DCIT, CHENNAI v. TAFE Motor & Tractors Ltd., CHENNAI

ITA 2082/CHNY/2016 | 2009-2010
Pronouncement Date: 28-10-2016 | Result: Allowed

Appeal Details

RSA Number 208221714 RSA 2016
Assessee PAN AACCT2459B
Bench Chennai
Appeal Number ITA 2082/CHNY/2016
Duration Of Justice 3 month(s) 20 day(s)
Appellant DCIT, CHENNAI
Respondent TAFE Motor & Tractors Ltd., CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-10-2016
Appeal Filed By Department
Order Result Allowed
Bench Allotted A
Tribunal Order Date 28-10-2016
Assessment Year 2009-2010
Appeal Filed On 08-07-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH CHENNAI . . . . . !' # $% BEFORE SHRI N.R.S. GANESAN JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH ACCOUNTANT MEMBER ./ ITA NO.2082/MDS/2016 & '& /ASSESSMENT YEAR : 2009-10 THE ASSISTANT COMMISSIONER OF INCOME TAX CORPORATE CIRCLE 3(1) NEW BLOCK 4 TH FLOOR 121 MAHATMA GANDHI ROAD NUNGAMBAKKAM CHENNAI 600 034. V. M/S.TAFE MOTORS & TRACTORS LIMITED NO.35 POTTIPATTI PLAZA NUNGAMBAKKAM HIGH ROAD NUNGAMBAKKAM CHENNAI 600 034. PAN: AACCT 2459B ( () /APPELLANT) ( *+() /RESPONDENT) () - /APPELLANT BY : SHRI B.SAHADEVAN JCIT *+() - /RESPONDENT BY : SHRI SAROJ KUMAR PARIDA ADVOC ATE .# /DATE OF HEARING : 27.09.2016 /0' .# /DATE OF PRONOUNCEMENT : 28.10.2016 /O R D E R PER N.R.S. GANESAN JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST TH E ORDER OF CIT(A)-11 CHENNAI DATED 17.03.2016 AND PERTAINS TO ASSESSMEN T YEAR 2009-10. 2 I.T.A. NO.2082/MDS/2016 2. SHRI B.SAHADEVAN THE LEARNED DEPARTMENT REPRESE NTATIVE SUBMITTED THAT IN THE ORIGINAL ASSESSMENT THE ASSESSING OFFI CER DISALLOWED THE EXPENDITURE FOR EARNING THE EXEMPTED INCOME AT 5%. THE ASSESSING OFFICER HAS NOT APPLIED THE PROVISIONS OF RULE 8D(2) OF THE INC OME TAX RULES. THEREFORE THE ASSESSMENT WAS RE-OPENED BY ISSUING NOTICE UNDE R SECTION 148. AFTER RE- OPENING THE ASSESSMENT THE ASSESSING OFFICER COMPU TED THE DISALLOWANCE UNDER RULE 8D(2) OF THE INCOME TAX RULES. HOWEVER ON APPEAL BY THE ASSESSEE THE CIT(A) FOUND THAT THE INVESTMENT WAS MADE IN SUBSIDIARY COMPANIES. THEREFORE THE DISALLOWANCE MADE BY THE ASSESSING OFFICER WAS DELETED. REFERRING TO RULE 8D(2) THE DEPARTMENT RE PRESENTATIVE SUBMITTED THAT RULE 8D(2) DOES NOT DISTINGUISH THE INVESTMENT MADE BY THE ASSESSEE FOR EARNING HE EXEMPTED INCOME EITHER IN THE SUBSIDIARY COMPANY OR IN THE OTHER COMPANIES. IRRESPECTIVE OF COMPANY IN WHICH THE ASS ESSEE INVESTED THE FUNDS ACCORDING TO THE LEARNED REPRESENTATIVE THE DISALL OWANCE HAS TO BE COMPUTED UNDER RULE 8D(2) OF THE INCOME TAX SINCE THE INCOM E OF SUCH INVESTMENT WOULD NOT FORM PART OF THE TOTAL INCOME OF THE ASSE SSEE FOR TAXATION. THEREFORE THE CIT(A) IS NOT JUSTIFIED IN ALLOWING THE CLAIM O F THE ASSESSEE. 3. ON THE CONTRARY SHRI SAROJ KUMAR PARIDA THE LE ARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE MADE INVESTMEN T IN THE SUBSIDIARY COMPANIES FOR THE PURPOSE OF BUSINESS. THEREFORE T HE PROVISIONS OF RULE 8D IS NOT APPLICABLE AT ALL. THE LEARNED COUNSEL FOR THE ASSESSEE PLACED HIS RELIANCE 3 I.T.A. NO.2082/MDS/2016 ON THIS TRIBUNALS DECISION IN THE CASE OF EIH ASSO CIATED HOTELS LTD. VS. DCIT REPORTED IN ITA NO.1503/MDS/2013 DATED 17.07.2013. 4. ON A QUERY FROM THE BENCH HOW THE COMPANIES IN WHICH THE INVESTMENT WAS MADE BY THE ASSESSEE IS THE SUBSIDIA RY COMPANY. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE FACTS O F THE CASE ARE EXAMINED BY BOTH THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WHEN THE ASSESSEE EARNED EXEMPTED INCOME THE DISALLOWANCE FOR EARNING SUCH EXEMPTED INCOME HAS TO BE COMPUTED UNDER RULE 8D(2) OF THE INCOME TAX RULES. THE ASSESSEE CLAIMS THAT THE INVESTMENT WAS MADE IN THE SUBSIDIARY COMPANY F OR THE PURPOSE OF BUSINESS. HOWEVER NO MATERIAL IS AVAILABLE ON RECO RD TO SUGGEST THAT THE COMPANY IN WHICH INVESTMENT WAS MADE WAS SUBSIDIARY COMPANY OF THE ASSESSEE. IT IS ALSO NOT KNOWN THE NATURE OF THE I NVESTMENT MADE BY THE ASSESSEE. HENCE THE MATTER NEEDS TO BE RE-EXAMINED BY THE ASSESSING OFFICER. ACCORDINGLY THE ORDERS OF THE LOWER AUTHORITIES AR E SET ASIDE AND THE ENTIRE ISSUE ON DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 14A READ WITH RULE 8D IS REMITTED BACK TO THE FILE OF THE AS SESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE ISSUE AFRESH AND BRING ON RECORD THE NATURE OF THE COMPANIES IN WHICH THE INVESTMENT WAS SAID TO BE MA DE AND THE NATURE OF THE INVESTMENT MADE BY THE ASSESSEE AND THEREAFTER DECI DE THE ISSUE IN 4 I.T.A. NO.2082/MDS/2016 ACCORDANCE WITH LAW AND THERE AFTER GIVING REASONAB LE OPPORTUNITY TO THE ASSESSEE. 9. IN THE RESULT THE APPEAL FILED BY THE REVENUE S TANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 28 TH OCTOBER 2016 AT CHENNAI. SD/- SD/- ( . . !' ) ( . . . ) (D.S. SUNDER SINGH) (N.R.S. GANESAN) # /ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI 1 /DATED THE 28 TH OCTOBER 2016. SP. *.!2 32'. /COPY TO: 1. () /APPELLANT 2. *+() /RESPONDENT 3. 4. ( )/CIT(A) 4. 4. /CIT 5. 25 *. /DR 6. & 6 /GF.