TVS MOTOR SERVICES LTD, CHENNAI V. ITO, CORP WARD -3(2), CHENNAI

ITA 3463/CHNY/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4274 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 20-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Set aside
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , ! ' , $ '% BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ ITA NO.3463/CHNY/2018 ( )( / ASSESSMENT YEAR : 2014-15 M/S TVS MOTOR SERVICES LTD., NO.29, JAYALAKSHMI ESTATES, HADDOWS ROAD, CHENNAI - 600 006. PAN : AADCT 1470 D V. THE INCOME TAX OFFICER, CORPORATE WARD 3(2), CHENNAI. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SH. R. VIJAYARAGHAVAN, ADVOCATE -.+, / 0 / RESPONDENT BY : SHRI SRIDHAR DORA, JCIT 1 / 2$ / DATE OF HEARING : 24.04.2019 34) / 2$ / DATE OF PRONOUNCEMENT : 10.05.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -11, CHENN AI, DATED 10.10.2018 AND PERTAINS TO ASSESSMENT YEAR 2014-15. 2. SH. R. VIJAYARAGHAVAN, THE LD.COUNSEL FOR THE AS SESSEE, SUBMITTED THAT THE ASSESSEE HAS NOT EARNED ANY EXEM PTED INCOME DURING THE YEAR UNDER CONSIDERATION. THEREFORE, AC CORDING TO THE 2 I.T.A. NO.3463/CHNY/18 LD. COUNSEL, THERE IS NO QUESTION OF ANY DISALLOWAN CE UNDER SECTION 14A OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT' ) IN VIEW OF THE JUDGMENTS OF MADRAS HIGH COURT IN REDINGTON (INDIA) LTD. V. ADDL. CIT (2017) 77 TAXMANN.COM 257 AND CIT V. CHETTINAD LOGISTICS (P.) LTD. (2017) 80 TAXMANN.COM 221. REFERRING TO THE O RDER OF THE ASSESSING OFFICER, MORE PARTICULARLY AT PAGE 2, THE LD.COUNSEL SUBMITTED THAT THE ASSESSING OFFICER HIMSELF HAS AD MITTED THAT THE ASSESSEE HAS NOT EARNED ANY EXEMPTED INCOME DURING THE YEAR UNDER CONSIDERATION. ACCORDING TO THE LD. COUNSEL, THE OBSERVATION OF THE ASSESSING OFFICER THAT THOUGH THERE IS NO D IVIDEND INCOME, THE INVESTMENT HAS THE CHARACTER OF EARNING EXEMPTE D INCOME, NAMELY, DIVIDEND INCOME IS CONTRARY TO THE JUDGMEN T OF MADRAS HIGH COURT, THEREFORE, THE CIT(APPEALS) IS NOT JUST IFIED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER. 3. ON THE CONTRARY, SHRI SRIDHAR DORA, THE LD. DEPA RTMENTAL REPRESENTATIVE, SUBMITTED THAT EVEN THOUGH THERE WA S NO EXEMPTED INCOME EARNED BY THE ASSESSEE, IT HAS THE CAPABILIT Y OF EARNING EXEMPTED INCOME IN OTHER YEARS. ACCORDING TO THE L D. D.R., EXPENDITURE INCURRED BY THE ASSESSEE FOR EARNING TH E EXEMPTED INCOME CANNOT BE ALLOWED MERELY BECAUSE IN SOME OF THE YEARS NO 3 I.T.A. NO.3463/CHNY/18 EXEMPTED INCOME WAS EARNED. THE FACT REMAINS THAT THE EXPENDITURE WAS INCURRED WITH AN INTENTION TO EARN INCOME WHICH IS NOT SUBJECT MATTER OF TAXATION. THEREFORE, ACCORDI NG TO THE LD. D.R., IRRESPECTIVE OF THE FACT WHETHER THE ASSESSEE EARNE D THE INCOME OR NOT, THE EXPENDITURE CANNOT BE ALLOWED AS DEDUCTION WHILE COMPUTING THE TAXABLE INCOME, THEREFORE, THE CIT(AP PEALS) HAS RIGHTLY DISALLOWED THE CLAIM OF THE ASSESSEE BY CON FIRMING THE ORDER OF THE ASSESSING OFFICER. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE CONTENTION OF THE REVENUE WAS CONSIDERED BY THE MADRAS HIGH CO URT IN REDINGTON (INDIA) LTD. (SUPRA) AND CHETTINAD LOGIST ICS (P.) LTD. (SUPRA). IN THE SUBSEQUENT JUDGMENT ALSO, THE MADR AS HIGH COURT HAS CONSIDERED THE CLAIM OF THE REVENUE AS CONTENDE D BY THE LD. D.R. BEFORE THIS TRIBUNAL. THE MADRAS HIGH COURT S PECIFICALLY FOUND THAT WHEN NO EXEMPTED INCOME WAS EARNED BY THE ASSE SSEE, THERE CANNOT BE ANY DISALLOWANCE. IN VIEW OF THE JUDGMEN T OF MADRAS HIGH COURT, THIS TRIBUNAL IS OF THE CONSIDERED OPIN ION THAT THERE CANNOT BE ANY DISALLOWANCE WHEN ADMITTEDLY NO EXEMP TED INCOME WAS EARNED BY THE ASSESSEE. THEREFORE, THIS TRIBUN AL IS UNABLE TO 4 I.T.A. NO.3463/CHNY/18 UPHOLD THE ORDERS OF THE LOWER AUTHORITIES. ACCORD INGLY, ORDERS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE DI SALLOWANCE OF EXPENDITURE MADE BY THE ASSESSING OFFICER AS CONFIR MED BY THE CIT(APPEALS) IS DELETED. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 10 TH MAY, 2019 AT CHENNAI. SD/- SD/- ( ! ' ) ( . . . ) (INTURI RAMA RAO) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 6 /DATED, THE 10 TH MAY, 2019. KRI. / -278 98)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 :2 () /CIT(A)-11, CHENNAI 4. PRINCIPAL CIT- 3, CHENNAI 5. 8; -2 /DR 6. <( = /GF.