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Income Tax Appellate Tribunal, ‘ B’ BENCH : CHENNAI
Before: SHRI ABRAHAM P.GEORGE & SHRI GEORGE MATHAN
आदेश / O R D E R
PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER:
In this appeal filed by the Revenue, it has taken altogether four grounds of which grounds 1 & 4 are general in nature needing no specific adjudication.
ITA No. 3118/Mds/2016. :- 2 -:
Vide its ground 2, grievance raised by the Revenue is that ld. Commissioner of Income Tax (Appeals) deleted a disallowance made by the ld. Assessing Officer u/s.14A of the Income Tax Act, 1961 (in short ‘’the Act’’) r.w.r. 8D of the Income Tax Rules, 1962 (in short ‘’the Rules’’).
Facts apropos are that assessee a software development company had made investments in the form of equity shares in its group concerns. Assessee had not made any suo-motu disallowance u/s. 14A of the Act r.w.r.8D of the Rules. Though assessee argued that no expenditure was incurred by it on account of the above investments, it was not accepted by the ld. Assessing Officer. He made an disallowance of �6,20,84,576/- applying Rule 8D (2)(ii) and �40,76,040/- applying Rule 8D(2)(iii) of the Rules.
Aggrieved, assessee moved in appeal before the ld. 4.
Commissioner of Income Tax (Appeals). Argument of the assessee was that investments were made in foreign subsidiaries and the dividend receipts were taxable in India. Reliance was placed on a decision of Co-ordinate Bench in assessee’s own case in 2028, 2029 & 2030/Mds/2014, dated 22.01.2016. Ld. Commissioner of Income Tax (Appeals) relying on the above decision of the Tribunal deleted the disallowances made by the ld. Assessing Officer.
ITA No. 3118/Mds/2016. :- 3 -:
Now before us, ld. Departmental Representative strongly assailing the order of the ld. Commissioner of Income Tax (Appeals) submitted that none of the lower authorities had verified whether assessee had received any dividend and claimed it as exempt. In the assessee‘s case for earlier years there was clear finding by the Tribunal that there were no fresh investments. Against this, according to her, there was nothing to show that were no incremental investments during the relevant previous year
Despite notice being issued nobody entered appearance for 6. the assessee. On 10.07.2017 when the matter earlier posted for hearing, one Ms. Bhavya had appeared for the assessee. Based on the request of the ld. Authorised Representative the case was adjourned to this day.
What we find from the orders of the lower authorities is that the question whether assessee had earned any income from the investments made by it which was claimed as exempt was not verified by any of the lower authorities. By virtue of judgment of Hon’ble Jurisdictional High Court in the case of Redington India Ltd vs. Addl. CIT (2016) 97 CCH 0219, unless there is exempt income there cannot be a disallowance u/s. 14A of the Act. We are of the opinion that the issue therefore requires a fresh look by the ld. Assessing Officer. We set aside the orders of the lower authorities and remit the ITA No. 3118/Mds/2016. :- 4 -:
issue regarding disallowance u/s. 14A of the Act back to the file of the ld. Assessing Officer for consideration afresh in accordance with law.
Ground No.2 of the Revenue stands allowed for statistical purpose.
Vide its ground No.3, grievance raised by the Revenue is that ld. Commissioner of Income Tax (Appeals) deleted the disallowance made by the ld. Assessing Officer for delayed remittances of employees contribution to PF & ESI.
It is not disputed by the ld. Departmental Representative 9. before us that remittances were made by the assessee before the due date of filing of return u/s. 139(1) of the Act, though after the dates set out under the respective enactment for PF/ESI. Ld. Commissioner of Income Tax (Appeals) had followed the judgment of Hon’ble Jurisdictional High Court in the case of CIT vs. Industrial Security & Intelligence India Pvt. Ltd in Mds/585 & 586 of 2015, dated 24.07.2015. Their lordship had clearly stated that even employees contribution if remitted prior to due date of filing of return, would be allowable. We also find the issue is squarely covered in favour of the assessee by the judgment of Hon’ble Supreme Court in the case of CIT vs. Alom Extrusions Limited 319 ITR 306. We do not find any ITA No. 3118/Mds/2016. :- 5 -: reason to interfere with the order of the ld. Commissioner of Income Tax (Appeals). Ground No.3 of the Revenue stands dismissed.
In the result, the appeal of the Revenue is partly allowed for 10. statistical purposes.
Order pronounced on Wednesday, the 20th day of September, 2017, at Chennai.