DCIT Corporate Circle 2(1) , CHENNAI v. Ennore Tank Terminals Pvt. Ltd. , CHENNAI

ITA 2089/CHNY/2017 | 2012-2013
Pronouncement Date: 08-11-2017 | Result: Dismissed

Appeal Details

RSA Number 208921714 RSA 2017
Assessee PAN AABCE3918K
Bench Chennai
Appeal Number ITA 2089/CHNY/2017
Duration Of Justice 2 month(s) 11 day(s)
Appellant DCIT Corporate Circle 2(1) , CHENNAI
Respondent Ennore Tank Terminals Pvt. Ltd. , CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 08-11-2017
Appeal Filed By Department
Tags No record found
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 08-11-2017
Assessment Year 2012-2013
Appeal Filed On 28-08-2017
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH CHENNAI ... $ BEFORE SHRI N.R.S. GANESAN JUDICIAL MEMBER AND SHRI S. JAYARAMAN ACCOUNTANT MEMBER ./ I.T.A. NOS. 2088 & 2089/MDS/2017 / ASSESSMENT YEARS : 2011-12 & 2012-13 DEPUTY COMMISSIONER OF INCOME TAX CORPORATE CIRCLE -4 CHENNAI 600 034. VS. M/S. ENNORE TANK TERMINALS PVT. LTD. NELLADRI 3 RD FLOOR NO. 9 CENOTAPH ROAD ALWARPET CHENNAI 600 018. [PAN: AABCE 3918K] ( / APPELLANT) ( / RESPONDENT) &' / APPELLANT BY : MRS. S. VIJAYAPRABHA JCIT *+&' / RESPONDENT BY : SHRI. P. RANGA RAMANUJAM CA ' /DATE OF HEARING : 07.11.2017 ' /DATE OF PRONOUNCEMENT : 08.11.2017 / O R D E R PER S. JAYARAMAN ACCOUNTANT MEMBER: THE REVENUE FILED THESE APPEALS AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-9 CHENNAI IN ITA NOS. 65 & :-2-: ITA NOS. 2088 & 2089/MDS/2017 66/(2014-15)/CIT(A)-9 DATED 30.05.2017 FOR AYS 2011 -12 AND 2012-13 RESPECTIVELY. 2. M/S. ENNORE TANK TERMINALS PVT. LTD. THE ASSESS EE IS IN THE BUSINESS OF OWNING OPERATING AND MAINTAINING THE JETTY AND BACK UP STORAGE AND HANDLING OF THIRD PARTY BULK LIQUID CARGO CATERING TO THE REQUIREMENTS OF IMPORTERS AND EXPORTERS THROUGH ENNORE PORT. WHILE MAKING THE ASSESSMENT FOR AYS 2011-12 & 2012-13 THE AO NOTICE D THAT THE ASSESSEE HAD EARNED DIVIDEND INCOME AT RS. 73 03 908/- & RS. 1 77 92 834/- IN THE RESPECTIVE ASSESSMENT YEARS AND CLAIMED IT AS EXEMP T INCOME U/S. 10(34). THE AO OBSERVED THAT THE EXPENDITURE ATTRIBUTABLE T O EARNING OF THESE EXEMPT INCOME OUGHT TO BE DISALLOWED U/S. 14A R.W.R . 8D. THE ASSESSEE STATED THAT THE INVESTMENTS WERE MADE OUT OF MIXED FUNDS I.E. BOTH FROM SHARE CAPITAL AS WELL AS FROM THE TERM LOAN. THE A O BY RELYING ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF GODREJ BOYCE MFG. CO. LTD. 328 ITR 81 AND INVOKING PROVISIONS O F SECTION 14A R.W.R. 8D WORKED OUT THE EXPENDITURE ATTRIBUTABLE TO THE EARN ING OF EXEMPT INCOME UNDER RULE 8D(2)(II) & 8D(2)(III) AT RS. 1 79 99 52 5/- & RS. 1 81 31 202/- FOR AYS 2011-12 & 2012-13 RESPECTIVELY. AGGRIEVED THE ASSESSEE FILED APPEALS BEFORE THE CIT(A). :-3-: ITA NOS. 2088 & 2089/MDS/2017 3. THE CIT(A) UPHELD THE DISALLOWANCES MADE U/S. 8D (2)(II) & 8D(2)(III) FOR BOTH THE AYS 2011-12 & 2012-13 HOWEVER HE FOU ND THAT THE ASSESSEE EARNED EXEMPT INCOME OF RS. 73 03 908/- & RS. 1 77 92 834/- FOR AYS 2011-12 & 2012-13 RESPECTIVELY. HOWEVER THE AO D ISALLOWED RS. 1 79 99 525/- & RS. 1 81 31 202/-. RELYING ON THE DELHI HIGH COURT DECISION IN THE CASE OF JOINT INVESTMENT PVT. LTD. 372 ITR 694 THE PUNJAB & HARYANA HIGH COURT DECISION IN THE CASE OF EMPIRE PACKAGE PVT. LTD. ITA NO. 425 OF 2015 DATED 12.01.2016 THE JURISDICTIONA L ITAT DECISION IN THE CASE OF AMBATTUR CLOTHING LTD. IN ITA NO. 1643/MDS /2014 AND ITA NO. 910/MDS/2014 DATED 28.12.2015 FOLLOWING THE DECISIO N OF MUMBAI BENCH OF TRIBUNAL IN THE CASE OF M/S. DAGA GLOBAL CHEMICALS PVT. LTD. IN ITA NO. 5592/MUM/2012 DATED 01.01.2015 THE CIT(A) HELD TH AT THE DISALLOWANCES MADE U/S. 14A CANNOT EXCEED THE EXEMPT INCOME AND H ENCE DIRECTED THE AO TO RESTRICT THE DISALLOWANCES U/S. 14A TO THE EX TENT OF EXEMPT INCOME EARNED OF RS. 73 09 908/- & 1 77 95 834/- FOR AYS 2 011-12 & 2012-13 RESPECTIVELY. HE DELETED THE BALANCE DISALLOWANCES IN THE RESPECTIVE ASSESSMENT YEARS. 4. AGGRIEVED THE REVENUE FILED THE COMMON GROUNDS OF APPEAL WHICH IS EXTRACTED AS UNDER: 2.1 THE CIT(A) ERRED IN RESTRICTING THE DISAL LOWANCE MADE U/S. 14A R.W.R. 8D TO THE EXTENT OF EXEMPT INCOME EARNED WHE N THE PROVISIONS OF :-4-: ITA NOS. 2088 & 2089/MDS/2017 THE SAID SECTION AS WELL AS RULE 8D DOES NOT PROVID E FOR ANY SUCH EXCEPTION. 2.2 THE CIT(A) FAILED TO APPRECIATE THAT AS PE R CBDT CIRCULAR NO. 5/2014 DATED 11.02.2014 DISALLOWANCE U/S. 14A IS E LIGIBLE EVEN WHEN THERE IS NO EXEMPT INCOME EARNED DURING THAT THE RE LEVANT PREVIOUS YEAR. 2.3 THE CIT(A) FAILED TO CONSIDER THE FACT THA T WHEN ASSESSEE HAD MIXED BAG OF FUNDS I.E. BOTH FROM THE SHARE CAPITA L AND ALSO FROM THE TERM LOAN AND HUGE INVESTMENTS WERE MADE IN ASSETS YIELDING EXEMPT INCOME. 3. SIMILAR DECISION OF THE APPELLATE FORUM IN VARIOUS CASES HAVE NOT BEEN ACCEPTED AND FURTHER APPEAL IS PENDING BEFORE THE HONBLE HIGH COURT. THE DR PLACING RELIANCE ON THE CBDT CIRCULAR NO. 5/ 2014 DATED 11.02.2014 SUBMITTED THAT THE DISALLOWANCES HAVE T O BE MADE UNDER RULE 8D(2) OF THE INCOME TAX RULES 1962. THEREFORE TH E CIT(A) WAS NOT JUSTIFIED IN RESTRICTING THE DISALLOWANCES TO THE E XTENT OF THE EXEMPTED INCOME EARNED BY THE ASSESSEE. 5. ON THE CONTRARY SHRI P. RANGA RAMANUJAM THE AU THORISED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE CIT(A) BY PLACING RELIANCE ON THE ORDER OF THE TRIBUNAL IN SOUTHERN P ETROCHEMICAL INDUSTRIES V. DCIT (993 TTJ 161) THE JUDGEMENT OF DELHI HIGH COURT IN JOINT INVESTMENTS PVT. LTD V. CICT (2015) 372 ITR 694 AND THE JUDGEMENT OF PUNJAB & HARYANA HIGH COURT IN EMPIRE PACKAGE PVT. LTD. IN ITA NO. 415 :-5-: ITA NOS. 2088 & 2089/MDS/2017 OF 2015 DATED 12.01.2016 FOUND THAT THE DISALLOWAN CES HAVE TO BE RESTRICTED TO THE EXTENT OF EXEMPTED INCOME EARNED BY THE ASSESSEE. FURTHER THE AR RELIED ON THE DECISION OF THIS TRIB UNAL IN THE ASSESSEES OWN CASE IN ITA NO. 1047/MDS/2017 DATED 18.09.2017. 6. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE R ELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER COMPUTE D THE DISALLOWANCES BY APPLYING RULE 8D(2)(II) & 8D(2)(III) AT RS. 1799952 5 (1699982+999543) AND RS. 18131202 (16738269+1392932) FOR AYS 2011-1 2 & 2012-13 RESPECTIVELY. THE CIT(A) BY FOLLOWING THE JUDGEMEN T OF DELHI HIGH COURT IN JOINT INVESTMENTS PVT. LTD. (SUPRA) AND JUDGEMENT OF PUNJAB & HARYANA HIGH COURT IN EMPIRE PACKAGE PVT. LTD. (SUPRA) AND THE ORDER OF THIS TRIBUNAL IN AMBATTUR CLOTHING LTD IN ITA NO. 1643/ MDS/2014 DATED 28.12.2015 DIRECTED THE ASSESSING OFFICER TO RESTRI CT THE DISALLOWANCES TO THE EXTENT OF EXEMPTED INCOME EARNED BY THE ASSESSE E. THIS TRIBUNAL ON SIMILAR FACTS IN THE ASSESSEES OWN CASE FOR ASSESS MENT YEAR 2010-11 DID NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND DISMISSED THE REVENUES APPEAL IN ITA NO. 1047/MDS/ 2017 DATED 18.09.2017. SINCE THERE IS NO CHANGE IN FACT AND IN LAW BY FOLLOWING THE ABOVE DECISIONS THE REVENUES APPEALS ARE DISMISSE D. :-6-: ITA NOS. 2088 & 2089/MDS/2017 7. IN THE RESULT REVENUES APPEAL IN ITA NOS 2088/ MDS/2017 & 2089/MDS/2017 ARE DISMISSED. ORDER PRONOUNCED ON WEDNESDAY THE 08 TH DAY OF NOVEMBER 2017 AT CHENNAI. SD/- ( . . . ) (N.R.S. GANESAN) !' /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) ' /ACCOUNTANT MEMBER /CHENNAI 1 /DATED: 08 TH NOVEMBER 2017 JPV '*2343 /COPY TO: 1. &/ APPELLANT 2. *+& /RESPONDENT 3. 5 ( )/CIT(A) 4. 5 /CIT 5. 3* /DR 6. 7 /GF