SVL LIMITED, CHENNAI V. ITO, CORP WARD 6(3), CHENNAI

ITA 3167/CHNY/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6866 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Appeal Filed On: 22-11-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHR. ABANI KANTA NAYAM
• Keywords: Earning of tax free income
• Section: 143(3); 14A; 115JB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI , , BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./I.T.A. NO.3167/CHNY/2018 ! ' / ASSESSMENT YEAR : 2015-2016. M/S. SVL LIMITED, SHRIRAM HOUSE, 1 ST FLOOR, NO.4, BURKIT ROAD, T. NAGAR, CHENNAI 600 017. VS. THE INCOME TAX OFFICER, CORPORATE WARD 6(3) CHENNAI. ./I.T.A. NO.3218/CHNY/2018 ! ' / ASSESSMENT YEAR : 2014-2015. THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 6(2) CHENNAI 600 034. VS. M/S. SVL LIMITED, SHRIRAM HOUSE, 1 ST FLOOR, NO.4, BURKIT ROAD, T. NAGAR, CHENNAI 600 017. [PAN AAACS 7696D] ( / APPELLANT) ( /RESPONDENT) ASSESSEE BY : SHRI. GAUTAM, ADVOCATE #$ % & ' /RESPONDENT BY : SHR. ABANI KANTA NAYAM, CIT. ( ) & * /DATE OF HEARING : 29-01-2020 +,'! & * /DATE OF PRONOUNCEMENT : 30-01-2020 ITA NOS.3167 & 3218/18 :- 2 -: / O R D E R PER INTURI RAMA RAO , ACCOUNTANT MEMBER: THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AS WE LL AS REVENUE DIRECTED AGAINST THE ORDER OF THE LEARNED C OMMISSIONER OF INCOME TAX (APPEALS)-15, CHENNAI (HEREINAFTER CALLE D AS CIT(A)) DATED 31.08.2018 FOR THE ASSESSMENT YEAR 2015-2016. 2. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE APPELLANT NAMELY M/S. SVL LIMITED IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956. IT IS ENGAGED IN THE BUSINESS OF INVESTMENTS. THE RETUR N OF INCOME FOR THE AY 2015-2016 WAS FILED ON 30.09.2015 DISCLOSING TOT AL LOSS OF D25,92,28,431/-. AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT WAS COMPLETED BY THE INCOME TAX OFFICER, CORPORATE WARD 6(3), CHENNAI (HEREINAFTER CALLED AO) VIDE ORDER DATED 26.12.2017 PASSED U/S. 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) AT TOTAL INCOME OF RS. 52,73,12,883/- AFTER SET OFF OF BROUG HT FORWARD LOSS FOR THE ASSESSMENT YEAR 2014-2015 OF D4,46,14,112/-. W HILE DOING SO, THE ASSESSING OFFICER MADE DISALLOWANCE OF D83,11,0 2,781/- INVOKING THE PROVISIONS OF SECTION 14A R.W.R 8D OF THE INCOM E TAX RULES, 1962 (IN SHORT THE RULES) REJECTING THE CONTENTION O F THE ASSESSEE ITA NOS.3167 & 3218/18 :- 3 -: COMPANY THAT EXPENDITURE OF D6,53,985/- ALONE WAS I NCURRED TO EARN EXEMPT INCOME. THE ASSESSING OFFICER RECORDED SATI SFACTION EXTRACTED AT PARA 3.3 AS TO WHY THE CONTENTION OF THE ASSESSE E COMPANY THAT ONLY EXPENDITURE OF D6,53,985/- INCURRED WAS INCORR ECT. 3. BEING AGGRIEVED, AN APPEAL WAS PREFERRED BEFORE LD. CIT(A), WHO VIDE IMPUGNED ORDER CONFIRMED THE APPLICABILITY OF PROVISIONS UNDER SECTION 14A OF THE ACT. HOWEVER, DIRECTED TH E ASSESSING OFFICER TO RESTRICT THE AMOUNT OF DISALLOWANCE U/S.14A OF T HE ACT TO THE EXTENT OF EXEMPT INCOME EARNED FOLLOWING THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF JOINT INVESTMENTS P. LTD VS. CIT, 372 ITR 694. THE LD. CIT(A) ALSO DIRECTED THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE U/S.14A OF THE ACT FOR THE PURPOSE OF COMPUTING TAX LIABILITY UNDER THE PROVISIONS OF SECTION 115JB OF THE ACT. 4. BEING AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US IN ITA NO.3167/CHNY/2018 CHALLENGING THAT IN THE ABSENCE OF RECORDING A FINDING BY THE ASSESSING OFFICER AS TO HOW THE AMO UNT OF DISALLOWANCE OFFERED BY THE ASSESSEE U/S. 14A OF T HE ACT IS INCORRECT RESORT TO PROVISIONS OF SECTION 14A OF THE ACT CANN OT BE MADE AND HE PLACED RELIANCE ON THE DECISIONS OF HONBLE DELHI H IGH COURT IN THE CASES OF CIT VS. TAIKISHA ENGINEERING INDIA LTD, 229 TAXMAN 143 AND CIT VS. I P SUPPORT SERVICES INDIA P. LTD 378 ITR 2 40 . ITA NOS.3167 & 3218/18 :- 4 -: 5. ON THE OTHER HAND, THE LD. CIT (DEPARTMENTAL REPRESENTATIVE) PLACED RELIANCE ON THE ORDERS OF LO WER AUTHORITIES. 6. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD. FROM THE PERUSAL OF PARA 3.3 OF THE ASSESSM ENT ORDER, IT IS CLEAR THAT ASSESSING OFFICER GAVE CATEGORICAL FIND ING THAT ASSESSEE COMPANY HAD INCURRED ONLY D6,53,985/- TO EARN DIVI DEND INCOME IS INCORRECT. HE ALSO ASSIGNED REASONS AS TO HOW THE C ONTENTION OF THE ASSESSEE COMPANY IS INCORRECT. IN THE CIRCUMSTANCE S, THE CONTENTION OF THE ASSESSEE IS FACTUALLY INCORRECT AND THE CAS E LAWS RELIED UPON BY THE ASSESSEE HAS NO APPLICATION TO THE FACTS OF THE ASSESSEE COMPANY. THUS, THE APPEAL FILED BY THE ASSESSEE STANDS DISM ISSED. 7. NOW, WE TAKE UP REVENUE APPEAL IN ITA NO.3218/CHNY/2018 FOR ADJUDICATION. 8. THE ONLY ISSUE INVOLVED IN THE PRESENT GROUNDS OF A PPEAL RELATES TO THE COMPUTATION OF AMOUNT OF DISALLOWANC E U/S.14A R.W.R. 8D. THERE IS NO DISPUTE WITH REGARD TO APPLICABILI TY OF PROVISION OF SECTION 14A OF THE ACT, BUT THE ONLY DISPUTE IS WIT H REGARD TO THE AMOUNT OF DISALLOWANCE. NOW THE LAW IS SETTLED TO THE EXTENT THAT AMOUNT OF DISALLOWANCE CANNOT EXCEED THE EXEMPT INC OME EARNED DURING THE PREVIOUS YEAR RELEVANT TO THE IMPUGNED A SSESSMENT YEAR ITA NOS.3167 & 3218/18 :- 5 -: UNDER CONSIDERATION. THE DECISION OF THE LD. COMMI SSIONER OF INCOME TAX (APPEALS) IS IN CONSONANCE WITH THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF REDINGTON (INDIA) LTD. VS. ACIT (2017) 77 TAXMANN.COM 257 , AND THIS JUDGMENT WAS AFFIRMED BY THE HONBLE APEX COURT JUDGMENT IN THE CASE OF MAXOPP INVESTMENT LTD. VS. CIT, CIVIL APPEAL NOS.104 TO 109/2015, DATED 12.02.2018 . IN THE CIRCUMSTANCES, WE DO NOT FIND ANY REASON TO INTERFE RE WITH THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). THE A PPEAL FILED BY THE REVENUE STANDS DISMISSED. 9. TO SUMMARIZE THE RESULTS, BOTH THE APPEALS FILED BY THE ASSESSEE IN ITA NO.3167/CHNY/2018 AND REVENUE IN IT A NO.3218/CHNY/2018 STAND DISMISSED. ORDER PRONOUNCED ON 30TH DAY OF JANUARY, 2020 A T CHENNAI. SD/- SD/- ( ) (GEORGE MATHAN) /JUDICIAL MEMBER ( ) (INTURI RAMA RAO) /ACCOUNTANT MEMBER -) / CHENNAI . / DATED: 30TH JANUARY, 2020. KV /0 &0# *12032'* / COPY TO: 0 1 . % / APPELLANT 3. 0 ( 4*056 / CIT(A) 5. 278 0# * 9 / DR 2. #$ % / RESPONDENT 4. 0 ( 4* / CIT 6. 8:0;) / GF