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Income Tax Appellate Tribunal, “C” BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN
आदेश /O R D E R
PER S. JAYARAMAN, ACCOUNTANT MEMBER:
The Revenue filed this appeal against the order of Commissioner of Income Tax (Appeals)-5, Chennai in dated 28.07.2017 for assessment year 2012-13.
:-2-: ITA No. 2245/Mds/2017
M/s. Dharani Sugars & Chemicals Ltd., the assessee, is engaged in the business of sugars. In the assessment made for assessment year 2012-13, the Assessing Officer disallowed interest u/s. 14A r.w.r. 8D at Rs. 38,87,936/-.
Aggrieved, the assessee filed an appeal before the CIT(A). Before the CIT(A) the assessee pleaded that it earned exempt income (dividend income) at Rs. 69,500/- only. The CIT(A) relying on, inter alia, the Delhi High Court decision in the case of Joint Investment Pvt. Ltd., vs CIT in this tribunal decisions in the cases of Kal Airways Pvt. Ltd., vs DCIT in ITA Nos.
2846 & 2847/Mds2016 dated 29.06.2017 & Apex Laboratories Pvt. Ltd., vs ACIT, LTU(Appeals)-II, Chennai, [2017] 80 Taxmann.com 236 the Madras High Court decisions in the cases of Redington (India) Limited vs ACIT, Chennai [2017] 77 Taxmann.com 257 and CIT, Central(1), Chennai vs Chettinad Logistics Pvt. Ltd., [2017] 80 Taxmann.com 221 directed the AO to restrict the disallowance to the extent of exempt income earned by the assessee disallowance u/s. 14A r.w.r. 8D.
Aggrieved, the Revenue filed this appeal with the following grounds:
“1. The order of the learned CIT(A) is contrary to law, facts and circumstances of the case. 2.1 The learned CIT(A) erred in holding that disallowance u/s. 14A shall be limited to the extent of exempt income earned, without appreciating the fact that, when exempt income bearing investments are held by the assessee, for which certain expenditure would have been definitely incurred by the assessee, the provisions of section 14A r.w.r. 8D will get triggered, and :-3-: ITA No. 2245/Mds/2017 further there is no such provision in the Act to restrict the 14A disallowance to the extent of exempt income earned. 2.2 The learned CIT(A) erred in following the decision of the Jurisdictional High Court decision in the case of M/s. Redington (India) Limited, without appreciating the fact that the decision of the Hon’ble High Court pertains to the AY 2007-08, which is prior to introduction of rule 8D, and the case in hand related to the AY 2012-13, thereby a decision of the Hon’ble High Court in the pre 8D era cannot be applied to a case in the post 8D era, which proposes disallowance on the basis of investments, and not based on exempt income earned. 2.3 The learned CIT(A) ought to have appreciated the Boards circular in 5/2014 dated 11.02.2014, which clearly explains that the provisions of section 14A r.w.r. 8D are applicable even in a situation, when the assessee does not earn any exempt income, but exempt income bearing investments are held by the assessee, and in this case, the assessee having earned exempt income, the disallowance shall have to be effected under Rule 8D only.
3. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned CIT(A) may be set aside and that of the Assessing Officer restored.”
The DR presented the case on the lines of the order of the AO and on the grounds of appeal. None was present for the assessee, though, the hearing notice is served by an acknowledgement due which is on record.
We heard the DR and gone through the orders of the lower authorities.
Since, the order of the CIT(A) is based on the decisions of the Jurisdictional High Court as well as the co-ordinate bench of this tribunal, apart from the decisions of other High Court and other co-ordinate benches. We find no :-4-: ITA No. 2245/Mds/2017 reason to interfere with the order of the CIT(A) and the grounds of Revenue’s appeal are dismissed.
In the result, the Revenue’s appeal is dismissed.
Order pronounced on Wednesday, the 10th day of January, 2018 at Chennai.