JCIT, Coimbatore V. Craftsman Automation Pvt. Ltd., CHENNAI

MA 56/CHNY/2023

AI Insights

The case involves a Miscellaneous Application (M.A. No.56/CHNY/2023) filed by the Revenue seeking rectification of a mistake in the Tribunal's earlier order (I.T.A. No. 652/CHNY/2016) dated 21.12.2022. The dispute centered on the disallowance of expenses related to exempt income under section 14A read with rule 8D(2)(ii) & (iii) of the Income Tax Rules. The Assessing Officer (AO) had added this disallowance, which was confirmed by the CIT(A), but was later deleted by the Tribunal. The Revenue contended that the Tribunal erred in not recognizing the AO's computation of the disallowance. The Tribunal, referencing the Supreme Court's decision in Maxopp Investment Ltd. vs. CIT, upheld its original decision, stating that the AO had not recorded any satisfaction regarding the disallowance as required under section 14A.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 134888 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 10-08-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 10-08-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 19-02-2023
• Other Referred Cases: Maxopp Investment Ltd. vs. CIT
• Laws Referred To: Income Tax Act, Rule 8D
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rectification of order; Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

आयकर अपीलीय अिधकरण, ‘डी’ ᭠यायपीठ, चे᳖ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘D’ BENCH, CHENNAI ᮰ी महावीर ᳲसह, उपा᭟यᭃ एवं ᮰ी मनोज कुमार अᮕवाल, लेखा सद᭭य के समᭃ BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENTAND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER िविवध यािचका सं / M.A. No.56/CHNY/2023 (arising in I.T.A. No. 652/CHNY/2016) िनधाᭅरण वषᭅ / Assessment Year : 2011-12 The DCIT, Corporate Circle-1, Coimbatore. Vs. M/s. Craftsman Automation Pvt. Ltd., Senthel Towers, IV Floor, 1078, Avanshi Road, Coimbatore – 641 018. PAN: AABCC 2461K (अपीलाथᱮ / Applicant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से /Applicant by : Shri P. Sajit Kumar, JCIT ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Shri N. Arjunraj, CA for Shri S. Sridhar, Advocate सुनवाई कᳱ तारीख/ Date of hearing : 11.08.2023 घोषणा कᳱ तारीख /Date of Pronouncement : 11.08.2023 आदेश /O R D E R PER MAHAVIR SINGH, VICE PRESIDENT: By way of this Miscellaneous Application, the Revenue has requested for rectification of mistake apparent from record crept in the order of the Tribunal in ITA No. 652/CHNY/2016 dated 21.12.2022. 2 M.A No.56/CHNY/2023 2. At the outset, the ld.Senior DR took us through the findings recorded by Tribunal in regard to disallowance of exempt income deleted by Tribunal, added by AO and confirmed by CIT(A) in relation to the provisions of section 14A r.w.rule 8D(2)(ii) & (iii) of the Rules. The relevant para pointed out by ld. Senior DR i.e., para 3.1 reads as under:- “3.1 We have heard rival contentions and gone through the facts and circumstances of the case. We noted that the assessee has computed disallowance of expenses relatable to exempt income at Rs.4,79,972/- and according to the AO, which was not correct. We noted that the AO simpliciter given his findings that the disallowance computed by the assessee is not correct, but he has not examined the accounts of the assessee and disallowance made even though offered by the assessee. We noted that the AO could not find any fault as to how this disallowance is not correct. According to us, there is no satisfaction recorded by the AO in regard to this disallowance and hence, there is no satisfaction recorded by the AO in terms of sec.14A of the Act. This issue of the assessee is allowed.” 3. The ld.Senior DR stated that the AO has computed the disallowance of expenses related to exempt income under Rule 8D(2)(ii) and 8D(2)(iii) by way of computation and there is not separate satisfaction required for the same. At this stage, the ld.counsel for the assessee stated that this issue is squarely covered by the decision of Hon’ble Supreme court in the case of Maxopp Investment Ltd., vs. CIT, (2018) 402 ITR 640 (SC), wherein it is held as under:- “Having regard to the language of section 14A(2) of the Act, read with rule 8D of the Rules, we also make it clear that before applying the theory of apportionment, the Assessing Officer needs to record satisfaction that having regard to the kind of the assessee, suo motu disallowance under section 14A was not correct. It will be in those cases where the assessee in 3 M.A No.56/CHNY/2023 his return has himself apportioned the expenditure but the Assessing Officer was not accepting the said apportionment. In that eventuality, it will have to record its satisfaction to this effect.” The ld.counsel for the assessee pointed out that the Tribunal has just based its decision on the same, even though not quoted. 4. After hearing both the sides, we noted that there is no satisfaction recorded by the AO for applying the provision of section 14A r.w.rule 8D of the Rules for invoking these provisions in relation to disallowance of expenses relatable to exempt income. Therefore, we find no mistake apparent from record in the order of the Tribunal. Hence, the miscellaneous application of the Revenue is dismissed. 5. In the result, the miscellaneous application of the Revenue is dismissed. Order pronounced in the open court on 11 th August, 2023 at Chennai Sd/- Sd/- (मनोज कुमार अᮕवाल) (MANOJ KUMAR AGGARWAL) लेखा सद᭭य /ACCOUNTANT MEMBER (महावीर ᳲसह ) (MAHAVIR SINGH) उपा᭟यᭃ /VICE PRESIDENT चे᳖ई/Chennai, ᳰदनांक/Dated, the 11 th August, 2023 RSR आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy to: 1. अपीलाथᱮ/Applicant 2. ᮧ᭜यथᱮ/Respondent 3. आयकर आयुᲦ /CIT 4. िवभागीय ᮧितिनिध/DR 5. गाडᭅ फाईल/GF.