ACIT CORPORATE CIRCLE 5 (2), CHENNNAI V. M/S PVP GLOBAL VENTURES PRIVATE LIMITED, CHENNAI

ITA 594/CHNY/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1016 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 19-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S BHARATH
• Assessee Lawyers: K HEMALATHA
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , !, # !$ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.593/CHNY/2018 ' (' / ASSESSMENT YEAR : 2014-15 THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 5(2), CHENNAI - 600 034. V. M/S PVP VENTURES LTD., KRM CENTRE, 9 TH FLOOR, NO.2, HARRINGTON ROAD, CHETPET, CHENNAI - 600 031. PAN : AAACS 3101 P (*+/ APPELLANT) (,-*+/ RESPONDENT) ./ ITA NO.594/CHNY/2018 ' (' / ASSESSMENT YEAR : 2014-15 THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 5(2), CHENNAI - 600 034. V. M/S PVP GLOBAL VENTURES PVT. LTD., NO.2, HARRINGTON ROAD, CHETPET, CHENNAI - 600 031. PAN : AAECP 0807 F (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SHRI S. BHARATH, CIT SHRI GURU BASHYAM, JCIT ,-*+ . / / RESPONDENTS BY : MS. K. HEMALATHA, CA 0 . 1# / DATE OF HEARING : 01.08.2018 23( . 1# / DATE OF PRONOUNCEMENT : 19.09.2018 2 I.T.A. NO.593/CHNY/18 I.T.A. NO.594/CHNY/18 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: BOTH THE APPEALS OF THE REVENUE ARE DIRECTED AGAI NST THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS) -3, CHENNAI, IN RESPECT OF TWO INDEPENDENT ASSESSEES. SINCE COMMON ISSUE ARISES FOR CONSIDERATION IN BOTH THE APPEALS, WE HEARD BOTH THE APPEALS TOGETHER AND DISPOSING OF THE SAME BY T HIS COMMON ORDER. 2. SHRI S. BHARATH, THE LD. DEPARTMENTAL REPRESENTA TIVE, SUBMITTED THAT IN THE CASE OF M/S PVP VENTURES LTD. IN I.T.A. NO.593/CHNY/2018, THE ASSESSEE HAS EARNED DIVIDEND INCOME OF 5,53,379/-. ACCORDING TO THE LD. D.R., THE ASSESSI NG OFFICER COMPUTED THE DISALLOWANCE UNDER RULE 8D(2) OF THE I NCOME-TAX RULES, 1962 TO THE EXTENT OF 11,71,79,344/-. THE CIT(APPEALS), BY PLACING RELIANCE ON THE ORDER OF THIS TRIBUNAL IN M /S ROYALA CORPORATION IN I.T.A. NO.908/MDS/2015, DIRECTED THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE TO THE EXTENT OF EXEMPTED INCOME. ACCORDING TO THE LD. D.R., AN APPEAL WAS A LREADY FILED BEFORE THE HIGH COURT AGAINST THE ORDER OF THIS TRI BUNAL IN M/S ROYALA CORPORATION (SUPRA). MOREOVER, ACCORDING TO THE LD. D.R., 3 I.T.A. NO.593/CHNY/18 I.T.A. NO.594/CHNY/18 RULE 8D(2) OF THE INCOME-TAX RULES, 1962 DOES NOT S AY THAT THE DISALLOWANCE HAS TO BE RESTRICTED TO EARNING OF EXE MPTED INCOME. ACCORDING TO THE LD. D.R., IRRESPECTIVE OF THE FACT WHETHER THE ASSESSEE EARNED DIVIDEND INCOME OR NOT, THE DISALLO WANCE HAS TO BE COMPUTED AS PROVIDED IN RULE 8D(2). SECTION 14A OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') READ WITH RULE 8D(2) DOES NOT IN ANYWHERE SAY THAT IT IS A PRE-CONDITION TO E ARN DIVIDEND INCOME OR EXEMPTED INCOME FOR MAKING DISALLOWANCE. THEREFORE, ACCORDING TO THE LD. D.R., THE CIT(APPEALS) IS NOT CORRECT IN DIRECTING THE ASSESSING OFFICER TO RESTRICT THE DIS ALLOWANCE TO THE EARNING OF DIVIDEND INCOME. 3. ON THE CONTRARY, MS. K. HEMALATHA, LD. REPRESENT ATIVE FOR THE ASSESSEE, SUBMITTED THAT THE MADRAS HIGH COURT IN T HE CASE OF REDINGTON (INDIA) LTD. V. ADDL. CIT (2017) 77 TAXMA NN.COM 257 AND IN THE CASE OF CIT V. CHETTINAD LOGISTICS PVT. LTD. IN T.C.A. NO.24 OF 2017, FOUND THAT THERE CANNOT BE ANY DISALLOWANCE F OR EXPENDITURE WHEN THE ASSESSEE HAS NOT EARNED ANY EXEMPTED INCOM E. IN THIS CASE, THE ASSESSEE HAS EARNED ONLY A SUM OF 5,53,379/-. THEREFORE, THE CIT(APPEALS) BY PLACING RELIANCE ON THE ORDER OF THIS 4 I.T.A. NO.593/CHNY/18 I.T.A. NO.594/CHNY/18 TRIBUNAL IN M/S ROYALA CORPORATION RESTRICTED THE D ISALLOWANCE TO THE EXEMPTED INCOME. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE CIT(APPEALS) BY PLACING RELIANCE ON THE ORDER OF TH IS TRIBUNAL IN M/S ROYALA CORPORATION (SUPRA) DIRECTED THE ASSESSING O FFICER TO RESTRICT THE DISALLOWANCE TO THE EXTENT OF EXEMPTED / DIVIDE ND INCOME EARNED BY THE ASSESSEE. AS RIGHTLY SUBMITTED BY TH E LD. REPRESENTATIVE FOR THE ASSESSEE, THE MADRAS HIGH CO URT IN REDINGTON (INDIA) LTD. (SUPRA) AND CHETTINAD LOGIST ICS PVT. LTD. (SUPRA) CATEGORICALLY FOUND THAT THERE CANNOT BE AN Y DISALLOWANCE WHEN THE ASSESSEE HAS NOT EARNED ANY EXEMPTED INCOM E. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT THE CIT(APPEALS) HAS RIGHTLY PLACED HIS RELIANCE ON THE ORDER OF THIS TRIBUNAL IN ROYALA CORPORATION LTD. (SUPRA). 5. THE ONLY CONTENTION OF THE LD. D.R. BEFORE THIS TRIBUNAL IS THAT AN APPEAL IS PENDING BEFORE THE HIGH COURT. I T IS NOBODYS CASE THAT THE HIGH COURT HAS STAYED OPERATION OF THE ORD ER OF THIS TRIBUNAL IN M/S ROYALA CORPORATION LTD. (SUPRA). MERE PENDI NG OF APPEAL BEFORE THE HIGH COURT CANNOT BE A REASON TO TAKE A DIFFERENT VIEW BY 5 I.T.A. NO.593/CHNY/18 I.T.A. NO.594/CHNY/18 THIS TRIBUNAL. THEREFORE, THIS TRIBUNAL DO NOT FIN D ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 6. NOW COMING TO I.T.A. NO.594/CHNY/2018 IN THE CAS E OF PVP GLOBAL VENTURES PVT. LTD. 7. IN THIS CASE, ADMITTEDLY, THE ASSESSEE HAS NOT E ARNED ANY EXEMPTED INCOME. THEREFORE, THE JUDGMENTS OF MADRA S HIGH COURT IN REDINGTON (INDIA) LTD. (SUPRA) AND CHETTINAD LOG ISTICS PVT. LTD. (SUPRA) ARE SQUARELY APPLICABLE. MOREOVER, THE CIT (APPEALS) HAS PLACED HIS RELIANCE ON THE ORDER OF THIS TRIBUNAL I N ACIT V. M. BHASKARAN IN I.T.A. NO.1717/MDS/2013. SINCE THE MA DRAS HIGH COURT FOUND THAT THERE CANNOT BE ANY DISALLOWANCE U NDER SECTION 14A OF THE ACT WHEN THERE WAS NO EXEMPTED INCOME OR DIVIDEND INCOME EARNED BY THE ASSESSEE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUT HORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 8. IN THE RESULT, BOTH THE APPEALS FILED BY THE REV ENUE STAND DISMISSED. 6 I.T.A. NO.593/CHNY/18 I.T.A. NO.594/CHNY/18 ORDER PRONOUNCED ON 19 TH SEPTEMBER, 2018 AT CHENNAI. SD/- SD/- ( ! ) ( . . . ) (S. JAYARAMAN) (N.R.S. GANESAN) # / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 19 TH SEPTEMBER, 2018. KRI. . ,167 87(1 /COPY TO: 1. *+/ APPELLANT 2. ,-*+/ RESPONDENTS 3. 0 91 () /CIT(A)-3, CHENNAI 4. PRINCIPAL CIT- 5, CHENNAI 5. 7: ,1 /DR 6. ;' < /GF.