DCIT, Bangalore V. M/s Sansera Engg. Ltd., Bangalore

ITA 468/BANG/2014

• Counselvise Citation: 46821114 RSA 2014
• Duration Of Justice: 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 25-02-2015
• Assessment Year: misc
• Appeal Filed On: 07-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR K SHANKAR PRASAD J
• Assessee Lawyers: BHARATH
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SMT. P. MADHAVI DEVI , JUDICIAL MEMBER A ND SHRI ABRAHAM P GEORGE , ACCOUNTANT MEMBER ITA NO. 468 / BANG/20 1 4 (ASSESSMENT YEAR: 2010 - 11 ) JOINT COMMISSIONER OF INCOME - TAX(LTU) BANGALORE. APPELLANT VS. M/S.SANSERA ENGG. PVT.LTD. NO.261/C, BOMMASANDRA INDUSTRIAL AREA, HEBBAGODI, ANEKAL TALUK, BANGALORE - 560099/ RESPONDENT PAN: AAECS 2440 M APPELLANT BY: DR.K.SHANKAR PRASAD, JCIT(DR). RESPONDENT BY: SHRI BHARATH, CA. DATE OF HEARING : 25 / 02 /2015 . DATE OF PRONOUNCEMENT: 04 /0 3 /2015. O R D E R PER SMT. P.MADHAVI DEVI, JM : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A),LTU, BANGALORE, DATED 10/04/2013 FOR THE ASSESSMENT YEAR 2010 - 11. THE REVENUE IS AGGRIEVED BY THE ORDER OF THE CIT(A) IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER (AO) U/S 14A OF THE INCOME - TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT]. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE - COMPANY WHICH IS IN THE BUSINESS OF MANUFACTURE OF AUTOMOBILE COMPONENTS, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010 - 11 ON 25/9/2010 DECLARING INCOME OF RS.10,66,08,420/ - . ITA NO . 468 /BANG/201 4 M/S.SANSERA ENG G.PVT.LTD. PAGE 2 OF 4 DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THE AO OBSERVED THAT T HE ASSESSEE HAD EARNED INCOME OF RS.88,800/ - BEING DIVIDEND FROM MUTUAL FUND WHICH IS EXEMPT FROM TAXATION U/S 10(35) OF THE ACT. AS THIS INCOME DOES NOT FORM PART OF THE TOTAL INCOME, HE ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE PROVISIONS OF SECTION 1 4A SHOULD NOT BE APPLIED. SINCE THE ASSESSEE DID NOT OFFER ANY EXPLANATION, THE AO PROCEEDED TO COMPUTE DISALLOWANCE U/S 14A OF THE ACT READ WITH RULE 8D OF THE IT RULES AT RS.1,11,92,410/ - AND BROUGHT IT TO TAX. AGGRIEVED BY THE SAID ADDITION, THE ASSESS EE PREFERRED AN APPEAL BEFORE THE CIT(A) STATING THAT THE ASSESSEE HAD NOT CLAIMED ANY INCOME AS EXEMPT AND HENCE THE APPLICATION OF SEC.14A WAS NOT WARRANTED AB INITIO . AFTER CONSIDERING THE ASSESSEE S CONTENTION AND PERUSING THE RECORDS, THE CIT(A) FOUN D THE ASSESSEE S CONTENTION TO BE CORRECT. HE ACCORDINGLY DELETED THE ADDITION. AGGRIEVED BY THE RELIEF GIVEN BY THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 3. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE AO WHILE THE LEARNE D COUNSEL FOR THE ASSESSEE PLACED RELIANCE UPON THE ORDER OF THE CIT(A). THE LEARNED DEPARTMENTAL REPRESENTATIVE ALSO PLACED RELIANCE UPON THE FOLLOWING DECISIONS IN SUPPORT OF HIS CONTENTION: I. M/S PRIYA LTD. VS. DCIT IN ITA NO.8725/MUM/2010 DT.2/8/2013 AN D ITA NO . 468 /BANG/201 4 M/S.SANSERA ENG G.PVT.LTD. PAGE 3 OF 4 II. BINAYAK TEX PROCESSORS LTD. VS. ACIT (2014) 44 TAXMAN.COM179(MUMBAI - TRIB.) HE SUBMITTED THAT IN THESE CASES, THE ASSESSEE THEREIN HAD NOT EARNED ANY EXEMPT INCOME AND HENCE IT WAS HELD THAT THE PROVISIONS OF SEC.14A WERE NOT APPLICABLE, WHEREAS IN THE CASE BEFORE US, THE ASSESSEE HAD EARNED EXEMPT INCOME THOUGH MAY NOT HAVE CLAIMED IT AS EXEMPT. THEREFORE, ACCORDING TO HIM, SINCE FACTS ARE DISTINGUISHABLE, RELIANCE OF THE CIT(A) ON THE DECISION OF THE MUMBAI TRIBUNAL IN THE CASE OF PRIYA LTD., IS NOT J USTIFIED. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, PLACED RELIANCE UPON THE DECISION OF THE MUMBAI TRIBUNAL IN THE CASE OF PRIYA LTD. (SUPRA) 4. HAVING HEARD BOTH THE PARTIES AND HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIA L ON RECORD, WE FIND THAT THE ASSESSEE HAD EARNED ONLY A SUM OF RS.88,880/ - AS DIVIDEND INCOME EXEMPT FROM TAX U/S 10(35) OF THE ACT. ON PERUSAL OF THE PROFIT & LOSS ACCOUNT AS WELL AS THE RETURN OF INCOME FILED BY THE ASSESSEE, WE FIND THAT THE ASSESSEE HAD NOT CLAIMED ANY INCOME AS EXEMPT FROM TAXATION. IN SUCH CIRCUMSTANCES, WHERE ASSESSEE HAS NOT CLAIMED INCOME AS EXEMPT AND IT IS NOT FORMING PART OF TOTAL INCOME , THE DISALLOWANCE U/S 14A IS NOT WARRANTED AS HELD BY THE MUMBAI TRIBUNAL IN THE CASE OF M/S.PRIYA LTD., (CITED SUPRA). IN VIEW OF THE SAME, WE SEE NO REASON TO ITA NO . 468 /BANG/201 4 M/S.SANSERA ENG G.PVT.LTD. PAGE 4 OF 4 INTERFERE WITH THE ORDER OF THE CIT(A) AND THE REVENUE S APPEAL IS ACCORDINGLY DISMISSED. PRON OUNCED IN THE OPEN COURT ON 04 TH MARCH , 201 5 . SD/ - SD/ - ( ABRAHAM P GEORGE ) ( SMT. P.MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER EKSRINIVASULU COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE T RIBUNAL BANGALORE