DCIT, CHENNAI V. M/s. Helios & Matheson Information Technology Ltd., CHENNAI

ITA 3118/CHNY/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6150 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 10-07-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 08-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M PALANICHAMY ADD
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . , , BEFORE SHRI ABRAHAM P.GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER ./I.T.A. NO. 3118/MDS/2016 ! ' # / ASSESSMENT YEAR : 2012-2013. THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 2(2) CHENNAI 600 034. VS. M/S. HELIOS & MATHESON INFORMATION TECHNOLOGY LTD, NO.605 & 605, 2 ND FLOOR, FILM CHAMBER BUILDING, ANNA SALAI, THOUSAND LIGHTS, CHENNAI 600 034. [PAN AAACE 0805A ] ( / APPELLANT) ( /RESPONDENT) $ % & / APPELLANT BY : SHRI. M. PALANICHAMY, ADD. CIT '($ % & /RESPONDENT BY : NONE ) * % + , /DATE OF HEARING : 19-09-2017 -.#' % + , /DATE OF PRONOUNCEMENT : 20-09-2017 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER: IN THIS APPEAL FILED BY THE REVENUE, IT HAS TAKEN ALTOGETHER FOUR GROUNDS OF WHICH GROUNDS 1 & 4 ARE GENERAL IN NATURE NEEDING NO SPECIFIC ADJUDICATION. ITA NO. 3118/MDS/2016. :- 2 -: 2. VIDE ITS GROUND 2, GRIEVANCE RAISED BY THE REVENUE IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) DELETED A DISALLOWANCE MADE BY THE LD. ASSESSING OFFICER U/S.14A OF THE I NCOME TAX ACT, 1961 (IN SHORT THE ACT) R.W.R. 8D OF THE INCOME TAX RULES, 1962 (IN SHORT THE RULES). 3. FACTS APROPOS ARE THAT ASSESSEE A SOFTWARE DEVELOP MENT COMPANY HAD MADE INVESTMENTS IN THE FORM OF EQUITY SHARES IN ITS GROUP CONCERNS. ASSESSEE HAD NOT MADE ANY SUO-MOTU DISALLOWANCE U/S. 14A OF THE ACT R.W.R.8D OF THE RULES. THOUGH ASSESSEE ARGUED THAT NO EXPENDITURE WAS INCURRED BY IT ON ACCOUNT O F THE ABOVE INVESTMENTS, IT WAS NOT ACCEPTED BY THE LD. ASSESSI NG OFFICER. HE MADE AN DISALLOWANCE OF B6,20,84,576/- APPLYING RU LE 8D (2)(II) AND B40,76,040/- APPLYING RULE 8D(2)(III) OF THE RULES. 4. AGGRIEVED, ASSESSEE MOVED IN APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS). ARGUMENT OF T HE ASSESSEE WAS THAT INVESTMENTS WERE MADE IN FOREIGN SUBSIDIARIES AND THE DIVIDEND RECEIPTS WERE TAXABLE IN INDIA. RELIANCE WAS PLAC ED ON A DECISION OF CO-ORDINATE BENCH IN ASSESSEES OWN CASE IN ITA NOS.2027, 2028, 2029 & 2030/MDS/2014, DATED 22.01.2016. LD. COMMISSIONER OF INCOME TAX (APPEALS) RELYING ON THE ABOVE DECISION OF THE TRIBUNAL DELETED THE DISALLOWANCES MADE BY THE LD. ASSESSING OFFICER. ITA NO. 3118/MDS/2016. :- 3 -: 5. NOW BEFORE US, LD. DEPARTMENTAL REPRESENTATIVE S TRONGLY ASSAILING THE ORDER OF THE LD. COMMISSIONER OF INCO ME TAX (APPEALS) SUBMITTED THAT NONE OF THE LOWER AUTHORITIES HAD V ERIFIED WHETHER ASSESSEE HAD RECEIVED ANY DIVIDEND AND CLAIMED IT AS EXEMPT. IN THE ASSESSEES CASE FOR EARLIER YEARS THERE WAS CLEAR FINDING BY THE TRIBUNAL THAT THERE WERE NO FRESH INVESTMENTS. AGAI NST THIS, ACCORDING TO HER, THERE WAS NOTHING TO SHOW THAT WERE NO IN CREMENTAL INVESTMENTS DURING THE RELEVANT PREVIOUS YEAR 6. DESPITE NOTICE BEING ISSUED NOBODY ENTERED APPEARAN CE FOR THE ASSESSEE. ON 10.07.2017 WHEN THE MATTER EARLIE R POSTED FOR HEARING, ONE MS. BHAVYA HAD APPEARED FOR THE ASSESS EE. BASED ON THE REQUEST OF THE LD. AUTHORISED REPRESENTATIVE THE CA SE WAS ADJOURNED TO THIS DAY. 7. WHAT WE FIND FROM THE ORDERS OF THE LOWER AUTHORITI ES IS THAT THE QUESTION WHETHER ASSESSEE HAD EARNED ANY INCOME FROM THE INVESTMENTS MADE BY IT WHICH WAS CLAIMED AS EXEMPT WAS NOT VERIFIED BY ANY OF THE LOWER AUTHORITIES. BY VIRT UE OF JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF REDINGTON INDIA LTD VS. ADDL. CIT (2016) 97 CCH 0219, UNLESS THERE IS EXEMPT INCOME THERE CANNOT BE A DISALLOWANCE U/S. 14A OF THE ACT. WE AR E OF THE OPINION THAT THE ISSUE THEREFORE REQUIRES A FRESH LOOK BY T HE LD. ASSESSING OFFICER. WE SET ASIDE THE ORDERS OF THE LOWER AUTHO RITIES AND REMIT THE ITA NO. 3118/MDS/2016. :- 4 -: ISSUE REGARDING DISALLOWANCE U/S. 14A OF THE ACT BA CK TO THE FILE OF THE LD. ASSESSING OFFICER FOR CONSIDERATION AFRESH IN ACCORDANCE WITH LAW. GROUND NO.2 OF THE REVENUE STANDS ALLOWED FOR STATI STICAL PURPOSE. 8. VIDE ITS GROUND NO.3, GRIEVANCE RAISED BY THE REVEN UE IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) DELETED TH E DISALLOWANCE MADE BY THE LD. ASSESSING OFFICER FOR DELAYED REMI TTANCES OF EMPLOYEES CONTRIBUTION TO PF & ESI. 9. IT IS NOT DISPUTED BY THE LD. DEPARTMENTAL REPRESEN TATIVE BEFORE US THAT REMITTANCES WERE MADE BY THE ASSESSE E BEFORE THE DUE DATE OF FILING OF RETURN U/S. 139(1) OF THE ACT, T HOUGH AFTER THE DATES SET OUT UNDER THE RESPECTIVE ENACTMENT FOR PF/ESI. LD. COMMISSIONER OF INCOME TAX (APPEALS) HAD FOLLOWED THE JUDGMENT O F HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. INDUSTRIAL SECURITY & INTELLIGENCE INDIA PVT. LTD IN MDS/585 & 586 OF 20 15, DATED 24.07.2015. THEIR LORDSHIP HAD CLEARLY STATED THAT EVEN EMPLO YEES CONTRIBUTION IF REMITTED PRIOR TO DUE DATE OF FILI NG OF RETURN, WOULD BE ALLOWABLE. WE ALSO FIND THE ISSUE IS SQUARELY COVE RED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. ALOM EXTRUSIONS LIMITED 319 ITR 306 . WE DO NOT FIND ANY ITA NO. 3118/MDS/2016. :- 5 -: REASON TO INTERFERE WITH THE ORDER OF THE LD. COMMI SSIONER OF INCOME TAX (APPEALS). GROUND NO.3 OF THE REVENUE STANDS D ISMISSED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON WEDNESDAY, THE 20 TH DAY OF SEPTEMBER, 2017, AT CHENNAI. SD/- SD/- ( ) (GEORGE MATHAN) /JUDICIAL MEMBER ( . ! ) (ABRAHAM P. GEORGE) $ %& / ACCOUNTANT MEMBER /* / CHENNAI 0 / DATED: 20TH SEPTEMBER, 2017. KV 1 % '+23 43#+ / COPY TO: 1 . $ / APPELLANT 3. ) 5+ () / CIT(A) 5. 389 '+:! / DR 2. '($ / RESPONDENT 4. ) 5+ / CIT 6. 9; <* / GF