The Andhra Suguras Ltd., Tanuku V. THE ACIT, Rajahmundry

MA 34/VIZ/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0274 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 11 month(s) 18 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 07-09-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 27-04-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 19-09-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: CH SANJEEV
• Assessee Lawyers: B KAUSHALENDRA RAO
• Keywords: Earning of tax free income; Proportionate interest

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER M.A .NO. 34 /VIZ/201 6 (ARISING OUT OF I.T.A.NO. 598 /VIZ/201 4 ) ( / ASSESSMENT YEAR: 20 1 0 - 1 1 ) THE ANDHRA SUGARS LTD. VENKATARAYAPURAM TANUKU WEST GODAVARI DIST. [PAN : AA ACT6357Q ] VS. ACIT, CIRCLE - 1 RAJAHMUNDRY ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI B.KAUSHALENDRA RAO , AR / RESPONDENT BY : SHRI CH.SANJEEV, DR / DATE OF HEARING : 07 . 0 9 . 2018 / DATE OF PRONOUNCEMENT : 0 7 .0 9 .2018 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: THIS MISCELLANEOUS APPLICATION IS FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE ITAT IN I.T.A NO.598/VIZ/2014 DATED 20.05.2016 FOR THE ASSESSMENT YEAR 2010 - 11. 2 M .A NO . 34 /VIZ/201 6 THE ANDHRA SUGARLS LTD., WEST GODAVARI DIST. 2. IN THE MISCELLANEOUS APPLICATION, THE ASSESSEE SUBMITTED THAT THE GROUND WITH REGARD TO THE DISALLOWANCE OF PROPORTIONATE EXPENDITURE U/S 14A, WHICH WAS RAISED IN GROUND NO .1 WAS NOT ADJUDICATED. THEREFORE, REQUESTED TO RECALL THE ORDER OF THE TRIBUNAL FOR RE - ADJUDICATION OF THE ISSUE. 3. DURING THE HEARING, THE LD.AR SUBMITTED THAT THE HONBLE ITAT HAS ERRONEOUSLY OMITTED TO ADJUDICATE THE ISSUE WITH REGARD TO THE PROPORTIONATE EXPENDITURE TOWARDS THE DIVIDEND INCOME. 4. ON THE OTHER HAND, THE LD.DR SUBMITTED THAT THE HONBLE ITAT HAS CONSIDERED THE ENTIRE ISSUE IN PARA NO.12 OF THE ORDER AND THERE IS NO MISTAKE WHICH REQUIRE RECTIFICATION U/S 254(2) OF THE ACT. 5 . WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE PARTIES AND GONE THROUGH THE ORDERS OF THE ITAT. IN PARA NO.11 AND 12 OF THE ORDER, THIS TRIBUNAL HAS CONSIDERED THE ENTIRE ISSUE OF ADDITION MADE TOWARDS THE DISALLOWANCE OF PROPORTIONATE EXPENSES AND UPHELD THE ADDITIONS MADE BY THE AO TOWARDS THE INDIRECT EXPENDITURE. FOR THE SAKE OF CLARITY, WE EXTRACT RELEVANT PART OF THE TRIBUNAL IN PARA NO.11 AND 12 WHICH READS AS UNDER : 3 M .A NO . 34 /VIZ/201 6 THE ANDHRA SUGARLS LTD., WEST GODAVARI DIST. 11. A SIMILAR ISSUE HAS BEEN COME UP FOR CONSIDERATION BEFORE THIS BENCH, IN ASSESSEE OWN CASE FOR THE ASSESSMENT YEAR 2004 - 05 IN ITAT NO . 162/VIZAG/2006 DATED 20 - 01 - 2011: WE FIND THAT THE COORDINATE BENCH OF THIS TRIBUNAL, IN ASSESSEE'S OWN CASE FOR THE A .Y. 2004 - 05 HELD THAT IN THE ABSENCE OF DIRECT NEXUS BETWEEN INVESTMENT IN SHARES AND BORROWED FUNDS, NO DISALLOWANCE CAN BE MADE TOWARDS INTEREST HOWEVER, THE ASSESSEE CANNOT GET AWAY WITH THE PLEA THAT THERE IS NO IN DIRECT EXPENDITURE SUCH AS SALARY TO E MPLOYEES AND OTHER INDIRECT EXPENSES TO MAINTAIN THE DAY TO DAY AFFAIRS OF THE INVESTMENT PO RTFOLIO. THEREFORE , INDIRECT EXPENDITURE RELATABLE TO THE EARNING OF EXEMPT INCOME SHOULD BE DISALLOWED ON PRO - RATA BASIS. THE RELEVANT PORTION OF THE ORDER IS REPR ODUCED HEREUNDER: HAVIN G GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM PE RU SAL OF THE ORDERS OF THE AUTHOR ITIES BEL OW, WE ARE OF THE VIEW THAT CTT(A) HAS RIGHTLY AD J UDICATED THE ISSUE AFTER HAVING HELD THAT IN THIS TYPE OF SITUATION IT IS VERY DIFFICULT TO FIND CUT WHETHER THE INVESTMENT IN SHARES WERE MADE OUT OF THE SURPLUS HINDS OR THE BORROWED FUNDS FOR WHICH HE HAS GIVEN THE BENEFIT OF DOUBT TO THE ASSCSSEES BUT THE ASSESSEE HAS RECEIVED A SUBSTANTIAL AMOUNT OF RS. 1,85,79 , 015/ - AS A DIVIDEND INCOME AND TO MAINTAIN THE INVESTMENT PORTFOLIOS AND OTHER THINGS ASSESSEE REQUIRES TO INCUR SOME ADMINISTRATIVE EXPENSES. THE CIT(A) HAS RESTRICTED THE DISALLOWANCE TO 7591 IAKHS TO WHICH WE DO NOT AND ANY UNREASONABLENESS. WE ACCORDINGLY OF THE VIEW THAT CJ7A) HAS RIGHTLY MADE THE DISALLOWANCE OF T'591 LATHS AND NO INFERENCE E CALLED THEREIN. ACCORDINGLY WE CONFIRM THE ORDER OF C I T( A )' 12. CONSIDERING THE FACTS, - AND CIRCUMSTANCES OF THE CASE AND ALSO RESPECTFULLY FOLLOWING THE COORDINATE B ENCH DECISION IN ASSESSEE'S OWN CASE FOR THE EARLIER PERIOD, WE ARE OF THE OPINION THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITIONS MADE TOWARDS PROPORTIONATE INTEREST AND UPHELD THE ADDITIONS MADE TOWARDS INDIRECT EXPENDITURE, WE DO NOT SEE ANY ERROR OR INFIRMITY IN THE ORDER PASSED BY THE CIT(A). HENCE, WE INCLINED TO UPHOLD THE ORDER PASSED BY THE CIT(A) AND REJECT THE GROUND RAISED BY THE ASSESSEE AS WELL AS REVENUE SINCE THE TRIBUNAL CONSIDERED THE ENTIRE ISSUE RAISED IN GROUND NO.1 AND DECIDED THE I SSUE, WE FIND NO MISTAKE IN THE ORDER OF THE ITAT. HENCE THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE IS DISMISSED. 4. IN THE RESULT, MISCELLANEOUS APPLICATION OF THE ASSESSEE IS DISMISSED 4 M .A NO . 34 /VIZ/201 6 THE ANDHRA SUGARLS LTD., WEST GODAVARI DIST. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 7 TH SEP, 201 8 . SD/ - SD/ - ( . ) ( . . ) ( V. DURGA RAO) ( D.S. SUNDER SINGH) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / VISAKHAPATNAM /DATED : 0 7 .09.2018 L.RAMA, SPS / COPY OF THE ORDER FORWARDED TO: - 1 . / THE ASSESSEE - THE ANDHRA SUGARS LTD. , VENKATARAYAPURAM TANUKU , WEST GODAVARI DIST. 2 . / THE REVENUE - ACIT, CIRCLE - 1 , RAJAHMUNDRY 3 . THE COMMISSIONER OF INCOME TAX , RAJAHMUNDRY 4. THE COMMISSIONER OF INCOME TAX(APPEALS), VI SAKHAPATNAM 5 . , , / DR, ITAT, VISAKHAPATNAM 6. / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM