Dy. Commissioner of Income Tax , Circle-2(2), Hyderabad V. Telangana State Power Generation Corporation Limited , Hyderabad

ITA 377/Hyd/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8461 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-08-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-A
• Next Hearing Date: 03-11-2021
• Assessment Year: 2017-2018
• Appeal Filed On: 06-07-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DANDA SRINIVAS
• Assessee Lawyers: CHANDRAMOULESWARA RAO
• Keywords: Earning of tax free income; Revised return; Rule 8D
• Section: 143(3); 14A; 80IA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD (THROUGH VIRTUAL CONFERENCE) BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER IT A NO. 377 /H/20 20 ASSESSMENT YEAR: 2 0 1 7 - 18 DY . COMMISSIONER OF INCOME - TAX, CIRCLE 2( 2 ), HYDERABAD. VS. TELANGANA STATE POWER GENERATION CORPORATION LTD., HYDERABAD. PAN AAFCT 0257Q (APPELLANT) (RESPONDENT) REVENUE BY: SHRI DANDA SRINIVAS ASSESSEE BY: S HRI CHANDRAMOULESWARA RAO DATE OF HEARING: 1 9 /0 7 /2021 DATE OF PRONOUNCEMENT: 16/ 0 8 /2021 O R D E R PER L.P. SAHU, A.M. : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST CIT(A) - 2 , HYDERABAD S ORDER DATED 21/01/2020 FOR AY 20 1 7 - 1 8 INVOLVING PROCEEDINGS U/S 14 3(3) OF THE INCOME - TAX ACT, 1961; IN SHORT THE ACT ON THE FOLLOWING GROUNDS OF APPEAL: 1. THE CIT(A) HAS IGNORED THE FINDINGS OF THE AO BROUGHT OUT IN THE ASSESSMENT ORDER THAT PROVISION OF I TA NO. 377 /HYD /20 20 TELANGANA STATE POWER GENERATION CORPORATION LTD., HYDERABAD. : - 2 - : SECTION 14A IS CLEARLY APPLICABLE IN THE CASE OF THE ASSESSEE. 2. THE CIT(A) ERRED IN NOTICING THE PROVISIONS OF SECTION 14A WHICH START WITH EXPENDITURE INCURRED IN RELATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME AND APPRECIATING THAT SUBSTITUTED RULE 8D(2)(II) AND ERSTWHILE RULE 8D(2)(III) ENVISAGES DISALLOWANCE ON AVERAGE INVESTMENT INCOME FROM WHICH DOES NOT OR SHALL NOT FORM PART OF TOTAL INCOME. 3. THE CIT(A) HAS ERRED IN IGNORING CBDT CIRCULAR NO. 5/2014, DATED 11/02/2014 WHICH HAS CLARIFIED UNAMBIGUOUSLY THE INTENT OF THE LEGISLATURE, PURPOSE AND APPLICABI LITY OF SECTION 14A. 4. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 2. WE NOTICE AT THE OUTSET THAT REVENUE S INSTANT APPEAL SUFFERS FROM 90 DAYS DELAY IN FILING. TO THIS EFFECT, THE LD. DR FILED AN AFFIDAVIT WHEREIN IT WAS AFFIRMED TH AT DUE TO COVIP PANDEMIC AND CONSEQUENT LOCKDOWN DECLARED BY THE GOVT. OF INDIA AND THE STATE GOVT. CAUSED THE IMPUGNED DELAY IN FILING OF THE INSTANT APPEAL. CASE LAW COLLECTOR LAND ACQUISITION VS MST. KATIJI & ORS, 1987 AIR 1353 (SC) AND UNIVERSITY OF DELHI VS. UNION OF INDIA, CIVIL APPEAL NO. 9488 & 9489/2019 DATED 17 DECEMBER, 2019, HOLD THAT SUCH A DELAY; SUPPORTED BY COGENT REASONS, DESERVES TO BE CONDONED SO AS TO MAKE WAY FOR THE CAUSE OF SUBSTANTIAL JUSTICE. WE ACCORDINGLY HOLD THAT REVENUE S IMPUGNED DELAY OF 90 DAYS IS NEITHER INTENTIONAL NOR DELIBERATE BUT DUE TO I TA NO. 377 /HYD /20 20 TELANGANA STATE POWER GENERATION CORPORATION LTD., HYDERABAD. : - 3 - : THE CIRCUMSTANCES BEYOND ITS CONTROL. THE SAME STANDS CONDONED. CASE IS NOW TAKEN UP FOR ADJUDICATION ON MERITS. 3. BRIEF FACTS OF THE C ASE ARE THAT THE ASSESSEE COMPANY FILED ITS ORIGINAL RETURN OF INCOME FOR A.Y. 2017 - 18 ON 26.10.2017 WITH PROVISIONAL FINANCIALS AND FILED REVISED RETURN OF INCOME 08.09.2018 DECLARING NIL INCOME UNDER NORMAL PROVISIONS AND RS.151,32,40,375/ - UNDER MAT PROVISIONS. THE CASE WAS SELECTED FOR SCRU TINY UNDER CASS AND ASSESSMENT U/S 143(3) WAS COMPLETED ON 06.12.2019 BY DETERMINING THE TOTAL INCOME OF RS.58,43,65,649/ - UNDER NORMAL PROVISIONS AND RS.210,27,06,024/ - UNDER MAT PROVISIONS. THE A. O . DISALLOWED INVESTMENT ALLOWANCE OF RS.46,89,27,229/ - , D ISALLOWED OTHER INCOME FOR 80IA OF RS.2,64,96,420/ - AND MADE DISALLOWANCE U/S. 14A OF RS. 9,40,42,000/ - . 4 . WHEN THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE WHERE THE CIT(A) HAS DELETED THE DIS ALLOWANCE MADE BY THE AO U/S 14A, AGAINST WHICH THE REVENUE IS IN APPEAL BEFORE THE ITAT. 5 . BEFORE US, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSE ES OWN CASE FOR AY 2015 - 1 6 IN ITA NO. 945/HYD/2019 & CO NO. I TA NO. 377 /HYD /20 20 TELANGANA STATE POWER GENERATION CORPORATION LTD., HYDERABAD. : - 4 - : 26/HYD/2019 VIDE ORDER DATED 17/03/2021, A COPY OF WHICH IS AVAILABLE ON RECORD. 6 . THE LD. DR NEITHER CONTROVERTED THE SUBMISSION OF THE LD. AR OF THE ASSESSEE NOR BROUGHT ANY CONTRARY DECISION IN THIS REGARD. 7 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD AS WELL AS GONE THROUGH THE ORDERS OF REVENUE AUTHORITIES. IN ASSESSEES OWN CASE FOR AY 2015 - 16 CITED SUPRA, THE COORDINATE BENCH HAS HELD AS UNDER: 2. IT APPEARS AT THE OUTSET THAT THERE IS NO DIVIDEND INCOME DERIVED ON ASSESSEES PART IN THE RELEVANT PREVIOUS YEAR AS PER ITS COMPUTATION SO AS TO JUSTIFY SEC.14AR.W.R.8D DISALLOWANCE OF RS.9,40,42,OOO/ - IN ISSUE; CASE LAW I. CIT VS. CHETTINAD LOGISTICS PVT. LTD., [80 TAXMANN.CORN 221J (MADRAS); II, CIT VS. CORRTECH ENERGY PVT. LTD., [223 TAXRNAN 1301 (GUJ); III. CHEMINVEST LTD ., VS. CIT (2015) (378 ITR 33J (DEL) HOLDS THAT SECTION 14A READ WITH RULE 80 APPLIES ONLY IN RELATION TO AN ASSESSEE'S EXEMPT INCOME AND NOT OTHERWISE. THERE IS NO DISPUTE THAT THE CIT(A) HAS APPLIE D THE VERY REASONING ONLY FOR DELETING THE IMPUGNED DISALLOWANCE. LOWER APPELLATE FINDINGS TO I TA NO. 377 /HYD /20 20 TELANGANA STATE POWER GENERATION CORPORATION LTD., HYDERABAD. : - 5 - : THIS EFFECT ARE UPHELD THEREFORE. THE REVENUE FAILS IN T HIS APPEAL LTA NO.945/HYD/2019 THEREFORE. 7 .1 AS THE ISSUE IN DISPUTE IS MATERIALLY IDENTICAL TO THAT OF AY 2015 - 16, RESPECTFULLY FOLLOWING THE COORDINATE BENCH DECISION AS ABOVE, WE UPHOLD THE ORDER OF CIT(A) AND DISMISS THE GROUNDS RAISED BY THE REVEN UE ON THIS ISSUE. 8 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 16 TH AUGUST , 2021 . SD/ - SD/ - ( S.S. GODARA ) (L . P . SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDE RABAD, DATED : 16 TH AUGUST , 20 2 1 . K V C OPY TO : 1 D CIT, CIRCLE 2(2) , ROOM NO. 513, 5 TH FLOOR, SIGNATURE TOWERS, OPP. BOTANICAL GARDE N S, KONDAUR, HYDERABAD 500 084 2 TELANGANA STATE POWER GENERATION CORPORATION LTD., 3 RD FLOOR, A - BLOCK, VIDYUT SOUDHA, KHAIRATABAD, HYDERABAD. 3 C I T(A) 2, HYDERABAD. 4 PR. CIT - 2 , HYDERABAD. 5 ITAT, DR, HYDERABAD. 6 GUARD FILE.