DCIT, CHENNAI V. Shriram Venture Limited, CHENNAI

ITA 735/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8698 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 24-03-2016
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: R SIVARAMAN
• Section: 14A; 115JB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . . . , . !' , # $ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NO.735/MDS/2016 / ASSESSMENT YEAR : 2012-13 THE DY. COMMISSIONER OF INCOME TAX CORPORATE CIRCLE 6(1) CHENNAI VS. M/S SHRIRAM VENTURE LTD NO.4, MOOKAMBIKA COMPLEX LADY DESIKACHARY ROAD MYLAPORE, CHENNAI 600 004 [PAN AACCS 9328 J ] ( &' / APPELLANT) ( ()&' /RESPONDENT) / APPELLANT BY : SHRI SHIVA SRINIVAS, JCIT /RESPONDENT BY : SHRI R. SI VARAMAN, ADVOCATE / DATE OF HEARING : 31 - 05 - 2016 ! / DATE OF PRONOUNCEMENT : 29 - 0 7 - 2016 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-15, CHENN AI, DATED 24.9.2015 AND PERTAINS TO ASSESSMENT 2012-13. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS DISALLOW ANCE OF ` 1,99,06,939/-. ITA NO. 735/16 :- 2 -: 3. SHRI SHIVA SRINIVAS, LD. DEPARTMENTAL REPRESENTATIV E SUBMITTED THAT THE ASSESSING OFFICER FOUND THAT THE ASSESSEE EARNED EXEMPTED INCOME DURING THE YEAR UNDER CONSIDERATION . THE ASSESSING OFFICER HAS ALSO FOUND THAT THE ASSESSEE INCURRED EXPENDITURE TO THE EXTENT OF ` 48,21,918/- FOR EARNING THE INCOME WHICH DO NOT FO RM PART OF THE TOTAL INCOME. IN FACT, THE ASSESSEE HAS PA ID ` 48,21,918/- TOWARDS INTEREST. DURING THE YEAR UNDER CONSIDERAT ION THE ASSESSEE ADMITTEDLY MADE INVESTMENT WHICH REFLECTED IN THE B ALANCE SHEET. THE TOTAL INVESTMENT AS ON 1.4.2011 WAS ` 61,00,15,110/-. THE INVESTMENT AS ON 31.3.2012 WAS ` 438,94,02,409/-. THE AVERAGE INVESTMENT WAS ` 249,97,08,759/-. THE ASSESSING OFFICER, WHILE COMPUTING THE AVERAGE AMOUNT, BY APPLYING THE THIRD LIMB OF RULE 8D(2) FOUND THAT THE DISALLOWANCE HAS TO BE MADE TO THE EXTENT OF ` 1,99,06,939/-. HOWEVER, THE CIT(A) DELETED THE ADD ITION MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THE ENTIRE INV ESTMENT WAS MADE IN THE SISTER CONCERN. ACCORDING TO THE LD. DR, T HE DETAILS OF THE SISTER CONCERNS ARE NOT AVAILABLE ON RECORD. IT IS NOT KN OWN HOW THE COMPANIES IN WHICH INVESTMENTS WERE MADE ARE SISTER /HOLDING COMPANIES OF THE ASSESSEE. IN THE ABSENCE OF ANY MATERIAL TO ENSURE HOLDING PATTERN OF THE SUBSIDIARY/HOLDING COMPANIES , IT CANNOT BE SAID THAT THE INVESTMENTS WERE MADE IN SUBSIDIARY COMPAN IES. THEREFORE, ITA NO. 735/16 :- 3 -: ACCORDING TO THE LD. DR, THE CIT(A) IS NOT JUSTIFIE D IN ALLOWING THE CLAIM OF THE ASSESSEE. 4. ON THE CONTRARY, SHRI R. SIVARAMAN, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ENTIRE INVESTMENT WAS M ADE IN THE SUBSIDIARY COMPANIES OF THE ASSESSEE FOR THE PURPO SE OF BUSINESS. THEREFORE, THE CIT(A), BY PLACING RELIANCE ON THE O RDER OF THIS TRIBUNAL IN THE CASE O ASSESSEES SISTER CONCERN M/S SHRIRA M CAPITAL LTD, FOR THE ASSESSMENT YEAR 2010-11 AND 2011-12, FOUND THAT THE INVESTMENT WAS MADE IN THE SUBSIDIARY COMPANIES, HENCE, THERE CANN OT BE ANY DISALLOWANCE U/S 14A R.W. RULE 8D. THE CIT(A) HAS ALSO DIRECTED THE ASSESSING OFFICER TO EXCLUDE THE INVESTMENT MADE IN SHRIRAM DISTRIBUTION SERVICES PVT. LTD TO THE EXTENT OF ` 25 CRORES WHILE CALCULATING THE DISALLOWANCE U/S 14A OF THE ACT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE CLAIMS THAT THE ENTIRE INVESTMENT WAS MADE IN SUBSIDIARY C OMPANIES FOR THE PURPOSE OF BUSINESS AND NOT FOR EARNING THE EXEMPTE D INCOME. AS RIGHTLY SUBMITTED BY THE LD. DR, THE DETAILS OF THE SUBSIDIARY/HOLDING COMPANY IN WHICH THE INVESTMENTS WERE MADE ARE NOT AVAILABLE ON RECORD. IT IS NOT KNOWN HOW THE COMPANIES IN WHICH THE INVESTMENTS WERE MADE ARE SUBSIDIARY/HOLDING COMPANIES OF THE ASSESSEE . UNLESS ITA NO. 735/16 :- 4 -: THE SHAREHOLDING PATTERN OF THE COMPANIES IN WHICH THE INVESTMENTS WERE MADE BY THE ASSESSEE ARE MADE AVAILABLE ON RE CORD, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THERE IS NO BASIS FOR CONCLUDING THAT THE INVESTMENTS WERE MADE IN SUBSID IARY COMPANIES. THEREFORE, IT IS NECESSARY TO BRING ON RECORD THE D ETAILS OF THE COMPANIES IN WHICH THE INVESTMENTS WERE MADE BY THE ASSESSEE AND THE SHAREHOLDING PATTERN OF SUCH COMPANIES. MOREOV ER, A BARE READING OF THE ASSESSMENT ORDER SHOWS THAT THE ASSESSING OF FICER HAS ALSO ADDED THE DISALLOWANCE MADE U/S 14A OF THE ACT TO THE INCOME COMPUTED U/S 115JB OF THE ACT. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT IN THE ABSENCE OF ANY MATERIAL AVAILAB LE ON RECORD, THE ASSESSING OFFICER HAS TO RECONSIDER THE MATTER. AC CORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ENTI RE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASS ESSING OFFICER SHALL RECONSIDER THE ISSUE AFRESH AND BRING ON RECORD THE DETAILS OF THE COMPANIES IN WHICH THE INVESTMENTS WERE MADE BY THE ASSESSEE AND THE SHAREHOLDING PATTERN OF SUCH COMPANIES AND THER EAFTER DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER GIVING A REASONAB LE OPPORTUNITY TO THE ASSESSEE. ITA NO. 735/16 :- 5 -: 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JULY, 2016, AT CHENNAI. SD/- SD/- ( . !' ) (A. MOHAN ALANKAMONY) # / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 29 TH JULY, 2016 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF