Natesan Synchrocones P Ltd., CHENNAI v. ACIT, CHENNAI

ITA 1007/CHNY/2017 | 2012-2013
Pronouncement Date: 08-11-2017 | Result: Partly Allowed

Appeal Details

RSA Number 100721714 RSA 2017
Assessee PAN AAACN2399A
Bench Chennai
Appeal Number ITA 1007/CHNY/2017
Duration Of Justice 6 month(s) 14 day(s)
Appellant Natesan Synchrocones P Ltd., CHENNAI
Respondent ACIT, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 08-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 08-11-2017
Assessment Year 2012-2013
Appeal Filed On 24-04-2017
Judgment Text
IN THE INCOME - TAX APPELLATE TRIBUNAL C BENCH CHENNAI . . BEFORE SHRI A. MOHAN ALANKAMONY ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY JUDICIAL MEMBER I . T.A. NO S . 2162/MDS/2015 1006 AND 1007/MDS/2017 ASSESSMENT YEAR S :201 1 - 1 2 2013 - 14 AND 2012 - 13 M/S. NATESAN SYNCHROCONES P. LTD. 6 FIRST CROSS STREET KASTURBA NAGAR ADYAR CHENNAI 600 020. [PAN: A A A C N2399A ] VS. THE ASSI STANT COMMISSIONER OF INCOME TAX COMPANY CIRCLE IV(4)/ CORPORATE CIRCLE 4(2) CHENNAI. ( APPELLANT ) ( R ESPONDENT ) / APPELLANT BY : SHRI S. S RIDHAR ADVOCATE / RESPONDENT BY : S HRI N. MADHAVAN ADDL. CIT / DATE OF HEARING : 0 2 . 11 .201 7 / DATE OF P RONOUNCEMENT : 08 .11 .201 7 / O R D E R PER DUVVURU RL REDDY JUDICIAL MEMBER : THE S E THREE APPEAL S FILED BY THE SAME ASSESSEE ARE DIRECTED AGAINST DIFFERENT ORDER S OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 8 C HENNAI DATED 2 3 .0 9 .201 5 AND 23.02.2017 RELEVANT TO THE ASSESSMENT YE AR S 2011 - 12 2013 - 14 AND 201 2 - 1 3 . THE ONLY COMMON GROUND RAISED IN ALL THE APPEAL S OF THE ASSESSEE IS WITH REGARD TO CONFIRMATION OF DISALLOWANCE MADE UNDER SECTION 14A OF THE INCOME TAX ACT 1961 [ ACT IN SHORT] R.W. RULE 8D OF IT RULES. SINCE THE ISSUE AND FACTS OF THE CASE ARE COMMON IN ALL THE APPEALS I.T.A. NO S . 2162/M/15 & 1006 & 1007 /M /17 2 WE SHALL TAKE UP THE APPEAL FOR THE ASSESSMENT YEAR 2011 - 12 FOR CONSIDERATION . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS MANUFACTURERS OF SYNCHROCONES AND SYNCHRONIZERS RIGS AND GENERATES EL ECTRICITY THROUGH WIND MILLS. THE ASSESSEE FILED ITS RETURN OF INCOME ADMITTING AN INCOME OF . 18 97 27 243/ - FOR THE ASSESSMENT YEAR 2011 - 12 . THE RETURN FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE ACT . SUBSEQUENTLY THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED ON 0 1 .0 8.201 2. NOTICE UNDER SECTION 142(1) OF THE ACT WAS ALSO ISSUED ON 18.04.2013 AND THE ASSESSEE HAS FILED ALL THE DETAILS AS CALLED FOR. 2.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAS NOTICED THAT THE ASSESSEE RECEIVED DIVIDEND INCOME OF .74 16 003/ - . HOWEVER THE ASSESSEE HAS NOT ADMITTED ANY EXPENSES FOR MAKING AND MAINTAINING INVESTMENTS IN MUTUAL FUNDS ETC. AS PER BALANCE SHEET SINCE THE ASSESSEE HAS OUTSTANDING IN SECURED AND UNSECURED LOAN AMOUNTING TO .13 50 23 594/ - AND .7 50 000/ - RESPECTIVELY BY INVOKING THE PROVISIONS OF SECTION 14A R.W. RULE 8D THE ASSESSING OFFICER DETERMINED THE EXPENDITURE COMPONENT AT .30 57 738/ - AND B ROUGHT TO TAX. I.T.A. NO S . 2162/M/15 & 1006 & 1007 /M /17 3 3 . THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDE RING VARIOUS SUBMISSIONS OF THE ASSESSEE THE LD. CIT(A) DISMISSED THE GROUND RAISED BY THE ASSESSEE . 4 . ON BEING AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS MORE THAN SU FFICIENT FUNDS UNDER RESERVE & SURPLUS FOR MAKING INVESTMENTS AND W HEN THE ASSESSEE GOT ITS OWN SUFFICIENT FUNDS FOR MAKING INVESTMENTS THE ASSESSING OFFICER CANNOT APPLY RULE 8D(2)(II) AND MAKE THE DISALLOWANCE BY RELYING ON THE DECISION IN THE CASE OF CIT V. HDFC BANK LTD. 366 ITR 505 (BOM) AS WELL AS THE DECISION IN THE CASE OF CIT V. RELIANCE UTILITIES AND POWER LTD. 313 ITR 340 (BOM) AND PRAYED THAT THE DISALLOWANCE MADE UNDER SECTION 14A R.W. RUE 8D SHALL BE DELETED. ON THE OTHER HAND THE LD. DR S TRONGLY SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 5. WE HAVE HEARD BOTH THE SIDES PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW INCLUDING PAPER BOOK FILED BY THE ASSESSEE. IN THE ASSESSMENT ORDER THE ASSES SING OFFICER HAS REFERRED TO THE BALANCE SHEET WITH REGARD TO THE OUTSTANDING IN SECURED AND UNSECURED LOAN ACCOUNT AMOUNTING TO .13 50 23 594/ - AND .7 50 000/ - RESPECTIVELY AND BY INVOKING THE PROVISIONS OF SECTION 14A R.W. RULE 8D THE ASSESSING OFFICE R WORKED OUT THE DISALLOWANCE. BUT THE ASSESSMENT ORDER DID NOT SPEAK AS TO WHETHER THE ASSESSEE HAD ANY RESERVES AND SURPLUS FOR I.T.A. NO S . 2162/M/15 & 1006 & 1007 /M /17 4 MAKING INVESTMENTS AND UTILIZED BORROWED FUNDS FOR MAKING INVESTMENTS. IN THE APPELLATE ORDER ALSO NO COMPLETE FACTS ARE EMAN ATING AND SIMPLY DISTINGUISHED THE CASE LAW. 6. BEFORE US BY RELYING ON THE BALANCE SHEET OF THE ASSESSEE THE LD. COUNSEL HAS ARGUED THAT THE ASSESSEE HAS MORE THAN SUFFICIENT FUNDS UNDER RESERVE & SURPLUS FOR MAKING INVESTMENTS AND W HEN THE ASSESSEE GOT ITS OWN SUFFICIENT FUNDS FOR MAKING INVESTMENTS THE ASSESSING OFFICER CANNOT APPLY RULE 8D(2)(II) AND MAKE THE DISALLOWANCE. WE FIND FORCE IN THE ARGUMENT OF THE LD. COUNSEL . THE ASSESSING OFFICER HAS NOT GIVEN ANY FINDING WITH REGARD TO THE QUANTUM OF INTEREST FREE FUNDS AT ASSESSEE S DISPOSAL FOR INVESTMENTS. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES WE SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE ACCOUNTS OF T HE ASSESSEE AND DECIDE THE ISSUE AFRESH WITH REGARD TO THE DISALLOWANCE MADE UNDER RULE 8D(2)(II) IN ACCORDANCE WITH AFTER GIVING AN OPPORTUNITY OF HEARING TO THE ASSESSEE BY KEEPING IN VIEW OF THE DECISION OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF C IT V. HDFC BANK LTD. (SUPRA) WHEREIN ITS OWN DECISION IN THE CASE OF CIT V. RELIANCE UTILITIES AND POWER LTD. (SUPRA) HAS BEEN APPLIED. 7. AFTER VERIFICATION OF THE ACCOUNTS IF THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS NOT MADE ANY STRATEGIC INVESTMENTS THEN THE DISALLOWANCE MADE UNDER RULE 8D(2)(III) CAN BE SUSTAINED. I.T.A. NO S . 2162/M/15 & 1006 & 1007 /M /17 5 8. WITH REGARD TO THE ASSESSMENT YEARS 2013 - 14 AND 2012 - 13 SINCE FACTS ARE SIMILAR AS THAT OF ASSESSMENT YEAR 2011 - 12 WE REMIT THE MATTER FOR ALL THE ASSESSMENT YEARS TO T HE FILE OF THE ASSESSING OFFICER FOR PASS SPEAKING ORDER AS OBSERVED HEREINABOVE AT PARA 6. THUS THE GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 9 . IN THE RESULT ALL THE APPEAL S FILED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL P URPOSES . ORDER PRONOUNCED ON THE 8 TH NOVEMBER 2017 AT CHENNAI. SD/ - SD/ - (A.MOHAN ALANKAMONY ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI DATED 08 . 1 1 .201 7 VM/ - / COPY TO: 1. / APPELLANT 2. / RESPONDENT 3. ( ) / CIT(A) 4. / CIT 5. / DR & 6. / GF.