DCIT, CHENNAI V. M/s. Turbo Energy Ltd., CHENNAI

ITA 907/CHNY/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51708 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 18-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR I VIJAYAKUMAR
• Assessee Lawyers: K SRINIVASAN
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE SHRI N. S. SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER .. I.T.A. NO. 907/MDS/2011 ASSESSMENT YEAR :2005-06 THE DEPUTY COMMISSIONER OF INCOME-TAX, LARGE TAXPAYER UNIT, CHENNAI. V. M/S. TURBO ENERGY LTD., 67, CHAMIERS ROAD, CHENNAI-600 028. PAN :AAACT2916R (APPELLANT) (RESPONDENT) APPELLANT BY : DR. I. VIJAYAKUMAR, CIT-DR RESPONDENT BY : SHRI K. SRINIVASAN, CA DATE OF HEARING : 11-08-2011 DATE OF PRONOUNCEMENT : 12/ 08/2011 O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(APPEALS)-III, CHENNAI IN ITA NO. 555/08-09/A.II I DATED 24-02-2011 FOR THE ASSESSMENT YEAR 2005-06. 2. DR. I. VIJAYAKUMAR, LEARNED CIT-DR REPRESENTED O N BEHALF OF THE REVENUE AND SHRI K. SRINIVASAN, CA REPRESENTED ON BEHALF OF THE ASSESSEE. I.T.A. NO.907/MDS/2011 2 3. IN THE REVENUES APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS : 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO LAW AND FACTS AND CIRCUMSTANCES OF THE CASE. 2.1 THE LD. CIT(A) ERRED IN DIRECTING THE ASSESSIN G OFFICER TO RESTRICT THE DISALLOWANCE U/S.14A TO 2% OF THE E XEMPTED INCOME AS AGAINST THE SUM OF ` 24,35,000/- MADE BY THE ASSESSING OFFICER. 2.2 IT IS SUBMITTED THAT RULE 8D HAS BEEN HELD TO BE RETROSPECTIVELY APPLICABLE BY THE SPECIAL BENCH OF THE ITAT, MUMBAI, IN THE CASE OF M/S. DAGA CAPITAL MANAGEMENT PVT LTD. IN ITA NO. 8057/MUMBAI/032 DT. 20.10.2008. 2.3 IT IS FURTHER SUBMITTED THAT THE DECISION OF T HE MUMBAI HIGH COURT RELIED UPON BY THE CIT(A) IN THE CASE OF M/S. GODREJ & BOYCE MFG. CO. LTD. HAS NOT BECOME FI NAL. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING O FFICER RESTORED. 4. IT WAS SUBMITTED BY THE LEARNED DR THAT IN THE COURSE OF ASSESSMENT THE ASSESSING OFFICER HAD MADE A DISALLOWANCE OF ` 24,35,000/- BY INVOKING THE PROVISIONS OF SECTION14A OF THE INCOME-TAX ACT, 196 , BEING THE EXPENDITURE ON THE EXEMPTED DIVIDEND INCOME WHICH HAD BEEN CLAIMED EXE MPTION UNDER SECTION 10(34) OF THE ACT. IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER HAD MADE THE ADDITION BY APPLYING RULE 8D OF THE INCOME TAX RULE S, 1962. IT WAS THE SUBMISSION THAT THE LEARNED CIT(A) HAD, FOLLOWING T HE DECISION OF THE HON'BLE I.T.A. NO.907/MDS/2011 3 BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG . CO. LTD. V. CIT (328 ITR 81), RESTRICTED THE DISALLOWANCE TO 2% OF THE TOTAL EXEMPTED INCOME. IT WAS THE SUBMISSION THAT THE DECISION IN THE CASE OF GODREJ & BVOYCE MFG. CO. LTD. HAS NOT BECOME FINAL. IT WAS THE FURTHER SUBMISSION THAT T HE LEARNED CIT(A) HAD ALSO FOLLOWED THE DECISION OF THE CO-ORDINATE BENCH OF T HIS TRIBUNAL IN THE CASE OF TVS MOTORS COMPANY LTD. IN ITA NOS. 697, 757, 976 & 101 7/MDS/2009 DATED 22-12- 2010 FOR THE PURPOSE OF RESTRICTING THE DISALLOWANC E UNDER SECTION 14A TO 2% OF THE EXEMPTED INCOME. IT WAS THE SUBMISSION THAT TH E DECISION IN THE CASE OF TVS MOTOR COMPANY LTD. HAS ALSO NOT BECOME FINAL. IT W AS THE SUBMISSION THAT THE ORDER OF THE LEARNED CIT(A) IS LIABLE TO BE REVERSE D AND THAT OF THE ASSESSING OFFICER RESTORED. HE VEHEMENTLY SUPPORTED THE ORDE R OF THE ASSESSING OFFICER. 5. IN REPLY, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT IN VIEW OF THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF TVS MOTOR COMPANY LTD., REFERRED TO SUPRA, THE ACTION OF THE LEARNED CIT(A) IN RESTRICTING THE DISALLOWANCE TO 2% WAS LIABLE TO BE UPHELD. HE ALSO RELIED UPON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GOD REJ & BOYCE MFG. CO. LTD., REFERRED TO SUPRA. IT WAS THE SUBMISSION THAT JUST BECAUSE AN APPEAL HAS BEEN FILED AGAINST AN ORDER THAT WOULD NOT MAKE THE ORDE R PER INCURIAM OR NOT APPLICABLE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE ORDER OF THE LEARNED CIT(A) SHOWS THAT THE LEARNED CIT(A) HAS CO NSIDERED THE DECISION OF THE I.T.A. NO.907/MDS/2011 4 HON'BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & B OYCE MFG. CO. LTD., REFERRED TO SUPRA, WHEREIN IT HAS BEEN CLEARLY HELD THAT RUL E 8D CAN BE APPLIED ONLY FROM THE ASSESSMENT YEAR 2008-09. IT IS FURTHER NOTICED THAT THE LEARNED CIT(A) HAS FOLLOWED THE DECISION OF THE CO-ORDINATE BENCH OF T HIS TRIBUNAL IN THE CASE OF TVS MOTOR COMPANY LTD., REFERRED TO SUPRA TO RESTRICT T HE DISALLOWANCE UNDER SECTION 14A TO 2%. THESE DECISIONS STILL HOLD THE FIELD. IN THE CIRCUMSTANCES, AS IT IS NOTICED THAT THE LEARNED CIT(A) HAS ONLY FOLLOWED T HE DECISION OF THE HIGHER JUDICIAL FORUMS, WE ARE OF THE VIEW THAT THE FINDIN G OF THE LEARNED CIT(A) IS ON THE RIGHT FOOTING AND DOES NOT CALL FOR ANY INTERFERENC E. IN THE CIRCUMSTANCES, THE APPEAL OF THE REVENUE STANDS DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 12/08/201 1. SD/- SD/- (N. S. SAINI) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 12 TH AUGUST, 2011. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE