Galada Finane Ltd, Chennai V. DCIT, Corp Cir 2(1), Chennai

ITA 572/CHNY/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 2186 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 06-03-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI , . , % BEFORE SHRI MAHAVIR SINGH, VICE-PRESIDENT AND SHRI G.MANJUNATHA, ACCOUNTANT MEMBER ./ I.T.A.NO.572/CHNY/2019 ( / ASSESSMENT YEAR: 2015-16) M/S. GALADA FINANCE LTD. 7, SHAFFEE MOHAMMED ROAD, THOUSANDS LIGHTS, CHENNAI-600 006. VS THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-2(1) CHENNAI. PAN:AABCG 6566B ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : NONE /RESPONDENT BY : MR. SURESH PERIASAMY,JCIT /DATE OF HEARING : 09.03.2021 /DATE OF PRONOUNCEMENT : 10.03.2021 / O R D E R PER G.MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST ORDER OF THE LEARNED CIT(A)-6, CHENNAI DATED 28.11 .2018 AND PERTAINS TO ASSESSMENT YEAR 2015-16. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL:- 1. THE ORDER OF THE LEARNED CIT(A) IS WRONG, ILLEG AL AND IS OPPOSED TO LAW. 2. THE LEARNED CIT(A) ERRED IN DISALLOWING ` 3,06,935/- U/S. 14A READ WITH RULE 8D OF INCOME TAX RULES, 1962 AS PER DETAILS GIVEN IN ANNEXURE-I 2 ITA NO.572/CHNY/2019 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY IS ENGAGED IN THE BUSINESS OF NON-BANKING FINANCE COM PANY FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2015-1 6 ON 26.09.2015 DECLARING TOTAL INCOME OF RS 43,47,540 /-. THE CASE WAS TAKEN UP FOR SCRUTINY AND ASSESSMENT HAS BEEN C OMPLETED U/S.143(3) OF THE ACT, ON 31.08.2017 AND DETERMINED TOTAL INCOME AT ` 52,12,290/- BY MAKING ADDITIONS TOWARDS DISALLOWANCES U/S.14A R.W.S 8D OF INCOME TAX RULES, 1962 AMOUNTING TO ` 8,64,747/-. THE ASSESSING OFFICER HAS ALSO RECOMPUTED BOOK PROFIT U/S.115JB OF THE INCOME TAX ACT, 1961 BY MAKING ADDITIONS TOWARDS DISALLOWANCE U/S.14A OF THE ACT. 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. BEFORE THE LEARNED CIT(A), THE ASSESSEE REQUESTED TO RESTRICT DISALLOWANCES TO THE EXTENT O F EXEMPT INCOME EARNED FOR THE YEAR. THE LEARNED CIT(A), FO R THE DETAILED REASONS RECORDED IN HIS APPELLATE ORDER DA TED 28.11.2018 HAS RESTRICTED DISALLOWANCE COMPUTED BY THE ASSESSING OFFICER TO THE EXTENT OF EXEMPT INCOME BE ING DIVIDEND OF ` 3,06,935/- BY HOLDING THAT DISALLOWANCE 3 ITA NO.572/CHNY/2019 CONTEMPLATED U/S.14A CANNOT EXCEED EXEMPT INCOME. AGGRIEVED BY THE LEARNED CIT(A) ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 5. NONE APPEARED FOR THE ASSESSEE. WE HAVE HEARD T HE LEARNED DR AND PERUSED MATERIALS AVAILABLE ON RECOR D. WE FIND THAT LEARNED CIT(A) HAS RESTRICTED DISALLOWANCES CO MPUTED BY THE ASSESSING OFFICER UNDER RULE 8D(II) & (III) OF INCOME TAX RULES, 1962 TO THE EXTENT OF EXEMPT INCOME OF ` 3,06,935/- ON THE BASIS OF REQUEST OF THE ASSESSEE IN LIGHT OF DE CISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. CHETT INAD LOGISTICS PVT.LTD. (2017) 80 TAXMANN.COM 221, WHERE THE HONBLE SUPREME COURT HELD THAT DISALLOWANCES CONT EMPLATED U/S.14A OF THE ACT, SHOULD NOT EXCEED THE AMOUNT OF EXEMPT INCOME EARNED DURING THE YEAR. A SIMILAR VIEW HAS BEEN EXPRESSED BY THE HON'BLE SUPREME COURT IN THE CASE OF PCIT VS. STATE BANK OF PATIALA (2018) 99 TAXMANN.COM 286 . THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT FINDI NGS RECORDED BY THE LEARNED CIT(A) IN LIGHT OF THE DECISIONS OF HON'BLE SUPREME COURT WHILE RESTRICTING DISALLOWANCES TO TH E EXTENT OF EXEMPT INCOME IS IN ACCORDANCE WITH LAW. HENCE, WE ARE 4 ITA NO.572/CHNY/2019 INCLINED TO UPHOLD FINDINGS OF THE LEARNED CIT(A) A ND DISMISS THE APPEAL FILED BY THE ASSESSEE. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH MARCH, 2021 SD/- SD/- ( ) ( . ) (MAHAVIR SINGH) (G. MANJUNATHA ) / VICE-PRESIDENT $ / ACCOUNTANT MEMBER & /CHENNAI, ' /DATED 10 TH MARCH 2021 DS )* +* /COPY TO: 1. APPELLANT 2. RESPONDENT 3. , () /CIT(A) 4. , /CIT 5. * 1 /DR 6. /GF .