DCIT, CHENNAI V. Express Newspapers Private Limited, CHENNAI

ITA 688/CHNY/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5059 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 16-08-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 20-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Assessee Lawyers: G BASKAR
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , , ' # BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NOS.687 & 688/MDS/2017 & '& / ASSESSMENT YEAR : 2010-11 & 2012-13 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 2(1), CHENNAI - 600 034. V. M/S EXPRESS NEWSPAPERS PVT. LTD., EXPRESS ESTATES, NO.2, CLUB HOUSE ROAD, MOUNT ROAD, CHENNAI - 600 002. PAN : AAACE 1702 G ()*/ APPELLANT) (+,)*/ RESPONDENT) )* - . / APPELLANT BY : SHRI N. MADHAVAN, ADDL.CIT +,)* - . / RESPONDENT BY : SHRI G. BASKAR, ADVOCATE / - 0' / DATE OF HEARING : 02.01.2018 12' - 0' / DATE OF PRONOUNCEMENT : 05.01.2018 / 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)-9, CHENNAI, DATED 19.12.2016 AND PERTAIN TO ASSESSMENT YEARS 2010- 11 AND 2012-13. SINCE COMMON ISSUE ARISES FOR CONS IDERATION IN BOTH THE APPEALS, WE HEARD BOTH THE APPEALS TOGETHE R AND DISPOSING OF THE SAME BY THIS COMMON ORDER. 2 I.T.A. NOS.687 & 688/MDS/17 2. SHRI N. MADHAVAN, THE LD. DEPARTMENTAL REPRESENT ATIVE, SUBMITTED THAT THE ASSESSING OFFICER MADE ADDITION UNDER SECTION 14A OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT' ) READ WITH RULE 8D(2) OF INCOME-TAX RULES, 1962 IN RESPECT OF THE I NVESTMENT MADE BY THE ASSESSEE IN EXPRESS INFRASTRUCTURE PVT. LTD. ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS) DELETED THE ADDITION MAD E BY THE ASSESSING OFFICER PLACING RELIANCE ON THE DECISION OF THIS TRIBUNAL IN EIH ASSOCIATED HOTELS LIMITED IN 2013-TOIL-796-ITAT -MAD DATED 17.07.2013. ACCORDING TO THE LD. D.R., THE ABOVE O RDER OF THIS TRIBUNAL WAS NOT ACCEPTED BY THE DEPARTMENT AND FUR THER APPEAL IS PENDING BEFORE THE HIGH COURT. ACCORDING TO THE LD . D.R., EVEN IF THE INVESTMENT WAS MADE IN SUBSIDIARY COMPANY, THE EXPENDITURE INCURRED BY THE ASSESSEE HAS TO BE COMPUTED UNDER R ULE 8D(2). ACCORDING TO THE LD. D.R., RULE 8D(2) IS MANDATORY FOR THE PURPOSE OF COMPUTING EXPENDITURE INCURRED IN EARNING EXEMPT ED INCOME. 3. THE LD. D.R. FURTHER SUBMITTED THAT IN THE CASE BEFORE US, THE DIVIDEND INCOME EARNED BY THE ASSESSEE FROM THE INV ESTMENT MADE IN SO-CALLED SUBSIDIARY COMPANY IS EXEMPTED FROM TA XATION. THEREFORE, ACCORDING TO THE LD. D.R., THE EXPENDITU RE HAS TO BE COMPUTED UNDER RULE 8D(2). THE PROVISIONS OF RULE 8D(2) DOES NOT 3 I.T.A. NOS.687 & 688/MDS/17 SAY ANYWHERE THAT THE INVESTMENT MADE IN SUBSIDIARY COMPANY HAS TO BE EXCLUDED WHILE COMPUTING THE DISALLOWANCE. T HEREFORE, ACCORDING TO THE LD. D.R., THE REVENUE IS IN APPEAL AGAINST THE ORDER OF THIS TRIBUNAL IN EIH ASSOCIATED HOTELS LIM ITED (SUPRA) BEFORE THE HIGH COURT. HENCE, ACCORDING TO THE LD. D.R., THE CIT(APPEALS) IS NOT JUSTIFIED IN PLACING RELIANCE O N THE DECISION OF THIS TRIBUNAL. 4. ON THE CONTRARY, SHRI G. BASKAR, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE-COMPANY ESTAB LISHED EXPRESS INFRASTRUCTURE PVT. LTD. IN FACT, ACCORDI NG TO THE LD. COUNSEL, THE ASSESSEE-COMPANY WAS HOLDING 13,999 SH ARES OUT OF 14,000 SHARES IN THE SAID COMPANY AND ONE EQUITY SH ARE WAS HELD BY ONE KAVITA SINGHANIA. THEREFORE, ACCORDING TO T HE LD. COUNSEL, EXPRESS INFRASTRUCTURE PVT. LTD. IS ADMITTEDLY A SU BSIDIARY COMPANY OF THE ASSESSEE-COMPANY. HENCE, THE INVESTMENT MAD E BY THE ASSESSEE IS FOR BUSINESS PURPOSE AND NOT FOR EARNIN G ANY DIVIDEND INCOME. ACCORDING TO THE LD. COUNSEL, THE DIVIDEND INCOME EARNED BY THE ASSESSEE IS INCIDENTAL TO THE INVESTMENT MAD E, THEREFORE, THERE CANNOT BE ANY DISALLOWANCE UNDER SECTION 14A OF THE ACT IN VIEW OF THE DECISION OF THIS TRIBUNAL IN EIH ASSOCI ATED HOTELS 4 I.T.A. NOS.687 & 688/MDS/17 LIMITED (SUPRA). ACCORDING TO THE LD. COUNSEL, MER ELY BECAUSE THE APPEAL IS PENDING BEFORE THE HIGH COURT, THAT CANNO T BE A REASON TO TAKE A DIFFERENT VIEW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT EXPRESS INFRASTRUCTURE PVT. LTD. IS A SUBSIDIARY COMPANY OF THE ASSESSEE. IN FACT, THE ASSESSEE IS HOLDING 13,999 EQUITY SHARES OUT OF 14,000 SHARES. THEREFORE, THIS TRIBU NAL IS OF THE CONSIDERED OPINION THAT THE DECISION OF THIS TRIBUN AL IN EIH ASSOCIATED HOTELS LIMITED (SUPRA) IS SQUARELY APPLI CABLE TO THE FACTS OF THE CASE. AS RIGHTLY SUBMITTED BY THE LD.COUNSE L FOR THE ASSESSEE, MERE PENDANCY OF APPEAL BEFORE THE HIGH C OURT CANNOT BE A GROUND TO DIFFER FROM THE DECISION OF THE CO-O RDINATE BENCH OF THIS TRIBUNAL. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(APPEALS) HAS RIGHTLY FOLLOWED THE ORDE R OF THIS TRIBUNAL IN EIH ASSOCIATED HOTELS LIMITED (SUPRA). ACCORDIN GLY, THE ORDER OF THE CIT(APPEALS) IS CONFIRMED. 6. IN THE RESULT, BOTH THE APPEALS FILED BY THE REV ENUE ARE DISMISSED. 5 I.T.A. NOS.687 & 688/MDS/17 ORDER PRONOUNCED ON 5 TH JANUARY, 2018 AT CHENNAI. SD/- SD/- ( ) ( . . . ) (S. JAYARAMAN) (N.R.S. GANESAN) ' / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 5 TH JANUARY, 2018. KRI. - +056 76'0 /COPY TO: 1. )* /APPELLANT 2. +,)* /RESPONDENT 3. / 80 () /CIT(A)-9, CHENNAI-34 4. PRINCIPAL CIT- 2, CHENNAI 5. 69 +0 /DR 6. :& ; /GF.