Pace Stocks and Shares Private Limited, CHENNAI V. ITO, CHENNAI

ITA 3400/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5005 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 06-04-2017
• Assessment Year: 2013-2014
• Appeal Filed On: 19-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B SAHADEVAN IRS
• Keywords: Business income; Earning of tax free income; Tax effect
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D (SMC) BENCH : CHENNAI . , [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT M EMBER ] ./I.T.A. NO. 3400/MDS/2016 / ASSESSMENT YEAR : 2013-2014. M/S. PACE STOCKS AND SHARES PRIVATE LIMITED, NEW NO.39, OLD NO.29/3, VISWANATHAPURAM MAIN ROAD, KODAMBAKKAM, CHENNAI 600 024. [ PAN AAACP 4294Q ] VS. THE INCOME TAX OFFICER, CORPORATE WARD 5(1) CHENNAI. ( !' / APPELLANT) ( #$!' /RESPONDENT) / APPELLANT BY : SHRI. Y. SRIDHAR, C.A. /RESPONDENT BY : SHRI. B. SAHADEVAN, IRS, JCIT. /DATE OF HEARING : 06-04-2017 !' /DATE OF PRONOUNCEMENT : 12-04-2017 % / O R D E R THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST A N ORDER DATED 28.10.2016 OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-3, CHENNAI. 2. ASSESSEE HAS TAKEN ALTOGETHER SIX GROUNDS. THERE AR E ONLY TWO ISSUES ARISING OUT OF THESE SIX GROUNDS. FIR ST IS ON A DISALLOWANCE MADE U/S.14A R.W. RULE 8D AND SECOND IS WITH REGARD TO TREATMENT OF INTEREST INCOME. LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT WITH REGARD TO SECOND ISSUE VIZ TREATMENT OF INTEREST IN COME, LD. ASSESSING ITA NO.3400/MDS/2016 :- 2 -: OFFICER HAD TREATED THE INTEREST UNDER THE HEAD INCOME FROM OTHER SOURCES THOUGH ASSESSEE HAD CONSIDERED IT AS BU SINESS INCOME. AS PER LD. AUTHORISED REPRESENTATIVE ASSESSEE WAS IN I NVESTMENT MANAGEMENT BUSINESS AND HENCE INTEREST INCOME COUL D ONLY BE CONSIDERED AS BUSINESS INCOME. NEVERTHELESS ACCORD ING TO HIM, INTEREST INCOME WHETHER CONSIDERED UNDER THE HEAD BUSINESS INCOME OR INCOME FROM OTHER SOURCES, WILL HAVE THE SAM E TAX EFFECT FOR THE ASSESSEE. LD. DEPARTMENTAL REPRESENTATIVE FAIRLY A GREED THAT IRRESPECTIVE OF THE HEAD UNDER WHICH INTEREST INCOM E TREATED, TAX ON THE ASSESSEE WOULD BE VERY SAME, SINCE TOTAL INCOM E REMAINED UNCHANGED. THUS THE TAX EFFECT BEING VERY SAME, T HE QUESTION OF TREATMENT OF INTEREST INCOME BECOMES ACADEMIC AND R ELEVANT GROUNDS ARE THEREFORE DISMISSED AS INFRUCTUOUS. 3. THIS LEAVES US WITH THE DISALLOWANCE U/S.14A OF THE ACT. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSEE W AS NOT HAVING ANY EXEMPT INCOME DURING THE RELEVANT PREVIOUS YEAR. A CCORDING TO HIM, WHEN THERE WAS NO EXEMPT INCOME, SEC. 14A COULD NO T BE APPLIED. RELIANCE WAS PLACED ON THE JUDGMENT OF HONBLE JUR ISDICTIONAL HIGH COURT IN THE CASE OF REDINGTON (INDIA) LTD VS. ADDL. CIT (2017) 77 TAXMANN.COM 257 . 4. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONG LY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. ITA NO.3400/MDS/2016 :- 3 -: 5. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF REDINGTON (INDIA) LTD (SUPRA) HAS UPHELD THE VIEW TAKEN BY THE TRIBUNAL THAT THERE CAN BE NO DISALLOWANCE U/S.14A R.W.R. 8D WHEN THERE WAS NO EXEMPT INCOME CLAIMED BY AN ASSESSEE. THEIR LORDSHIP ALSO OBSERVED THAT FOR SEC. 14A OF THE ACT COULD NO T BE APPLIED ON NOTIONAL OR ANTICIPATORY INCOME. IN THE CASE BEFOR E ME, LD. ASSESSING OFFICER HIMSELF HAS NOTED THAT ASSESSEE WAS NOT HA VING EXEMPT INCOME. THEREFORE, IN MY OPINION DISALLOWANCE U/S. 14A OF THE ACT COULD NOT HAVE BEEN MADE. DISALLOWANCE OF I9,48,778 /- STANDS DISMISSED. RELATED GROUNDS OF THE ASSESSEE ARE ALL OWED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED A S PARTLY ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 12 TH DAY OF APRIL, 2017, AT CHENNAI. #$% & ( . ) (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER '( / CHENNAI )* / DATED:12TH APRIL, 2017 KV *+ ,-.- / COPY TO: 1 . / APPELLANT 3. /01 / CIT(A) 5. -23 4 / DR 2. / RESPONDENT 4. / / CIT 6. 35 / GF