M/s. Sundaram Clayton Ltd., CHENNAI V. Addl. CIT, CHENNAI

MA 236/CHNY/2016

• Counselvise Citation: [2016] 124 COUNSELVISE.COM (IT) 4910 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 28 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 23-11-2016
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 28-10-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 26-08-2016
• Court: TRIBUNAL
• Department Lawyers: DURAI
• Assessee Lawyers: R VIJAYARAGHAVAN
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI , ! ' ! # . $ , & '( ) [ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ] M.P.NOS.236 & 237/MDS/2016 [IN I.T.A.NOS.1163/MDS/2013 & 1431/MDS/2013] ASSESSMENT YEAR : 2009-10 M/S SUNDARAM CLAYTON LTD NO.29 HADDOWS ROAD CHENNAI 600 006 VS. THE ADDL. COMMISSIONER OF INCOME-TAX COMPANY RANGE VI CHENNAI [PAN AAACS 4920 J] (PETITIONER) ( *+,- /RESPONDENT) PETITIONER BY : SHRI R. VIJAYARAGHAVAN, ADVOCATE RESPONDENT BY : SHRI DURAIPANDIAN, JCIT / DATE OF HEARING : 28 - 10 - 2016 / DATE OF PRONOUNCEMENT : 23 - 1 1 - 2016 . / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THE ASSESSEE HAS FILED THESE TWO MISCELLANEOUS P ETITIONS SEEKING RECTIFICATION OF THE ORDER OF THIS TRIBUNAL IN I.T.A.NOS. 1163/MDS/2013 AND 1431/MDS/2013, DATED 13.4.2016. 2. THE LD. AR SUBMITTED THAT IN THESE CASES, THERE IS AN ISSUE RELATING TO DISALLOWANCE U/S 14A OF THE INCOME-TAX ACT, 1961 AND THE ASSESSEE HAVING MADE INVESTMENTS IN SUBSIDIARY COMP ANIES AND IN M.P NOS. 236 & 237/16 :- 2 -: MUTUAL FUNDS EQUITY SHARES, CANNOT BE CONSIDERED FO R COMPUTATION OF 0.5% OF THE TOTAL INVESTMENT BY APPLYING RULE 8D. HE FURTHER SUBMITTED THAT INTEREST FREE FUNDS AND CAPITAL RESE RVES WERE USED FOR INVESTMENTS, THEREFORE, IT CANNOT BE CONSIDERED AS PART OF THE INVESTMENT. ACCORDINGLY, HE PRAYED FOR MODIFICATIO N OF THE TRIBUNAL ORDER SUITABLY. 3. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORDER O F THE TRIBUNAL. 4. WE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. ADMITTEDLY, IN THIS CASE, WHILE ADJUDICATI NG THE ISSUE RELATING TO THE DISALLOWANCE U/S 14A, THE TRIBUNAL HAS FOLL OWED THE EARLIER ORDER OF THE CO-ORDINATE BENCH IN THE CASE OF M/S S HRIRAM INVESTMENTS IN I.T.A.NO.2112/MDS/2015 DATED 10.3.2016. THE TRI BUNAL IS BOUND TO FOLLOW THE CO-ORDINATE BENCH DECISION AND IT CANNOT BE SAID THAT THERE IS AN ERROR IN THE ORDER OF THE TRIBUNAL OR MUCH L ESS A MISTAKE APPARENT ON RECORD SO AS TO RECALL THE ORDER OF THE TRIBUNAL. IT WAS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF HO NDA SEIL POWER PRODUCTS LTD VS CIT, 213 CTR 425, THAT THE TRIBUNAL IS BOUND TO FOLLOW THE EARLIER DECISION OF THE CO-ORDINATE BENCH. BEI NG SO, WE CANNOT SAY THAT THERE IS ANY MISTAKE APPARENT ON THE ISSUE OF DISALLOWANCE U/S 14A. THIS GROUND IN BOTH THE MISCELLANEOUS PETITIO NS IS DISMISSED. M.P NOS. 236 & 237/16 :- 3 -: 5. THE NEXT ISSUE IN M.P.NO.237/MDS/2016 IS WITH REGAR D TO THE DIRECTION OF THE TRIBUNAL TO THE ASSESSING OFFICE R TO IGNORE THE LOSS ON ACCOUNT OF PREMATURE CANCELLATION/TERMINATION BE FORE THE DUE DATE OF MATURITY OF THE TRANSACTION UNDERTAKEN BY THE A SSESSEE WHILE DISALLOWING THE LOSS ON CANCELATION OF FORWARD CONT RACT. ACCORDING TO THE LD. AR, THERE ARE JUDGMENTS IN THE FOLLOWING CA SES WHEREIN IT WAS HELD THAT LOSS ARISING FROM CANCELLATION OF FORWARD CONTRACT IS A BUSINESS LOSS: (I) CIT VS FRIENDS AND FRIENDS SHIPPING (P) LTD 217 TAXMAN 267 GUJ (II) CIT VS VISHINDAS HOLARAM(2015) 229 TAXMAN 0030(BOMBAY) (III) CIT VS PANCHMAHAL STEEL LTD 215 TAXMAN 140 GUJ (IV) CIT VS BADRIDAS GAURIDU P LTD 261 ITR 256 (BOM) 6. THE LD. AR SUBMITTED THAT EXCLUSION OF LOSS ARISING FROM CANCELLATION OF THE FORWARD CONTRACTS DIRECTLY CONN ECTED WITH EXPORT RECEIVABLES IS ALLOWABLE AS BUSINESS LOS. THE TRI BUNAL HAS NOT CONSIDERED THE RATIO OF THE ABOVE JUDGMENTS IN ITS ORDER. ACCORDINGLY, HE PRAYED FOR APPROPRIATE RECTIFICATION OF THE ORDE R OF THE TRIBUNAL. 7. ON THE OTHER HAND, THE LD. DR. SUPPORTED THE ORDER OF THE TRIBUNAL. M.P NOS. 236 & 237/16 :- 4 -: 8. WE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. AS DISCUSSED IN EARLIER ISSUE, THIS ISSUE WAS ALSO SUPPORTED BY THE EARLIER ORDER OF THE CO-ORDINATE BENCH IN THE C ASE OF M/S TCS TEXTILES P. LTD VS DCIT IN I.T.A.NO. 1192/MDS/2015 DATED 24.3.2016 WHEREIN THE TRIBUNAL HAS CONSIDERED THE DECISION IN THE CASE OF M/S AMBATTUR CLOTHING LTD IN I.T.A.NOS. 1436, 1643/MDS/ 2014 AND 910/MDS/2015 DATED 28.12.2015. THE CASE LAWS CITED BY THE LD. AR WERE NOT BROUGHT TO THE NOTICE OF THE BENCH AT THE TIME OF HEARING OF THE APPEAL. BEING SO, IT IS NOT APPROPRIATE ON THE PART OF THE LD. AR TO SAY THAT THERE IS ERROR IN THE ORDER OF THE TRIBUNA L WHICH HAS TO BE RECTIFIED U/S 254(2) OF THE ACT. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE TRIBUNAL. IF THERE IS AN ERROR , THE REMEDY LIES TO THE ASSESSEE ELSEWHERE AND NOT BY PROCEEDINGS U/S 254( 2) OF THE ACT. 9. IN THE RESULT, BOTH THE MISCELLANEOUS PETITIONS FIL ED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON 23 RD NOVEMBER, 2016, AT CHENNAI. SD/ - SD/ - ( ! ' ! # . $ ) ( DUVVURU RL REDDY ) & / JUDICIAL MEMBER ( ) ( CHANDRA POOJARI ) / ACCOUNTANT MEMBER !'# / CHENNAI $%& / DATED: 23 RD NOVEMBER, 2016 RD M.P NOS. 236 & 237/16 :- 5 -: '%'( )*+,-. /0'- / COPY TO: 1 . PETITIONER 4. '1 '1 2 / CIT 2. )3145 / RESPONDENT 5. -6781 )**9: / DR 3. '1 '1 2 (/.8,) / CIT(A) 6. 7=> ?, / GF