Igarashi Motors India Ltd., CHENNAI V. DCIT, CHENNAI

MA 200/CHNY/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1825 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 21 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 04-12-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 13-08-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: N VIJAY KUMAR
• Keywords: Rule 8D
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI ... , . !', $ '% BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER && / M.P. NO.200/CHNY/2019 [IN C.O. NO.22/CHNY/2019 (IN I.T.A. NO.3448/CHNY/20 18)] ' (' / ASSESSMENT YEAR : 2010-11 M/S IGARASHI MOTORS INDIA LTD., PLOT NO.B-12 TO B-15, PHASE-II, MEPZ-SEZ, TAMBARAM, CHENNAI - 600 045. PAN : AAACC 1305 R V. THE JOINT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 2(2), CHENNAI - 600 034. (*+' /PETITIONER) (*,+-/ RESPONDENT) *+' / 0 /PETITIONER BY : SHRI N. VIJAY KUMAR, CA *,+- / 0 / RESPONDENT BY : SHRI AR.V. SREENIVASAN, JCIT 1 / 2$ / DATE OF HEARING : 25.10.2019 34( / 2$ / DATE OF PRONOUNCEMENT : 04.12.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THE ASSESSEE HAS FILED THE PRESENT MISCELLANEOUS PETITION ON THE GROUND THAT THERE IS AN ERROR IN THE ORDER O F THIS TRIBUNAL DATED 30.04.2019. 2. SHRI N. VIJAY KUMAR, THE LD. REPRESENTATIVE FOR THE ASSESSEE, REFERRING TO ORDER OF THIS TRIBUNAL, MORE PARTICULA RLY PARA 4, 2 M .P. NO.200/CHNY/19 SUBMITTED THAT THIS TRIBUNAL DISMISSED THE CROSS-OB JECTION OF THE ASSESSEE ON THE GROUND THAT IT BECOMES INFRUCTUOUS. REFERRING TO THE GROUNDS OF APPEAL RAISED IN THE CROSS-OBJECTION , THE LD. REPRESENTATIVE SUBMITTED THAT THE ASSESSEE SPECIFIC ALLY CLAIMED THAT INVESTMENT IN SHARES WERE MADE OUT OF INTEREST FREE FUNDS AND HENCE, NO INTEREST EXPENDITURE CAN BE ATTRIBUTED. SINCE THIS GROUND WAS NOT DISPOSED OF, ACCORDING TO THE LD. REPRESENT ATIVE, THERE IS AN ERROR IN THE ORDER OF THIS TRIBUNAL DATED 30.04.201 9. THE LD. REPRESENTATIVE FURTHER SUBMITTED THAT THE LOANS WER E TAKEN FOR SPECIFIC PURPOSES, THEREFORE, THEY WERE NOT RELATED TO INVESTMENT IN SHARES. 3. ON THE CONTRARY, SHRI AR.V. SREENIVASAN, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ISS UE RAISED IN THE REVENUES APPEAL IS WITH REGARD TO DISALLOWANCE MAD E UNDER SECTION 14A OF THE INCOME-TAX ACT, 1961 (IN SHORT ' THE ACT'). THIS TRIBUNAL CONFIRMED THE ORDER OF THE CIT(APPEALS) BY REFERRING TO THE JUDGMENT OF MADRAS HIGH COURT IN CIT V. CHETTINAD L OGISTICS (P.) LTD. (2017) 80 TAXMANN.COM 221. NO DOUBT, ACCORDIN G TO THE LD. D.R., THE ASSESSEE HAS RAISED GROUNDS WITH REGARD T O INVESTMENTS IN THE SHARES OUT THEIR OWN FUNDS. HOWEVER, THERE WAS NO MATERIAL AVAILABLE ON RECORD TO SHOW THAT THE INVESTMENTS WE RE MADE OUT OF 3 M .P. NO.200/CHNY/19 OWN FUNDS. REFERRING TO THE GROUND NO.7 RAISED BY THE ASSESSEE IN THE CROSS-OBJECTION, THE LD. D.R. SUBMITTED THAT TH E ASSESSEE HAS ALSO BORROWED LOANS FOR BUSINESS PURPOSES. THE ASS ESSEE NOW CLAIMS THAT THE LOANS WERE BORROWED FOR SPECIFIC PU RPOSES, THEREFORE, IT IS NOT RELATED TO INVESTMENTS. THIS, ACCORDING TO THE LD. D.R., MEANS THAT THERE WAS INDIRECT EXPENDITURE AS PROVIDED IN RULE 8D(2)(II) OF INCOME-TAX RULES, 1962. THIS WAS CONS IDERED BY THE CIT(APPEALS) AND FOUND THAT THE ASSESSING OFFICER H AS RIGHTLY APPLIED RULE 8D(2)(II). ACCORDINGLY, HE UPHELD THE DISALLOWANCE MADE WITH REGARD TO INDIRECT EXPENDITURE. 4. HAVING HEARD THE LD. REPRESENTATIVE FOR THE ASSE SSEE AND THE LD. D.R., THIS TRIBUNAL FINDS THAT THE ONLY ISS UE RAISED BEFORE THIS TRIBUNAL IS WITH REGARD TO DISALLOWANCE MADE UNDER SECTION 14A READ WITH RULE 8D. THE ASSESSEE NOW CLAIMS THAT TH EY HAD SUFFICIENT FUNDS OF THEIR OWN AND LOANS BORROWED WE RE FOR SPECIFIC PURPOSES AND WHICH WERE NOT UTILISED FOR INVESTMENT S IN SHARES. HOWEVER, THERE WAS NO MATERIAL WAS FILED BY THE ASS ESSEE BEFORE THIS TRIBUNAL EITHER AT THE TIME OF HEARING OF APPE AL OR EVEN AT THE TIME OF HEARING OF THE MISCELLANEOUS PETITION, IN S UPPORT OF ITS CLAIM THAT ITS OWN FUNDS WERE AVAILABLE TO MAKE INVESTMEN TS. MOREOVER, THE ASSESSEE SPECIFICALLY CLAIMS THAT IT BORROWED LOANS FOR 4 M .P. NO.200/CHNY/19 BUSINESS PURPOSE. HENCE, THE ASSESSEE INDIRECTLY I NCURRED EXPENDITURE. IN OTHER WORDS, HAD THE ASSESSEE NOT INVESTED ITS OWN FUNDS IN THE SHARES, IT NEED NOT HAVE BORROWED LOAN S FOR BUSINESS OR ANY OTHER SPECIFIC PURPOSE. TO THAT EXTENT, THE AS SESSEE HAS DIVERTED ITS FUNDS, THEREFORE, THERE WAS NO MERIT I N CONTENDING THAT THE LOANS WERE BORROWED FOR SPECIFIC PURPOSE. AS R IGHTLY SUBMITTED BY THE LD. D.R., THERE WAS INDIRECT EXPENDITURE INC URRED BY THE ASSESSEE. THEREFORE, RULE 8D(2)(II) OF INCOME-TAX RULES, 1962 WOULD BE APPLICABLE. THE CIT(APPEALS) HAS RIGHTLY CONFIRMED THE ORDER OF THE ASSESSING OFFICER TO THAT EXTENT. THI S TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 5. WITH THE ABOVE OBSERVATION, THE MISCELLANEOUS PE TITION FILED BY THE ASSESSEE STANDS DISMISSED AS DEVOID OF MERIT . ORDER PRONOUNCED IN THE COURT ON 4 TH DECEMBER, 2019 AT CHENNAI. SD/- SD/- (. !' ) ( ... ) (S. JAYARAMAN) (N.R.S. GANE SAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 6 /DATED, THE 4 TH DECEMBER, 2019. 5 M .P. NO.200/CHNY/19 KRI. / *27& 8&(2 /COPY TO: 1. *+' / PETITIONER 2. *,+- /RESPONDENT 3. 1 92 () /CIT(A) 4. 1 92 /CIT 5. &: *2 /DR 6. ;' < /GF.