Spark Capital Advisors (India) Pvt Ltd., CHENNAI v. DCIT, CHENNAI

CO 63/CHNY/2017 | 2010-2011
Pronouncement Date: 28-11-2017 | Result: Dismissed

Appeal Details

RSA Number 6321723 RSA 2017
Assessee PAN AADCS0211P
Bench Chennai
Appeal Number CO 63/CHNY/2017
Duration Of Justice 5 month(s) 29 day(s)
Appellant Spark Capital Advisors (India) Pvt Ltd., CHENNAI
Respondent DCIT, CHENNAI
Appeal Type Cross Objection
Pronouncement Date 28-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 28-11-2017
Assessment Year 2010-2011
Appeal Filed On 30-05-2017
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI . ' % & BEFORE SHRI ABRAHAM P.GEORGE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN JUDICIAL MEMBER ./ ITA NO.938/MDS/2017 %' ' /ASSESSMENT YEAR: 2010-11 THE DY. COMMISSIONER OF INCOME- TAX CORPORATE CIRCLE-6(2) AAYAKAR BHAVAN NEW BLOCK 7 TH FLOOR 121 M.G.ROAD CHENNAI-600 034. VS. M/S.SPARK CAPITAL ADVISORS- (INDIA) PVT. LTD. NO.2 REFLEXTIONS LEITH CASTLE CENTRE STREET SANTHOME HIGH ROAD CHENNAI-600 028. [PAN: AADCS 0211 P ] ( ( /APPELLANT) ( )*( /RESPONDENT) CROSS - OBJECTION NO. 63 /MDS/20 17 %' ' /ASSESSMENT YEAR: 2010-11 M/S.SPARK CAPITAL ADVISORS (INDIA) PVT. LTD. NO.2 REFLEXTIONS LEITH CASTLE CENTRE STREET SANTHOME HIGH ROAD CHENNAI-600 028. VS. THE DY. COMMISSIONER OF- INCOME TAX CORPORATE CIRCLE-6(2) AAYAKAR BHAVAN NEW BLOCK 7 TH FLOOR 121 M.G.ROAD CHENNAI-600 034. [PAN: AADCS 0211 P ] ( ( /APPELLANT) ( )*( /RESPONDENT) ASSESSEE BY : MS.JHARNA B. HARILAL CA DEPARTMENT BY : MR.M.PALANICHAMY JCIT /DATE OF HEARING : 28.11.2017 /DATE OF PRONOUNCEMENT : 28.11.2017 ITA NO.938/MDS/2017 & CO NO.63/MDS/2017 :- 2 -: / O R D E R PER GEORGE MATHAN JUDICIAL MEMBER : ITA NO.938/MDS/2017 IS AN APPEAL FILED BY THE REVE NUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-1 5 CHENNAI IN ITA NO.109/CIT(A)-15/2014-15 DATED 29.10.2016 FOR THE A Y 2010-11 AND CO NO.63/MDS/2017 IS A CROSS-OBJECTION FILED BY THE AS SESSEE IN ITA NO.938/MDS/2017. 2. MR. M.PALANICHAMY JCIT REPRESENTED ON BEHALF O F THE REVENUE AND MS.JHARNA B. HARILAL CA REPRESENTED ON BEHALF OF T HE ASSESSEE. 3. IN THE REVENUES APPEAL THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S) IS CONTRARY TO THE LAW AND FACTS OF THE CASE. 1. THE LD CIT(A) ERRED IN DIRECTING THE AO TO CONSIDE R THE DEDUCTION OF RS.2 1 4 00 000/- MADE ON ACCOUNT OF DEEMED DIVIDEND U/S.2(22)(E) OF THE IT ACT. 2. THE LD CIT(A) UNDER THE POWERS OF RULE 46A OF THE INCOME TAX RULES OUGHT TO HAVE GIVEN THE ASSESSING OFFICER A REASONABLE OPPORTUNITY TO EXAMINE THE FRESH MATERIAL EVIDENCE BEFORE DIRECTING THE AO TO VERIFY AND SIMUL TANEOUSLY ALLOWED U/S.2(22)(E) OF THE IT ACT. 2.1 THE LD CIT(A) ERRED IN DIRECTING THE AO TO RECKO N ONLY THE INVESTMENTS THAT HAVE YIELDED EXEMPT INCOME DURING THE YEAR FOR THE PURPO SE OF COMPUTATION OF DISALLOWANCE UNDER RULE 8D. 2.2 THE LD CIT(A) ERRED IN NOT CONSIDERING THE CLAR IFICATION IN CBDT CIRCULAR NO.5/2014 THAT RULE 8D R.W.S 14A PROVIDES FOR DISALLOWANCE OF THE EXPENDITURE EVEN WHERE TAXPAYER IN A PARTICULAR YEAR HAS NOT EARNED ANY EXEMPT INCOME. 2.3 THE LD.CIT(A) FAILED TO APPRECIATE THE RATIONAL E IN THE DECISION OF HONOURABLE ITAT CHENNAI IN THE CASE SIVA INDUSTRIES AND HOLDINGS LT D. VS ACIT IN (2011) (TAXMANN.COM 404) (CHENNAI) WHEREIN IT IS HELD THAT SECTION 14A RE AD WITH RULE 8D IS APPLICABLE EVEN WHEN NO EXEMPT INCOME IS RECEIVED DURING THE YEAR. ITA NO.938/MDS/2017 & CO NO.63/MDS/2017 :- 3 -: 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT(A) MAY BE SET ASID E AND THAT OF THE ASSESSING OFFICER RESTORED. 4. AT THE TIME OF HEARING IT WAS SUBMITTED BY THE LD.DR THAT IN GROUND NOS.1 & 2 THE ASSESSEE HAS CHALLENGED THE ACTION O F THE LD.CIT(A) IN CONSIDERING THE FRESH MATERIAL IN VIOLATION OF SEC. 46A OF THE ACT. THE LD.DR DREW OUR ATTENTION TO PAGE NO.8 PARA NO.4.4 O F THE ORDER OF THE LD.CIT(A) TO SUBMIT THAT THE LD.CIT(A) HAD WITHOUT GRANTING THE OPPORTUNITY TO THE AO ADMITTED AND EXAMINED THE FR ESH STAND OF THE ASSESSEE THAT THE MONEYS WHICH WERE KEPT IN THE SHA RE PREMIUM ACCOUNT ARE NOT IN THE NATURE OF PROFITS THAT THE COMPANY C OULD HAVE DISTRIBUTED TO SHAREHOLDERS. IT WAS A SUBMISSION THAT HE HAD NO O BJECTION IF THE ISSUES ARE RESTORED TO THE FILE OF THE AO FOR RE-ADJUDICAT ION. 4.1 IN REPLY THE LD.AR VEHEMENTLY SUPPORTED THE OR DER OF THE LD.CIT(A) ON THIS ISSUE. 4.2 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS I T IS NOTICED THAT THE LD.CIT(A) HAS ADMITTED FRESH EVIDENCE WITHOUT GRANT ING THE AO AN OPPORTUNITY TO REBUT THE SAME IN THE INTEREST OF N ATURAL JUSTICE THE ISSUE OF THE DEEMED DIVIDEND IS RESTORED TO THE FILE OF T HE AO FOR RE- ADJUDICATION. IN THE RESULT GROUND NOS.1 & 2 OF T HE REVENUES APPEAL STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO.938/MDS/2017 & CO NO.63/MDS/2017 :- 4 -: 5. IN REGARD TO GROUND NOS.2.1 TO 2.3 IT WAS SUBMI TTED BY THE LD.DR THAT THE DISALLOWANCE WAS IN REGARD TO THE APPLICAB ILITY OF SEC.14A READ WITH RULE 8D. IT WAS A SUBMISSION THAT THE LD.CIT( A) HAD DIRECTED THE AO TO CONSIDER THE ONLY INVESTMENTS WHICH HAVE YIELDED EXEMPT INCOME DURING THE YEAR FOR THE PURPOSE OF COMPUTATION OF D ISALLOWANCE UNDER RULE 8D OF THE ACT. THE LD.DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO. 5.1 IN REPLY THE LD.AR VEHEMENTLY SUPPORTED THE OR DER OF THE LD.CIT(A). 5.2 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS I T IS NOTICED THAT THE LD.CIT(A) HAS DIRECTED THE AO TO ONLY CONSIDER THE INVESTMENTS WHICH HAVE YIELDED EXEMPT INCOME DURING THE RELEVANT YEAR FOR THE PURPOSE OF COMPUTATION OF DISALLOWANCE UNDER RULE 8D OF IT RUL ES IN LINE WITH THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL CALCUTTA BENCHES IN THE CASE OF M/S.REI AGRO LTD. WE FIND NO REASON TO INTERFERE WITH THE FINDINGS OF THE LD.CIT(A). IN THE RESULT GROUND N OS.2.1 TO 2.3 OF THE REVENUES APPEAL STANDS DISMISSED. 6. GROUND NO.3 IS GENERAL IN NATURE. ITA NO.938/MDS/2017 & CO NO.63/MDS/2017 :- 5 -: CO NO.63/MDS/2017 : 7. CROSS-OBJECTION FILED BY THE ASSESSEE IS IN SUPP ORT OF THE ORDER OF THE LD.CIT(A). AS WE HAVE ALREADY ADJUDICATED THE ORDER OF THE LD.CIT(A) THE CROSS-OBJECTION FILED BY THE ASSESSEE BECOMES I NFRUCTUOUS. CONSEQUENTLY THE SAME IS DISMISSED AS INFRUCTUOUS. 8. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S PARTLY ALLOWED AND THE CROSS-OBJECTION FILED BY THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON NOVEMBER 28 2017 AT CHENNAI. SD/- SD/- ( . ) ( ABRAHAM P GEORGE ) /ACCOUNTANT MEMBER ( ' ) (GEORGE MATHAN) % /JUDICIAL MEMBER /CHENNAI 1 /DATED: NOVEMBER 28 2017. TLN )%23 43 /COPY TO: 1. ( /APPELLANT 4. 5 /CIT 2. )*( /RESPONDENT 5. 3 )%% /DR 3. 5 ( ) /CIT(A) 6. ' /GF