Shriram Construction Finance, CHENNAI V. DCIT, CHENNAI

ITA 994/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6342 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 21-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN
• Section: 14A

Judgement Text

, .. , IN THE INCOME TAX APPELLATE TRIBUNAL , SMC B BENCH, CHENNAI . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.994/MDS/2017 ( / ASSESSMENT YEAR: 2013-14) M/S. SHRIRAM CONSTRUCTION FINANCE, MOOKAMBIKA COMPLEX, NO.4, LADY DESIKA ROAD, MYLAPORE, CHENNAI 600 004. VS THE DEPUTY COMMISSIONER OF INCOME TAX, NON CORPORATE CIRCLE 2, CHENNAI. PAN: AAAFS2597N ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI RAGHAV RAJEEVMENON, ADVOCATE /RESPONDENT BY : SHRI B. SAGADEVAN, JCIT /DATE OF HEARING : 06.07.2017 !' /DATE OF PRONOUNCEMENT : 28.08.2017 / O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEA LS)-2, CHENNAI DATED 31.01.2017 IN ITA NO.192/CIT(A)-2/201 5-16 FOR THE ASSESSMENT YEAR 2013-14 PASSED U/S.250(6) R.W.S.143 (3) OF THE ACT. 2 ITA NO.994/MDS/2017 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN ITS A PPEAL, HOWEVER THE CRUX OF THE ISSUE IS THAT THE ASSESSEE IS AGGRI EVED BY THE ORDER OF THE LD.CIT(A) WHO HAS ERRED IN CONFIRMING THE DI SALLOWANCE MADE BY THE LD.AO FOR RS.35,55,637/- U/S.14A R.W.R 8D OF THE RULES. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A FIRM ENGAGED IN THE BUSINESS OF ADVANCING LOANS TO GROUP CONCERNS, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2013-1 4 ON 17.09.2013 ADMITTING NIL INCOME. INITIALLY THE RETURN WAS PR OCESSED U/S.143(1) OF THE ACT. SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY AND FINALLY ASSESSMENT ORDER WAS PASSED U/S.143(3) OF T HE ACT ON 10.12.2015, WHEREIN THE LD.AO MADE DISALLOWANCE U/S .14A R.W.R. 8D FOR RS.35,55,637/-. ON APPEAL, THE LD.CIT(A) AL SO CONFIRMED THE ORDER OF THE LD.AO. 4. AT THE OUTSET, THE LD.AR SUBMITTED BEFORE US THA T THE ASSESSEE HAD MADE INVESTMENTS IN EQUITY SHARES OF ITS SISTER CONCERNS AND THEREFORE THE ASSESSEE HAD NOT INCURRED ANY EXPENDI TURE TOWARDS SUCH INVESTMENTS. HENCE, IT WAS PLEADED THAT THE P ROVISION OF SECTION 14A WILL NOT BE APPLICABLE IN THE CASE OF T HE ASSESSEE. THE 3 ITA NO.994/MDS/2017 LD.DR ON THE OTHER HAND RELIED ON THE ORDERS OF THE LD.REVENUE AUTHORITIES. 5. I HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS ON RECORD. IF THE ASSESSEE HAS INVESTED IN ITS SISTER CONCERNS FOR STRATEGICALLY REASONS FROM ITS OWN INT EREST FREE CAPITAL AND RESERVES, THEN PROVISIONS OF SECTION 14A OF THE ACT WILL NOT BE APPLICABLE, BECAUSE PRIMA FACIE SECTION 14A WARRANTS THAT THE ASSESSEE SHOULD HAVE INCURRED SOME EXPENDITURE IN R ELATION TO THE INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT. FURTHER THERE WILL BE NO OVERHEAD COST TO THE ASSES SEE WHEN IT DECIDES TO INVEST IN ITS OWN SISTER COMPANIES FOR S TRATEGIC REASONS AT LEAST IN THE CASE OF THE ASSESSEE FIRM BEFORE US. H OWEVER IF THE ASSESSEE HAD MADE SUCH INVESTMENTS OUT OF ITS INTER EST BEARING FUNDS THEN THE INTEREST COST WILL BE DIRECTLY ATTRI BUTABLE TO SUCH INVESTMENTS AND CANNOT BE CLAIMED AS DEDUCTION FROM ANY OTHER ACTIVITIES OF THE ASSESSEE BEARING TAXABLE INCOME. SINCE THE LD.AR HAD POINTED OUT TO US THAT THE ASSESSEE HAD MADE TH E INVESTMENTS IN ITS SISTER CONCERNS FOR STRATEGIC REASONS OUT OF ITS OWN INTEREST FREE FUNDS, I FIND IT APPROPRIATE TO REMIT THE MATTER BA CK TO THE FILE OF LD.AO FOR FRESH CONSIDERATION AND TO PASS APPROPRIA TE ORDER IN 4 ITA NO.994/MDS/2017 ACCORDANCE WITH LAW AND MERIT AND BASED ON OUR ABOV E MENTIONED OBSERVATIONS. 6. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 28 TH AUGUST, 2017 AT CHENNAI. SD/- ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER #$ /CHENNAI, %& /DATED 28 TH AUGUST, 2017 RSR & () *) /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. - ( )/CIT(A) 4. - /CIT 5. )./ 0 /DR 6. /1 /GF