Asst. Commissioner of Income Tax, Circle-2(1), Tirupathi V. Sudakagunta Hotels Limited, Tirupathi

ITA 480/Hyd/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4205 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-B
• Next Hearing Date: 06-03-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 07-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: THARISH V
• Assessee Lawyers: RAJEEV BENJWAL
• Keywords: Earning of tax free income
• Section: 143(3); 14A; 201; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE V. DURGA RAO , JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO S . 480 & 481 /HYD/2018 ASSESSMENT YEAR: 201 3 - 14 & 2014 - 15 ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 2(1), TIRUPATI. VS. SUDALAGUNTA HOTELS LIMITED, TIRUPATI. PAN: AADCS 1460 N (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI RAJEEV BENJWAL, DR REVENUE BY: SHRI THARISH V DATE OF HEARING: 0 6 /03/2019 DATE OF PRONOUNCEMENT: 13 /03/2019 ORDER PER V. DURGA RAO, J.M.: THE REVENUE HAS FILED THE CAPTIONED APPEALS AGAINST THE DIFFERENT ORDERS OF THE CIT(A), TIRUPATI COMMONLY DATED 29/12/2017 FOR THE ASSESSMENT YEARS 2013 - 14 AND 2014 - 15. THE GROUNDS OF APPEAL RAISED IN BOTH THE APPEALS ARE IDENTICAL, AND THEREFORE, THESE APPEALS ARE CLUBBED, HEARD COMBINEDLY AND DISPOSED OF IN THIS CONSOLIDATED ORDER. GROUNDS RAISED BY THE REVENUE FOR THE A.Y. 2013 - 14: 1. THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE MADE U/S 14A OF RS. 23,38,740/ - WHICH WAS ENHANCED TO RS. 88,40,479/ - VIDE RECTIFICA TION U/S 154 DATED 27/04/2016. 2. THE LD. CIT(A) ERRED IN IGNORING CBDTS CIRCULAR NO.5/2014. 2 GROUNDS RAISED BY THE REVENUE FOR THE A.Y. 2014 - 15 : 1. THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE MADE U/S 14A OF RS. 89,98,728/ - . 2. THE LD. CIT(A) ERRED IN IGNOR ING CBDTS CIRCULAR NO.5/2014. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS IN THE BUSINESS OF RUNNING HOTELS , FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 1,56,93,430/ - FOR THE ASSESSMENT YEAR 2013 - 14. THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY UNDER CASS. A.O. COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT DETERMINING THE ASSESSED INCOME AT RS. 1,80,32,170/ - WHICH INCLUDES AN ADDITION U/S 14A AMOUNTING TO RS. 23,38,740/ - . THE CASE OF THE ASSESSEE IS THAT THE ASSESSEE DOES NOT HAVE ANY DIVIDEND INCOME AND THEREFORE, SECTION 14A HAS NO APPLICATION. HOWEVER, ASSESSING OFFICER NOT AGREED WITH THE S UBMISSIONS OF THE ASSESSEE AND INVOKED THE PROVISIONS OF SECTION 14A AND DISALLOWANCE WAS MADE AND THE SAME IS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 4. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A), WHO DELETED THE ADDITION MADE BY THE A.O. BY FOLLOWING THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. CHETTINAD LOGISTICS PVT LTD [2017] 248 TAXMAN 55 (MAD, REDINGTON (INDIA) LTD VS. ADDL. CIT [2017] 392 ITR 633 (MAD.) AND ALSO FOLLOWED THE DECISION OF THE ITAT HYDERABAD BENCH IN THE CASE OF ITO VS. NEULAND HEALTH SERVICES PVT LTD 3 IN ITA NO.41/HYD/2017, DATED 31/07/2017. ON BEING AGGRIEVED, REVENUE FILED THE PRESENT A PPEALS BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS OF APPEAL. 5. LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AND ALSO THE CIRCULAR ISSUED BY THE CBDT 6. ON THE OTHER HAND, LEARNED COUNSEL FOR THE ASSESS EE SUBMITTED THAT THE ISSUE INVOLVED IN THIS APPEAL IS SQUARELY COVERED BY THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. CHETTINAD LOGISTICS (P) LTD (SUPRA) AND ALSO SUBMITTED THAT ON THE SAID DECISION OF THE HIGH COURT, THE DEPARTME NT HAS FILED AN APPEAL BEFORE THE HONBLE SUPREME COURT AND THE APEX COURT HAS DISMISSED THE APPEAL [2018] 95 TAXMANN.COM 250. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE MATERIAL PLACED BEFORE US. IN THE CASE OF CIT VS. CHETTINAD LOGISTICS (P) LTD (SUPRA), T HE HONBLE MADRAS HIGH COURT HAS DISMISSED THE APPEAL BY OBSERVING THAT WHERE NO EXEMPT INCOME I.E., DIVIDEND WAS EARNED IN THE RELEVANT ASSESSMENT YEAR BY THE ASSESSEE, SECTION 14A OF THE ACT SHOU LD NOT BE INVOKED AND ON DEPARTMENTS APPEAL, THE APEX COURT HAS ALSO UPHELD THE VIEW TAKEN BY THE HIGH COURT. THE COORDINATE BENCH OF THE TRIBUNAL WAS ALSO CONSIDERED THE SIMILAR ISSUE IN THE CASE OF NEULAND HEALTH SERVICES PVT LTD (SUPRA). THEREFORE, I T IS SETTLED THAT WHERE NO EXEMPT INCOME WAS 4 EARNED BY THE ASSESSEE IN THE RELEVANT ASSESSMENT YEAR, HAVING NO DIVIDEND INCOME THE PROVISIONS OF SECTION 14A ARE NOT APPLICABLE. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, THE CIT(A) HAS RIGHTLY FOLLOWED THE ABOVE PRECEDENTS AND ALLOWED THE APPEAL FILED BY THE ASSESSEE. THEREFORE, IN OUR CONSIDERED VIEW, WE SEE NO REASON TO INTERFERE WITH THE DECISION OF THE CIT(A) AND THE GROUNDS OF APPEAL FILED BY THE REVENUE , IN BOTH THE APPEALS, ARE DISMISSED . 8. IN THE RESULT, BOTH THE APPEALS FILED BY THE REVENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 13 TH MARCH, 2019. SD/ - SD/ - (S. RIFAUR RAHMAN) (V. DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 13 TH MARCH , 2019 OKK COPY TO: - 1) M/S. SUDALAGUNTA HOTELS LIMITED, D.NO.209, TP AREA, HOTEL MAYURA , TIRUPATI 517501. 2) ACIT, CIRCLE - 2(1), 3 RD FLOOR, AAYAKAR BHAVAN , K.T. ROAD, TIRUPATI - 517501. 3) THE CIT(A) , TIRUPATI. 4) THE PR. CI T, TIRUPATI. 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE