DCIT, CHENNAI V. Lucas TVS Limited, CHENNAI

ITA 331/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6007 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 06-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M PALANICHAMY
• 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 ./ ITA NO.331/MDS/2017 %' ' /ASSESSMENT YEAR: 2012-13 THE DY. COMMISSIONER OF- INCOME TAX, CORPORATE CIRCLE-4(1), CHENNAI. VS. M/S.LUCAS TVS LTD., AALIM CENTRE, NO.82, DR.RADHAKRISHNAN SALAI, MYLAPORE, CHENNAI-600 004. [PAN: AAACL 3763 E ] ( ( /APPELLANT) ( )*( /RESPONDENT) ( + / APPELLANT BY : MR.M.PALANICHAMY, JCIT )*( + /RESPONDENT BY : MR.SAROJ KUMAR PARIDA, ADV. + /DATE OF HEARING : 09.10.2017 + /DATE OF PRONOUNCEMENT : 09.10.2017 / O R D E R PER GEORGE MATHAN , JUDICIAL MEMBER : ITA NO.331/MDS/2017 IS AN APPEAL FILED BY THE REVE NUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-8 , CHENNAI, IN ITA NO.65/2015-16 DATED 21.11.2016 FOR THE AY 2012-13. 2. MR.M.PALANICHAMY, JCIT, REPRESENTED ON BEHALF OF THE REVENUE AND MR.SAROJ KUMAR PARIDA, ADV. REPRESENTED ON BEHALF O F THE ASSESSEE. ITA NO.331/MDS/2017 :- 2 -: 3. IT WAS SUBMITTED BY THE LD.DR THAT THE ONLY ISSU E IN THE REVENUES APPEAL WAS AGAINST THE ACTION OF THE LD.CIT(A) IN D IRECTING THE AO TO RE- COMPUTE THE DISALLOWANCE U/S.14A R.W.R.8D AND TO CO NSIDER 0.5% OF THE AVERAGE OF THE VALUE OF THE INVESTMENT, THE INCOME FROM WHICH DOES NOT OR SHALL NOT FORM PART OF THE TOTAL INCOME. IT WAS A SUBMISSION THAT LD.CIT(A)S DIRECTION TO RE-COMPUTE THE DISALLOWANC E U/S.14A R.W.R.8D(2)(III) WAS ERRONEOUS. IT WAS A SUBMISSIO N THAT THE ORDER OF THE LD.CIT(A) WAS LIABLE TO BE REVERSED. 4. IN REPLY, THE LD.AR SUBMITTED THAT THE ISSUE WAS SQUARELY COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THIS TR IBUNAL IN THE CASE OF M/S.COMPUTER AGE MANAGEMENT SERVICES (P) LTD., IN I TA NO.1259 TO 1261/MDS/2014 DATED 28.11.2014 WHEREIN PARA NO.11 & 12 WHICH HAS BEEN HELD AS FOLLOWS: 11. THE KOLKATA BENCH OF THIS TRIBUNAL IN REI AGRO LTD. VS. DCIT (SUPRA) HELD THAT DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D CA N BE MADE ONLY BY TAKING INTO CONSIDERATION THE INVESTMENTS WHICH HAS GIVEN RISE TO SUCH INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME. WHILE HOLDING SO, THE TRI BUNAL OBSERVED AS UNDER:- 8. IN RESPECT OF PROVISIONS OF RULE 8D(2) (III) WHI CH IS THE SUBJECT MATTER OF THE ASSESSEES APPEAL IN THE ASSESSEES HAND, A PERUSAL OF THE SAID PROVISION SHOWS THAT WHAT IS DISALLOWABLE UNDER RULE 8D (2) (III) IS THE A MOUNT EQUAL TO PERCENTAGE OF THE AVERAGE VALUE OF THE INVESTMENT THE INCOME FROM WHICH DOES NOT OR SHALL NOT FORM PART OF THE TOTAL INCOME. THUS, UNDER SUB-CLAU SE (III) WHAT IS DISALLOWED IS PERCENTAGE OF THE NUMERATOR B IN RULE 8D(2)(II). AGAI N THIS IS TO BE CALCULATED IN THE SAME LINE AS MENTIONED EARLIER IN RESPECT OF NU MERATOR B IN RULE 8D (2) (II) OF THE ACT. 8.1 THUS, NOT ALL INVESTMENTS BECOME THE SUBJECT MA TTER OF CONSIDERATION WHEN COMPUTING DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D. THE DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D IS TO BE IN REL ATION TO THE INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME AND THIS CAN BE D ONE ONLY BY TAKING INTO CONSIDERATION THE INVESTMENT WHICH HAS GIVEN RISE T O THIS INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME. UNDER THE CIRCUMSTAN CES, THE COMPUTATION OF THE DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D(2) (III) WHICH IS ISSUE IN THE ASSESSEES APPEAL IS RESTORED TO THE FILE OF THE AS SESSING OFFICER FOR RE-COMPUTATION ITA NO.331/MDS/2017 :- 3 -: IN LINE WITH THE DIRECTION GIVEN ABOVE. NO DISALLOW ANCE UNDER SECTION 14A READ WITH RULE 8D(2)(II) AND (II) CAN BE MADE IN THIS CASE. 12. FOLLOWING THE SAID DECISION, WE DIRECT THE ASSE SSING OFFICER TO RE-COMPUTE THE DISALLOWANCE UNDER RULE 8D(2)(III) BY TAKING THE AMOU NT EQUAL TO PERCENTAGE OF THE AVERAGE VALUE OF THE INVESTMENT WHICH HAS GIVEN RIS E TO THE INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS IT IS NOTICED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE CO -ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M/S.COMPUTER AGE MANAGEMENT SERVICES (P) LTD., REFERRED TO SUPRA WHICH HAS BEEN EXTRACTED, RESPECT FULLY FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL, THE FINDINGS OF THE LD.CIT(A) ON THIS ISSUE STANDS CONFIRMED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON OCTOBER 09, 2017, AT CHENNAI. SD/- SD/- ( . ) ( ABRAHAM P GEORGE, ) /ACCOUNTANT MEMBER ( ' ) (GEORGE MATHAN) % /JUDICIAL MEMBER /CHENNAI, 2 /DATED: OCTOBER 09, 2017. TLN + )%34 54 /COPY TO: 1. ( /APPELLANT 4. 6 /CIT 2. )*( /RESPONDENT 5. 4 )%% /DR 3. 6 ( ) /CIT(A) 6. ' /GF