M/s. R.K.M. Powergen Pvt. Ltd., CHENNAI V. DCIT, CHENNAI

MA 216/CHNY/2016

• Counselvise Citation: [2017] 124 COUNSELVISE.COM (IT) 5551 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 02-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 12-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 16-08-2016
• Court: TRIBUNAL
• Department Lawyers: GURU BHASHYAM
• Assessee Lawyers: B PURSHOTHAM
• Keywords: Rectification of order; Earning of tax free income
• Section: 40A(3); 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . . . , . ,%& BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER MISCELLANEOUS PETITION NO.216/MDS/2016 IN C.O. NO.129/MDS/2015 ( I.T.A.NO.1868/MDS/2015) ( / ASSESSMENT YEAR :2010-11) M/S . R.K.M. POWERGEN PVT. LTD., 14/45, DR. GIRIAPPA ROAD, T.NAGAR, CHENNAI 600 017. VS THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-5(2), CHENNAI-34. PAN:AADCR0301B (PETITIONER) ( /RESPONDENT) APPLICANT BY : SHRI B. PURSHOTHAM, CA /RESPONDENT BY : SHRI GURU BHASHYAM, JCIT /DATE OF HEARING : 28.04.2017 /DATE OF PRONOUNCEMENT : 02.05.2017 / O R D E R PER A. MOHAN ALANKAMONY, AM: THE MISCELLANEOUS PETITION IS FILED BY THE ASSESSEE PRAYING FOR RECTIFICATION OF MISTAKE APPARENT ON RECORD BY RECALLING THE ORDER OF THE TRIBUNAL PASSED IN I.T.A. NO.1868/MDS/ 2015 & CO NO.129/MDS/2015 DATED 22.06.2016. 2. THE LD.AR SUBMITTED BEFORE US THAT IN THE ORDER OF THE TRIBUNAL AT PARA NO.7.3, PAGE 15 IT WAS HELD THAT A DDITION CANNOT BE MADE BY INVOKING THE PROVISIONS OF SECTION 40(A) (IA) OF THE ACT IN THE CASE OF THE ASSESSEE BECAUSE THE ASSESSEE HA D PAID ONLY ADVANCE TO M/S. GM ENERGY SERVICES PVT. LTD., AND N OT CLAIMED 2 M.P.NO.216 /MDS/2016 THE SAME AS EXPENDITURE TO BE ALLOWED AS DEDUCTION. HOWEVER, WITH RESPECT TO THE DISALLOWANCE U/S.40A(3) OF THE ACT IN REGARD TO CASH PAYMENTS EXCEEDING RS.20,000/- TO A SINGLE PER SON IN A DAY UNDER THE HEAD TRAVELLING EXPENSE, BROKERAGE, COMMI SSION, BUSINESS PROMOTION EXPENSE AND OFFICE MAINTENANCE E XPENSE AND DISALLOWANCE U/S.14A OF THE ACT, THE TRIBUNAL UPHE LD THE ORDER OF THE LD.A.O. THE LD.AR FURTHER SUBMITTED THAT WITH RESPECT TO CASH PAYMENT EXCEEDING RS.20,000/- THE ASSESSEE HAD NOT CLAIMED THE SAME AS EXPENDITURE BUT IT WAS ALSO CAPITALIZED, TH EREFORE THE SAME RATIO OF THE BENCH FOR DISALLOWANCE U/S.40(A)( IA) OF THE ACT WILL APPLY. SINCE THE BENCH HAS DECIDED THE ISSUE O THERWISE THE LD.A.R ARGUED STATING THAT IT IS A MISTAKE APPARENT ON RECORD THAT IS REQUIRED TO BE RECTIFIED. THE LD.AR FURTHER POIN TED OUT THAT FOR THE RELEVANT ASSESSMENT YEAR THE ASSESSEE HAS ONLY ADMITTED INCOME FROM OTHER SOURCE AND NOT FROM BUSINESS & PROFESSION, HENCE DISALLOWANCE U/S.14A OF THE ACT IS MISTAKE AP PARENT ON RECORD BECAUSE NO EXPENDITURE ATTRIBUTABLE FOR EARN ING EXEMPT INCOME WAS EMBEDDED IN ANY EXPENDITURE WHILE COMPUT ING THE INCOME DECLARED UNDER THE HEAD INCOME FROM OTHER S OURCE. ON THE ABOVE SUBMISSIONS OF THE LD.AR, THE LD.DR COULD NOT SUCCESSFULLY CONTROVERT. 3 M.P.NO.216 /MDS/2016 3.1 AFTER HEARING BOTH THE PARTIES, WE FIND MERIT I N THE SUBMISSION OF THE LD.AR. WHILE DECIDING THE ISSUE WITH RESPECT TO 40A(3) OF THE ACT, THE BENCH WAS UNDER THE IMPRESSI ON THAT THE ASSESSEE HAD CLAIMED SUCH PAYMENTS AS EXPENDITURE A ND REDUCED THE SAME FROM ITS INCOME. IF SUCH PAYMENTS MADE BY THE ASSESSEE IS CAPITALIZED, THEN FOLLOWING THE SAME RA TIO WITH RESPECT TO SECTION 40(A)(IA) OF THE ACT SUPRA SUCH DISALLOW ANCE IS NOT WARRANTED. THEREFORE THE DECISION OF THE TRIBUNAL VIA ORDER DATED 22/06/2016 IN ITA NO. 1868/MDS/2015 & C.O NO.129/MDS/2015 ON THIS ISSUE IS HEREBY RECALLED AN D THE MATTER IS REMITTED BACK TO THE FILE OF LD.AO WITH D IRECTION TO VERIFY WHETHER THE CASH PAYMENTS EXCEEDING RS.20,00 0/- WAS PAID AS ADVANCE AND IF SO DELETE THE ADDITION MADE BY INVOKING SECTION 40A(3) OF THE ACT AND IF FOUND OTH ERWISE REINSTATE THE ORDER PASSED BY HIM ON THE EARLIER IN STANCE. 3.2 FURTHER PROVISIONS OF SECTION 14A OF THE ACT FALL UNDER CHAPTER IV OF THE ACT IE., UNDER THE HEAD COMPUTAT ION OF TOTAL INCOME. THEREFORE SECTION 14A OF THE ACT IS APPLIC ABLE WHILE COMPUTING TOTAL INCOME UNDER ALL THE HEADS OF INC OME SUCH AS 4 M.P.NO.216 /MDS/2016 SALARIES, INCOME FROM HOUSE PROPERTY, PROFITS AND GAINS OF BUSINESS OR PROFESSION, CAPITAL GAINS AND INCOM E FROM OTHER SOURCE. HOWEVER, IF THE ASSESSEE HAS NOT INCURRED ANY EXPENDITURE THAT IS ATTRIBUTABLE FOR EARNING EXEMPT INCOME WHICH IS CLAIMED AS DEDUCTION UNDER ANY HEAD OF INCOME THEN PROVISIONS OF SECTION 14A OF THE ACT CANNOT BE INVOKED. THE LD. A .R SUBMITTED BEFORE US THAT THE ASSESSEE HAD NO EARNED ANY BUSIN ESS INCOME DURING THE RELEVANT ASSESSMENT YEAR BUT ONLY EARNED INCOME FROM OTHER SOURCE. THE LD.AR ALSO VOUCHED BEFORE U S THAT THE ASSESSEE HAS NOT INCURRED ANY EXPENDITURE ATTRIBUTA BLE FOR EARNING EXEMPT INCOME WHICH IS CLAIMED AS DEDUCTION UNDER T HE HEAD INCOME FROM OTHER SOURCE. SINCE THE FACTS ARE NOT CLEAR WITH RESPECT TO THE EXPENDITURE INCURRED BY THE ASSESSEE FOR EARNING EXEMPT INCOME AND THERE IS NO FINDING IN AN Y ORDERS OF THE REVENUE AND THE TRIBUNAL ON THIS REGARD, WE ARE OF THE CONSIDERED VIEW THAT THE DECISION OF THE TRIBUNAL W ITH RESPECT TO THIS ISSUE ALSO REQUIRES TO BE RECALLED AND THE MATTER REMITTED BACK TO THE FILE OF THE LD.AO FOR FRESH CO NSIDERATION. IT IS ORDERED ACCORDINGLY. 5 M.P.NO.216 /MDS/2016 5. IN THE RESULT, THE MISCELLANEOUS PETITION FILED BY THE ASSESSEE IS ALLOWED AS INDICATED HEREIN ABOVE. ORDER PRONOUNCED IN THE COURT ON THE 02 ND MAY, 2017. SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.MOHAN ALANKAMONY ) / JUDICIAL MEMBER ! / ACCOUNTANT MEMBER ' /CHENNAI, #$ /DATE : 02 ND MAY 2017 JR '!() *+( /COPY TO: 1.*).! /APPELLANT 2. /RESPONDENT 3. / ( *).! )/CIT(A) 4. / /CIT 5. (01. 2 /DR 6. 13 ! /GF