THE COMMISSIONER OF INCOME T vs. M/S.MRF LTD

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TCA/217/2021HC Madras29 March 2021Bench: Hon`ble Mr Justice T. S. SIVAGNANAM4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that there was no error in the order passed by the Tribunal and that no substantial question of law arose for consideration. The Tribunal, in its order, had relied on the decision in Joint Investments Pvt. Ltd. Vs Commissioner of Income Tax (372 ITR 694 (Delhi)) and a Division Bench decision of the same High Court in Marg Ltd. Vs Commissioner of Income Tax [(2020) 120 taxmann.com 84]. These precedents supported the view that disallowance under Section 14A, if any, should be restricted to the dividend income earned. Consequently, the Tribunal had remanded the matter to the AO for recalculation. The High Court found no fault with this approach and dismissed the appeal. The operative direction was that the AO shall comply with the directions issued by the Tribunal. The substantial question of law was left open.

What were the facts?

The Revenue, represented by the Commissioner of Income Tax, Chennai, filed an appeal under Section 260A of the Income Tax Act, 1961, against an order dated 09.05.2018 passed by the Income Tax Appellate Tribunal, Madras 'D' Bench. The appeal pertains to the assessment year 2011-12 and concerns a disallowance made under Section 14A of the Act. The Tribunal had previously remanded the matter to the Assessing Officer (AO) to restrict the disallowance to the extent of dividend income earned, relying on judicial precedents. The Revenue challenges this direction, arguing that Section 14A does not provide for such a restriction.

What were the issues?

1. Whether the Tribunal was justified in directing the AO to restrict the disallowance made under Section 14A of the Income Tax Act, 1961, to the extent of dividend income earned, especially when the section does not provide for any such exceptions? Assessee's Contentions: The judgment does not record specific contentions made by the assessee. However, the Tribunal's order, as referred to in the judgment, indicates that the assessee's submissions were considered. Revenue's Contentions: The Revenue contended that Section 14A of the Act does not contain any exceptions that would permit restricting the disallowance to the dividend income earned. They argued that the Tribunal's direction to do so was unjustified.

Which sections of the Income-tax Act were involved?

Section 14A,Section 260A

AI-generated summary — verify with the full judgment below

TCA.No.217 of 2021 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 29.03.2021 CORAM : The Honourable Mr.Justice T.S.SIVAGNANAM and The Honourable Ms.Justice R.N.MANJULA Tax Case Appeal No.217 of 2021 The Commissioner of Income Tax, Chennai. ...Appellant Vs M/s.MRF Ltd., New No.114 (Old No.124), Greams Road, Chennai - 600 006. ...Respondent PRAYER: Appeal under Section 260A of the Income Tax Act, 1961 against the order dated 09.05.2018 made in ITA.No.643/Chny/2017 for the assessment year 2011-12 on the file of the Income Tax Appellate Tribunal, Madras 'D' Bench, Chennai. For Appellant: Mrs.R.Hemalatha, SSC For Respondent: Mr.R.Vijayaraghavan JUDGMENT (Delivered by

T.S.Sivagnanam,J

) This appeal has been filed by the Revenue under Section 260A of the Income Tax Act, 1961 ('the Act' for brevity) challenging the order dated 1/4 https://www.mhc.tn.gov.in/judis/ TCA.No.217 of 2021 09.05.2018 made in ITA.No.643/Chny/2017 for the assessment year 2011- 12 on the file of the Income Tax Appellate Tribunal, Madras 'D' Bench, Chennai ('the Tribunal' for brevity). 2. The Revenue has raised the following substantial question of law for consideration: "Whether the Tribunal was justified in directing the AO to restrict the disallowance made u/s.14A of the I.T. Act, 1961 to the extent of dividend income earned especially when the section does not provide for any such exceptions?" 3. We have heard Mrs.R.Hemalatha, learned Senior Standing Counsel appearing for the appellant-Revenue and Mr.R.Vijayaraghavan, learned counsel for the respondent-assessee. 4. The issue is with regard to disallowance made under Section 14A of the Act. 5. The Tribunal, after taking note of the submissions made by the assessee and also the decision in the case of Joint Investments Pvt. Ltd. Vs 2/4 https://www.mhc.tn.gov.in/judis/ TCA.No.217 of 2021 Commissioner of Income Tax [372 ITR 694 (Delhi)], had noted that the assessee earned dividend income for the assessment years 2012-13 and 2013-14 and disallowance, if any, has to be restricted to the dividend income earned as per the decision in Joint Investments (supra). Therefore, the matter was remanded to the Assessing Officer to restrict the disallowance in accordance with the said decision. The decision of the Division Bench of this Court in the case of Marg Ltd. Vs Commissioner of Income Tax [(2020) 120 taxmann.com 84] is also to the same effect. 6. Therefore, we find that there is no error in the order passed by the Tribunal and no substantial question of law arises for consideration on the said issue. Accordingly, the tax case appeal is dismissed and the substantial question of law is left open and the Assessing Officer shall comply with the directions issued by the Tribunal. No costs. (T.S.S.,J.) (R.N.M.,J.) 29.03.2021 Index:Yes/No Internet:Yes/No hvk 3/4 https://www.mhc.tn.gov.in/judis/ TCA.No.217 of 2021 T.S.SIVAGNANAM,J AND R.N.MANJULA,J hvk To 1. The Income Tax Appellate Tribunal, Madras 'D' Bench, Chennai. 2. The Commissioner of Income Tax, Chennai. TCA.No.217 of 2021 29.03.2021 4/4 https://www.mhc.tn.gov.in/judis/

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