ACIT, CHENNAI V. Chettinad Logistics Pvt. Ltd., CHENNAI

ITA 309/CHNY/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4695 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 21-11-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 19-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T N BETGIR I IRS
• Assessee Lawyers: S SRIDHAR
• Section: 143(3); 14A; 260A; 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENTAND SHRI V, DURGA RAO, JUDICIAL MEMBER ITA NOS. 308 & 309(MDS)/2013 ASSESSMENT YEARS : 2005-06 & 2007-08 THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(3), CHENNAI - 600 034. V. M/S CHITTINAD LOGISTICS PVT. LTD., NO.603, RANI SEETHAI HALL, 5 TH FLOOR, ANNA SALAI, CHENNAI - 600 006. PAN : AABCC 4551 C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T.N. BETG IRI, IRS, JCIT RESPONDENT BY: SHRI S. SRIDHAR, A DVOCATE DATE OF HEARING : 21 ST NOVEMBER, 2013 DATE OF PRONOUNCEMENT: 21 ST NOVEMBER, 2013 O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT THESE APPEALS ARE FILED BY THE REVENUE. THE RELE VANT ASSESSMENT YEARS ARE 2005-06 AND 2007-08. THESE TW O APPEALS ARE DIRECTED AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-III AT CHENNAI, PASSED ON 29.11.2012. TH E APPEALS ARISE 2 I.T.A. NOS. 308 & 309/MDS/13 OUT OF THE RESPECTIVE ASSESSMENT COMPLETED UNDER SE CTION 143(3) OF THE INCOME-TAX ACT, 1961. 2. THE ONLY ISSUE RAISED FOR THE ASSESSMENT YEAR 20 05-06 AND ONE OF THE ISSUES RAISED IN THE APPEAL FOR ASSESSME NT YEAR 2007-08 IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN DIRECTING THE ASSESSING OFFICER TO RECOMPUTE THE DE DUCTION UNDER SECTION 10B AFTER EXCLUDING THE FREIGHT ON EXPORT A ND INSURANCE FROM THE EXPORT TURNOVER AS WELL AS FROM THE TOTAL TURNO VER. IT IS THE CASE OF THE REVENUE THAT THE DECISION OF ITAT, CHENNAI S PECIAL BENCH RENDERED IN THE CASE OF M/S SAK SOFT LTD. HAS NOT B ECOME FINAL AND IT HAS PREFERRED AN APPEAL AGAINST THE SAID ORDER U NDER SECTION 260A BEFORE THE HONBLE HIGH COURT OF MADRAS. 3. THE OTHER ISSUE RAISED IN THE APPEAL FOR ASSESSM ENT YEAR 2007-08 IS THAT THE COMMISSIONER OF INCOME TAX (APP EALS) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO DISALLO W 0.1% OF THE AVERAGE VALUE OF INVESTMENTS UNDER SECTION 14A AGAI NST THE DISALLOWANCE OF ` 12,37,130/- MADE BY THE ASSESSING OFFICER BY APPLYING RULE 8D OF INCOME-TAX RULES, 1962. 3 I.T.A. NOS. 308 & 309/MDS/13 4. WE HEARD SHRI T.N. BETGIRI, THE LEARNED JOINT CO MMISSIONER OF INCOME TAX, APPEARING FOR THE REVENUE AND SHRI S . SRIDHAR, THE LEARNED COUNSEL, APPEARING FOR THE RESPONDENT-ASSES SEE. 5. AS FAR AS THE COMMON ISSUE OF SECTION 10B COMPUT ATION IS CONCERNED, ITAT, CHENNAI SPECIAL BENCH HAS HELD IN THE CASE OF INCOME TAX OFFICER V. M/S SAK SOFT LTD. [313 ITR (A T) 353] (CHENNAI) (SB) THAT IF FREIGHT AND INSURANCE CHARGE S ARE REDUCED FROM THE EXPORT TURNOVER, THOSE EXPENSES SHOULD EQU ALLY BE REDUCED FROM THE TOTAL TURNOVER AS WELL. AS OF NOW, THIS D ECISION OF THE SPECIAL BENCH PREVAILS. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS LEGITIMATELY FOLLOWED THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL AND DECIDED THE ISSUE. THIS IS PERFEC TLY IN ACCORDANCE WITH LAW. NO INTERFERENCE IS CALLED FOR. 6. REGARDING THE QUESTION OF DISALLOWANCE UNDER SEC TION 14A, WE HAVE TO STATE THAT RULE 8D IS NOT APPLICABLE FOR THE IMPUGNED ASSESSMENT YEAR 2007-08. BUT, STILL A REASONABLE A MOUNT OF DISALLOWANCE IS CALLED FOR AGAINST EXPENDITURE INCU RRED AGAINST STOCKS HELD THAT WOULD GENERATE TAX FREE INCOME. T HE COMMISSIONER OF INCOME TAX (APPEALS) HAS REASONABLY ESTIMATED SUCH DISALLOWANCE OF EXPENDITURE TO 0.1% OF THE AVE RAGE VALUE OF 4 I.T.A. NOS. 308 & 309/MDS/13 INVESTMENTS. THIS IS VERY FAIR. THERE IS NO NEED TO DISTURB HER ORDER. 7. IN RESULT, THESE TWO APPEALS FILED BY THE REVENU E ARE DISMISSED. ORDERS PRONOUNCED IN THE OPEN COURT AT THE TIME O F HEARING ON THURSDAY, THE 21 ST OF NOVEMBER, 2013 AT CHENNAI. SD/- SD/- (V. DURGA RAO) (DR. O. K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED, THE 21 ST NOVEMBER, 2013. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT, CHENNAI-I, CHENNAI (4) CIT(A)-III, CHENNAI (5) DR (6) GF