO AS CIT(A)]. 2. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE SOLE ISSUE RAISED IN THIS APPEAL RELATES TO DIS ALLOWANCE MADE U/S 14A OF THE ACT. IT HAS BEEN POINTED OUT THAT EARLI ER THE LD. CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE BY INVOKING THE PROVISIONS U/S 154 OF THE ACT. THE LD. CIT(A) MADE THE IMPUGNED ADD ITION OF RS. 39,85,335/- U/S 14A OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). IN RESPECT OF EXPENDITURE INCURRED IN RELATION OF EARNING OF TAX ITA NO. 302/CHD/2015- M/S CHADHA SUPER CARS PVT LTD, LUDHIANA 2 EXEMPT INCOME FROM THE INVESTMENTS MADE IN THE PAR TNERSHIP FIRM OF THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE HA S SUBMITTED THAT THE TOTAL TAX EXEMPT INCOME EARNED DURING THE YEAR WAS RS. 72,293/- ONLY. HE HAS FURTHER SUBMITTED THAT THE DISALLOWAN CE U/S 14A CANNOT EXCEED THE TOTAL TAX EXEMPT INCOME EARNED BY THE AS SESSEE. HE HAS SUBMITTED THAT THE ASSESSEE WILL BE SATISFIED IF TH E DISALLOWANCE U/S 14A OF THE ACT SHOULD BE RESTRICTED TO THE TOTAL TA X EXEMPT INCOME EARNED BY THE ASSESSEE DURING THE YEAR. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND AVERMENT S MADE BY THE LD. COUNSEL FOR THE ASSESSEE. HE IN THIS RESPECT HA S RELIED UPON THE DECISION IN THE CASE OF CIT, FARIDABAD VS. LAKHANI MARKETING INC. 226 TAXMAN 45 (P&H) AND THE DECISION OF HON'BLE DELHI HIGH COURT IN IN THE CASE OF CHEMINVEST LTD VS. ITO (2015) 378 ITR 33 (DELHI). 4. THE LD. DR, ON THE OTHER HAND, HAS RELIED ON THE FINDINGS OF THE LD. CIT(A). 5. WE FIND THAT THE ISSUE IS SQUARELY COVERED BY TH E DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CAS E OF CIT, FARIDABAD VS. LAKHANI MARKETING INC. 226 TAXMAN 45 (P&H) AND THE DECISION OF HON'BLE DELHI HIGH COURT IN IN THE CASE OF CHEMINVEST LTD VS. ITO (2015) 378 ITR 33 (DELHI) AND OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CORRTE CH ENERGY P. LTD. (2014) 45 TAXMAN.COM 116 AND FURTHER OF THE H ON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. M/S S HIVAM MOTORS ITA NO. 302/CHD/2015- M/S CHADHA SUPER CARS PVT LTD, LUDHIANA 3 (P) LTD (2014) 272 CTR (ALL) 277 AND IN VARIOUS OT HER CASE LAWS. THE HON'BLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD VS. ITO (SUPRA) HAS HELD THAT THE DISALLOWANCE U/S 14A CANNOT SWALL OW THE ENTIRE TAX EXEMPT INCOME. SIMILAR PROPOSITION W AS LAID DOWN BY THE HON'BLE ALLAHABAD HIGH COURT IN CIT VS. M/S SHIVAM MOTORS (P) LTD (SUPRA) AND HON'BLE GUJARAT HIGH COURT IN CORRTECH ENERGY P. LTD. (SUPRA). IN VIEW OF THIS, AND AS PER SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE THE DISALLOWANCE U /S 14A IS RESTRICTED TOTAL TAX EXEMPT INCOME EARNED BY THE AS SESSEE DURING THE YEAR. THE APPEAL OF THE ASSESSEE IS, THEREFORE, TREATED A S PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT SD/- SD/- (ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 02.07.2018 RKK COPY TO: THE APPELLANT THE RESPONDENT THE CIT THE CIT(A) THE DR