Dakshin Infrstucture Private Limited, Hyderabad V. Income Tax Officer, Ward-17(1), Hyderabad

ITA 787/Hyd/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2416 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 20-02-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 27-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NILANJAN DEY
• Assessee Lawyers: T CHAITANYA KUMAR
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

. PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.787/HYD/2018 (ASSESSMENT YEAR: 2014-15) M/S. DAKSHIN INFRASTRUCTURES PRIVATE LTD HYDERABAD PAN:AACCD4138P VS INCOME TAX OFFICER WARD 17(1) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI T. CHAITANYA KUMAR FOR REVENUE : SHRI NILANJAN DEY, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2014-15 AGAIN ST THE ORDER OF THE CIT (A)-5, HYDERABAD, DATED 23.02. 2018. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY, ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION, FILE D ITS RETURN OF INCOME FOR THE A.Y 2014-15 ELECTRONICALLY ON 28.09. 2014 DECLARING INCOME OF RS.62,05,220/-. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND ACCORDINGLY NOTICE U/S 143(2) DATED 07.09.2015 WAS ISSUED AND SERVED ON THE ASSESSEE. DURING THE A SSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE COMPA NY HAS MADE INVESTMENTS IN OTHER COMPANIES TO THE TUNE OF RS.45 ,33,31,212/-. DATE OF HEARING : 20.02.2019 DATE OF PRONOUNCEMENT: 13.03.2019 . PAGE 2 OF 4 PRESUMING THAT THE COMPANY MUST HAVE INCURRED SOME SORT OF ADMINISTRATIVE/MANAGERIAL EXPENDITURE TO MANAGE THE INVESTMENTS, THE AO OBSERVED THAT THE PROVISION OF SECTION 14A R.W.R 8D IS APPLICABLE AND THE DISALLOWANCE OF EXPE NDITURE IS TO BE MADE ACCORDINGLY. THEREFORE, HE WORKED OUT THE DISA LLOWANCE OF RS.22,66,656/- UNDER RULE 8D(2)(III) BEING 0.5% OF THE AVERAGE VALUE OF THE INVESTMENT AND BROUGHT IT TO TAX. AGGR IEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A), WH O CONFIRMED THE ORDER OF THE AO AND THE ASSESSEE IS IN SECOND A PPEAL BEFORE US BY RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) IS ERRONEOUS BOTH ON FACTS AND IN LAW TO THE EXTENT IT IS PREJUDICIAL TO THE ASSESSEE. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER WITHOUT GIVING ANY FURTHER OPPORTUNITY. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN HOLDING THAT THE PROVISIONS U / S 14 A OF THE 1. T ACT IS APPLICABLE. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION AN AMOUNT OF RS.22,66,656/- U/S 14A OF THE I.T.ACT . 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE CONSIDERED THE FACT THE APPELLANT NOT RECEIVED ANY EXEMPTION INCOME. 6. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT DURING THE RELEVANT A.Y, THE ASSESSEE HAS NOT EARNE D ANY DIVIDEND/EXEMPT INCOME AND THEREFORE, THE PROVISION S OF SECTION 14A ARE NOT APPLICABLE TO THIS A.Y. HE HAS FILED CO PIES OF THE . PAGE 3 OF 4 RETURN OF INCOME, COMPUTATION OF TOTAL INCOME FOR T HE A.Y 2014-15 ALONG WITH FINANCIAL ACCOUNTS TO DEMONSTRATE THAT T HE ASSESSEE HAS NOT EARNED ANY DIVIDEND/EXEMPT INCOME DURING TH E RELEVANT A.Y. THUS, HE PRAYED FOR DELETING THE ADDITIONS MAD E BY THE AO AND CONFIRMED BY THE CIT (A). 4. THE LEARNED DR, HOWEVER, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE HON'BLE DELHI HIGH COUR T IN THE CASE OF CHEMINVEST LTD VS. CIT REPORTED IN 378 ITR 33 (DEL. ) HAS HELD THAT IF THERE IS NO DIVIDEND INCOME (WHICH IS EXEMPT FRO M TAX) EARNED DURING THE RELEVANT PERIOD, NO DISALLOWANCE U/S 14A CAN BE MADE. THIS DECISION HAS BEEN FOLLOWED BY US IN A NUMBER O F CASES TO WHICH BOTH OF US ARE SIGNATORIES. THEREFORE, RESPEC TFULLY FOLLOWING THE DECISION OF THE HON'BLE DELHI HIGH COURT (CITED SUPRA), THE APPEAL OF THE ASSESSEE IS ALLOWED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH MARCH, 2019. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 13 TH MARCH, 2019. VINODAN/SPS . PAGE 4 OF 4 COPY TO: 1 M/S. DAKSHIN INFRASTRUCTURES PRIVATE LTD C/O SHRI T. CHAITANYA KUMAR, ADVOCATE, FLAT NO.102, GOURI APARTMENT, URDULANE, H IMAYATHNAGAR, HYDERABAD 2 ITO WARD 17(1) HYDERABAD 3 CIT (A)-5 HYDERABAD 4 PR. CIT 5 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER