SNR Investments Private Limited, Hyderabad, Hyderabad V. DCIT, Central Circle-8, Hyderabad, Hyderabad

ITA 495/HYD/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2627 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 16-03-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V SREEKAR
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER I.T.A. NO. 495/HYD/2017 ASSESSMENT YEAR: 2008-09 SNR INVESTMENTS PVT. LTD., HYDERABAD [PAN: AAACH4913N] VS DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-8, HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI K.C. DEVDAS, AR FOR REVENUE : SHRI V. SREEKAR, DR DATE OF HEARING : 28-08-2017 DATE OF PRONOUNCEMENT : 30-08-2017 O R D E R PER INTURI RAMA RAO, A.M. : THIS APPEAL FILED BY ASSESSEE-COMPANY IS DIRECTED A GAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS )-12, HYDERABAD, DATED 31-10-2016 FOR THE AY. 2008-09. ASS ESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) [ CIT (A)] IS ERRONEOUS IN LAW AND FACTS OF THE CASE. 2. THE CIT (A) FAILED TO NOTE THAT THERE WAS NO EXP ENDITURE INCURRED IN RELATION TO EARNING THE EXEMPT INCOME AND THEREFORE THE PROVISIONS OF SECTION 14A OF THE I.T. ACT 1961 WERE NOT APPLICABL E. I.T.A. NO. 495/HYD/2017 :- 2 - : 3. THE CIT(A) ERRED IN DIRECTING THE LD. ASSESSING OFFICER ('AO') TO COMPUTE THE DISALLOWANCES OF EXPENDITURE UNDER RULE 8D WHEN THE PROVISIONS OF SECTION 14A OF THE INCOME TAX ACT, 1961 (I.T.ACT 19 61) ITSELF WERE INAPPLICABLE. 4. WITHOUT PREJUDICE TO ANY OF THE AFORESAID GROUND S, THE LD.CIT(A) HAVING FOR AS A MATTER OF FACT THAT THE RESIDUE TAX PENDIN G WAS OF RS. 60,318/- ERRED IN UPHOLDING THE DISALLOWANCE OF THE ENTIRE S UM OF RS.60,318/- U/S 14A R.W RULE 8D OF INCOME TAX ACT 1961 OR INCOME TA X RULES. 5. ANY OTHER GROUND OR GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING. 2. BRIEFLY FACTS OF THE CASE ARE THAT THE APPELLANT IS A COMPANY DULY INCORPORATED UNDER THE PROVISIONS OF THE COMPANI ES ACT, 1956. FOR THE AY. 2008-09, APPELLANT FILED RETURN OF INCOME ON 30-09-2008 DECLARING LOSS OF RS. 60,318/-. AFTER PRO CESSING THE SAID RETURN OF INCOME UNDER THE PROVISIONS OF SECTION 143(1) OF THE INCOME TAX ACT [ACT], THE CASE WAS SELECTED FOR SCRU TINY AND THE ASSESSMENT ORDER U/S. 143(3) OF THE ACT WAS PASSED AFT ER GIVING DUE OPPORTUNITY OF HEARING TO THE APPELLANT VIDE ORD ER DT. 10-08-2011 AFTER MAKING DISALLOWANCE OF RS. 60,318/- UNDER THE PROVISIONS OF SECTION 14A OF THE ACT. THE FACTS SET O UT BY THE AO RELATING TO THIS ADDITION ARE AS UNDER: 'ON VERIFICATION OF THE RETURN OF INCOME FILED BY T HE ASSESSEE IT WAS NOTICED THAT WHILE COMPUTING THE TOTAL INCOME THE A SSESSEE COMPANY HAS CLAIMED ADMINISTRATIVE AND OTHER EXPENSES OF RS.4,2 9,491/INTEREST AND FINANCIAL CHARGES OF RS.327/- WERE CLAIMED, OUT OF THIS WEALTH TAX OF RS.3,69,500/- WAS ALREADY ADDED BACK BY THE ASSESSE E. THUS THE REMAINING EXPENDITURE COMES TO RS. 60,318/-.AS MENT IONED ABOVE, THE EXPENDITURE INCLUDES EXPENDITURE INCURRED TOWARDS E ARNING THE EXEMPTED INCOME ALSO. AS THE DETAILS FURNISHED WERE INCLUSIV E OF BOTH EXEMPTED INCOME AND TAXABLE INCOME IT IS VERY DIFFICULT TO B IFURCATE. AS THERE IS NO REGULAR INCOME AND ONLY INTEREST INCOME WAS SHOWN A S TAXABLE INCOME, IT IS CLEAR THAT THE EXPENDITURE INCURRED IS MAINLY TO WARDS EARNING THE EXEMPTED INCOME ONLY. HENCE, THE ENTIRE EXPENDITURE OF RS.60,318/- IS DISALLOWED AS NON-ALLOWABLE EXPENDITURE AS PER SEC. 14A OF THE I.T. ACT, I.T.A. NO. 495/HYD/2017 :- 3 - : 3. BEING AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BE FORE THE LD.CIT(A), WHO VIDE THE IMPUGNED ORDER HAD SET ASIDE THE ISSUE TO THE FILE OF THE AO TO COMPUTE THE DISALLOWANCE IN ACCOR DANCE WITH THE PROVISIONS OF RULE 8D OF THE INCOME TAX RULES, 1 962. BEING AGGRIEVED, THE APPELLANT IS IN APPEAL BEFORE US IN THE PRESENT APPEAL. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ONLY ISSUE IN THIS APPEAL I S WHETHER THE DISALLOWANCE CAN BE MADE UNDER THE PROVISIONS OF SEC TION 14A R.W. RULE 8D OF THE INCOME TAX RULES, 1962. IT IS UNDISPU TED FACT THAT THERE IS AN EXEMPT INCOME, THEREFORE, THE APPLICABILITY OF THE PROVISIONS OF SECTION 14A CANNOT BE RULED OUT. THEREF ORE, THE LD.CIT(A) HAS RIGHTLY SET ASIDE THE ISSUE TO THE FILE OF AO TO COMPUTE THE DISALLOWANCE IN ACCORDANCE WITH THE PROVISI ONS OF RULE 8D OF INCOME TAX RULES. IN OUR CONSIDERED OPI NION, THERE IS NO PREJUDICE CAUSED TO THE ASSESSEE-COMPANY AS THE LD .CIT(A) ONLY SET ASIDE THE ISSUE TO THE FILE OF AO TO COMPUTE THE DISA LLOWANCE IN ACCORDANCE WITH RULE 8D. WE DO NOT SEE ANY MERIT IN TH E GROUNDS OF APPEAL FILED BY THE APPELLANT. HENCE, THE APPEAL IS DISMISSED. 5. IN THE RESULT, APPEAL OF ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH AUGUST, 2017 SD/- SD/- (D. MANMOHAN) (INTURI RAMA RAO) VICE PRESIDENT ACCOUNTANT MEMB ER HYDERABAD, DATED 30 TH AUGUST, 2017 TNMM I.T.A. NO. 495/HYD/2017 :- 4 - : COPY TO : 1. SNR INVESTMENTS PVT. LTD., 3 RD FLOOR, FLAT NO. 306, PLOT NO. 707-709, ROAD NO. 36, JUBILEE HILLS, HYDERABAD. 2. THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRC LE-8, HYDERABAD. 3. CIT (APPEALS)-12, HYDERABAD. 4. PR.CIT(CENTRAL), HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.