ACIT, CHENNAI vs. ANAND TRANSPORT, CHENNAI

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ITA 1190/CHNY/2017Status: DisposedITAT Chennai13 October 2017AY 2008-095 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that no disallowance under Section 14A can be made if there is no exempted income, following the Madras High Court judgment. It also held that Pooja expenses are for the well-being of the business and its employees, thus allowable.

What were the facts?

The Revenue appealed against the CIT(Appeals)'s order deleting disallowance under Section 14A and allowing Pooja expenses. The assessee had not earned any exempted income, and the Pooja expenses were claimed as business-related.

What were the issues?

Whether disallowance under Section 14A is permissible when no exempted income is earned, and whether Pooja expenses are allowable as business expenditure.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, ‘D’ BENCH, CHENNAI

Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY

For Respondent: Shri SP. Palaniappan, ACA
Hearing: 27.09.2017Pronounced: 13.10.2017

आदेश /O R D E R

PER N.R.S. GANESAN, JUDICIAL MEMBER:

1.

This appeal of the Revenue is directed against the order of the Commissioner of Income Tax (Appeals) -2, Chennai, dated 09.02.2017 and pertains to assessment year 2008-09.

2.

The first issue arises for consideration is disallowance made by the Assessing Officer under Section 14A of the Income-tax Act, 1961 (in short 'the Act').

3.

Ms. S. Vijayaprabha, the Ld. Departmental Representative, submitted that the Assessing Officer disallowed a sum of `15,580/-.

However, on appeal by the assessee, the CIT(Appeals) found that there cannot be any disallowance when the assessee has not acquired any exempted income. The Ld. D.R. further submitted that the provisions of Section 14A of the Act does not say that there cannot be any disallowance when the assessee has not earned any exempted income. Irrespective of the fact whether the assessee earned exempted income or not, disallowance under Section 14A of the Act needs to be made since it is mandatory. Therefore, according to the Ld. D.R., the CIT(Appeals) is not justified in deleting the disallowance made by the Assessing Officer.

4.

On the contrary, Shri SP. Palaniappan, the Ld. representative for the assessee, submitted that the assessee has not earned any exempted income, therefore, the CIT(Appeals) by placing reliance on the judgment of Delhi High Court in Cheminvest Ltd. v. CIT in ITA 749/2014 dated 02.09.2015, deleted the addition made by the Assessing Officer. The Ld. representative further submitted that the Madras High Court in Redington (India) Ltd. v.

Addl. CIT (2017) 77 taxmann.com 257 also has taken a similar view.

5.

We have considered the rival submissions on either side and perused the relevant material available on record. It is not in dispute that the assessee has not earned any exempted income.

The Madras High Court in Redington (India) Ltd. (supra) had an occasion to examine the same and found that when there was no exempted income, there cannot be any disallowance of expenditure.

In view of this judgment of Madras High Court in Redington (India)

Ltd. (supra), this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.

6.

The next issue arises for consideration is with regard to Pooja expenses to the extent of `1,23,105/-.

7.

We have heard the Ld. D.R. and the Ld. representative for the assessee. The assessee is admittedly in the business of logistics and stevedoring. The assessee claimed a sum of `1,23,105/- being Pooja expenses. The Assessing Officer disallowed the claim of the assessee on the ground that the Pooja expenses are not for the purpose of business. This Tribunal is of the considered opinion that performing Pooja is depending upon the faith of individual businessman. Irrespective of religion, everyone is performing Pooja for their own well-being and well-being of the business concern. Moreover, when the assessee performs Pooja with an intention to earn profit in its business activities, the Assessing Officer cannot step into the shoes of the businessman to say that it is not for the business. It is for the businessman to decide whether he has to do Pooja for the well-being of the business concern. Therefore, this Tribunal is of the considered opinion that the Pooja expenditure has to be necessarily for the purpose of business and well-being of business concern and its employees, therefore, the CIT(Appeals) has rightly allowed the claim of the assessee. This Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.

8.

In the result, the appeal filed by the Revenue is dismissed.

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