Nanda Exim Pvt Ltd, Chennai V. ACIT, Corp Ward -4(2), Chennai

ITA 408/CHNY/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 4759 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 18-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S. BHARATH
• Keywords: Earning of tax free income; Set aside
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , ! ' , $ '% BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ ITA NO.408/CHNY/2019 ( )( / ASSESSMENT YEAR : 2015-16 M/S NANDA EXIM PVT. LTD., NO.33, BHARATHIDASAN STREET, NETHAJI AVENUE EXTENSION, NERKUNDRAM, CHENNAI - 600 107. PAN : AACCN 9282 C V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE WARD 4(2), CHENNAI - 600 034. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SHRI D. ANAND, ADVOCATE -.+, / 0 / RESPONDENT BY : SHRI S. BHARATH, CIT 1 / 2$ / DATE OF HEARING : 31.07.2019 34) / 2$ / DATE OF PRONOUNCEMENT : 08.08.2019 / 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) -8, CHENNA I, DATED 18.12.2018 AND PERTAINS TO ASSESSMENT YEAR 2015-16. 2. SHRI D. ANAND, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT ADMITTEDLY THERE WAS NO DIVIDEND INCOME DURING THE YEAR UNDER CONSIDERATION. THEREFORE, ACCORDING TO THE LD. COU NSEL, THERE 2 I.T.A. NO.408/CHNY/19 CANNOT BE ANY DISALLOWANCE OF EXPENDITURE IN VIEW O F THE JUDGMENT OF MADRAS HIGH COURT IN CIT V. CHETTINAD LOGISTICS (P.) LTD. (2017) 80 TAXMANN.COM 221. THIS JUDGMENT OF THE MADRAS HI GH COURT WAS CONFIRMED BY THE APEX COURT IN 257 TAXMAN 2. 3. ON THE CONTRARY, SHRI S. BHARATH, THE LD. DEPART MENTAL REPRESENTATIVE, SUBMITTED THAT IN VIEW OF THE JUDGM ENT OF APEX COURT IN CIT V. WALFORT SHARE & STOCK BROKERS (P) L TD. (2010) 326 ITR 1, AND ALSO THE JUDGMENT OF GODREJ & BOYCE MANU FACTURING CO. LTD. V. DCIT (2017) 394 ITR 449, EVEN IF THERE WAS NO DIVIDEND INCOME, THE EXPENDITURE HAS TO BE DISALLOWED UNDER SECTION 14A OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). THE REFORE, ACCORDING TO THE LD. D.R., THE CIT(APPEALS) HAS RIGHTLY CONFI RMED 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 MADRAS HIGH COURT IN THE CASE OF CHETTINAD LOGISTICS (P.) LTD. (SUPRA), AFTER FOLLOWING ITS OWN EARLIER ORDER IN REDINGTON (INDIA ) LTD. V. ADDL. CIT (2017) 392 ITR 633, HAS FOUND THAT THERE CANNOT BE ANY DISALLOWANCE WHEN THERE WAS NO EXEMPT INCOME. THE MADRAS HIGH 3 I.T.A. NO.408/CHNY/19 COURT HAS ALSO TAKEN INTO CONSIDERATION THE JUDGMEN T OF APEX COURT IN WALFORT SHARE & STOCK BROKERS (P) LTD. (SUPRA). 5. WE HAVE CAREFULLY GONE THROUGH THE JUDGMENT OF APEX COURT IN GODREJ & BOYCE MANUFACTURING CO. LTD. (SUPRA). THE APEX COURT FOUND THAT THE REVENUE HAS TO ESTABLISH THE NEXUS B ETWEEN THE EXPENDITURE DISALLOWED AND EARNING OF DIVIDEND INCO ME IN QUESTION. THE APEX COURT ALSO FOUND THAT WHAT THE LAW POSTUL ATES IS THE REQUIREMENT OF A SATISFACTION OF THE ASSESSING OFFI CER THAT HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE, AS PLACED B EFORE HIM, IT IS NOT POSSIBLE TO GENERATE THE REQUISITE SATISFACTION WITH REGARD TO THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE. AS FAR A S THE ABSENCE OF DIVIDEND INCOME IS CONCERNED, THE APEX COURT DISMIS SED THE APPEAL OF THE REVENUE AGAINST THE JUDGMENT OF MADRAS HIGH COURT IN CHETTINAD LOGISTICS (P.) LTD. (SUPRA) ON MERIT ALSO . THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE JUDG MENT OF APEX COURT IN CHETTINAD LOGISTICS (P.) LTD. DISMISSING T HE APPEAL OF THE REVENUE ON MERIT ALSO MAY BE APPLICABLE TO THE FACT S OF THE CASE. THEREFORE, THIS TRIBUNAL IS UNABLE TO UPHOLD THE OR DERS OF THE LOWER AUTHORITIES IN THE ABSENCE OF ANY DIVIDEND INCOME. ACCORDINGLY, THE 4 I.T.A. NO.408/CHNY/19 ORDERS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS DELET ED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 8 TH AUGUST, 2019 AT CHENNAI. SD/- SD/- ( ! ' ) ( . . . ) (INTURI RAMA RAO) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 6 /DATED, THE 8 TH AUGUST, 2019. KRI. / -278 98)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 :2 () /CIT(A)-8, CHENNAI 4. PRINCIPAL CIT- 4, CHENNAI 5. 8; -2 /DR 6. <( = /GF.