M.R.M. PLANTATIONS (P) LTD.,KARAIKUDI vs. ACIT, CIRCLE-1, KARAIKUDI

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ITA 2709/CHNY/2019Status: DisposedITAT Chennai19 July 2022AY 2014-154 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the head office expenses had no nexus with the interest income earned in India and were related to the exempt Malaysian plantation business. Following its own previous decision in the assessee's own case, the Tribunal dismissed the appeal.

What were the facts?

The assessee company earned agricultural income from palm seed plantations in Malaysia and also received interest income in India. The Assessing Officer disallowed head office expenses, arguing they were related to exempt Malaysian income. The CIT(A) confirmed the disallowance.

What were the issues?

Whether head office expenses incurred by a company earning both taxable interest income and exempt foreign agricultural income are allowable as a deduction against the taxable income.

Which sections of the Income-tax Act were involved?

Section 37(1),Section 14A,Section 57

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI

Before: SHRI MAHAVIR SINGHAND SHRI MANOJ KUMAR AGGARWAL

Hearing: 19.07.2022Pronounced: 19.07.2022

आदेश /O R D E R PER MAHAVIR SINGH, VICE PRESIDENT: These appeals by the assessee are arising out of different orders of Commissioner of Income Tax (Appeals)-1, Madurai in 201 & 202/2016-17 vide orders of even date 09.08.2019. The assessments were framed by the ITO, Ward-2 / ACIT, Circle-1, Karaikudi for the assessment years 2010-11, 2011- 12 & 2014-15 u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961

2.

The only common issue in these three appeals of assessee is as regards to the order of CIT(A) confirming the disallowance made by AO of Head office expenses. For this, the expenses disallowed for AY 2010-11 is Rs.21,90,436/-, AY 2011-12 is Rs.18,80,927/- and for AY 2014-15 is Rs.29,43,098/-. Both the ld.counsel for the assessee and the ld. Senior DR agreed that the facts and circumstances in all the three years are exactly identical and there is no difference in facts. Hence, we are taking up the facts from assessment year 2010-11 and will decide the issue. The assessee has raised various grounds for the above issue, which is argumentative in nature and in all the three years various grounds are raised, which we need not to reproduce.

3.

Brief facts are that the assessee company, over and above its income earned in India, derived agricultural income from Malaysia by way of plantation of palm seeds. The assessee claimed expenses and the AO noted that the assessee company has no business activity in India except interest received from certain fixed deposits. The AO and the CIT(A) in their concurrent finding noted that the company has plantation situated in Malaysia and is earning income

1.

3 to 2709/Chny/2019 from the same. The AO and the CIT(A) held that since Malaysian income from plantation business is exempt u/s.14A of the Act, all the expenses which are related to business is even to be allowed against that income only. Since the income is exempt, the AO disallowed the entire expenditure claimed amounting to Rs.21,90,436/- u/s.37(1) of the Act. But, the CIT(A) noted that the same has to be disallowed u/s.14A of the Act. Accordingly, the CIT(A) confirmed the addition. Aggrieved assessee is in appeal before the Tribunal.

4.

The ld.counsel for the assessee stated that although the assessee’s case is covered by Tribunal’s decision against assessee in assessee’s own case for assessment year 2006-07 in order dated 09.10.2015, he wanted to distinguish the same. But, on record he could not distinguish on facts. On the other hand, the ld. Senior DR supported the orders of the lower authorities.

5.

After hearing both the sides and going through the facts, we noted that the Tribunal in assessee’s own case for assessment year 2006-07 has rejected the claim of assessee of Head office expenses by observing in para 9 as under:-

4 to 2709/Chny/2019 9. We have heard both the sides and perused the material on record. Under section 57 only expenditure incurred in connection with earning of income was allowable as deduction. The assessee admitted that the entire income is by way of interest from the bank deposits. It was seen that the expenditure made by the assessee towards salary, remuneration, commission, building maintenance etc, these expenses have no nexus with earning of interest on bank deposits and cannot be allowed as deduction u/s.57 of the Act. Further, the assessee made a plea before us that expenditure at head office at Rs.15,65,918/- instead of Rs.43,35,061/-. In our opinion, the Assessing Officer already brought on record the total expenditure at Rs.43,35,061/- as recorded in earlier para. Being so, the contention of the assessee counsel is devoid of merit as it is not based on any evidences. Accordingly, this ground of the appeal of the assessee is rejected.

Since the assessee factually could not distinguish the above findings of Tribunal, respectfully following the same and taking a consistent view, we dismiss this appeal of assessee. Since the facts in all three assessment years are same, all the three appeals of the assessee are dismissed.

6.

In the result, the appeals filed by the assessee are dismissed.

Order pronounced in the open court on 19th July, 2022 at Chennai.

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