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Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI D.S.SUNDER SINGH
आदेश / O R D E R
PER D.S.SUNDER SINGH, ACCOUNTANT MEMBER:
This is an appeal filed by the Revenue against the Order dated 18.03.2016 of Commissioner of Income Tax (Appeals)-6, Chennai, in for the AY 2008-09 & ITA No.182/CIT(A)- 6/2014-15 for the AY 2011-12 and raised the following grounds: & 1670/Mds/2016 :- 2 -:
2.0 Both the appeals are on the common issue of disallowance made u/s.14A of Income Tax Act (in short ‘the Act’). During the assessment proceedings, the AO found that the assessee has received the dividend income of Rs.64,73,573/- and the same was claimed as exempt in the computation of income. The AO applied Rule 8D of Income Tax Rules and made the disallowance of Rs.1,33,73,209/- for the AY 2008-09 and Rs.1,85,57,722/- for the AY 2010-11. The assessee went on appeal before the Ld.CIT(A) and the Ld.CIT(A) deleted the addition made by the AO placing reliance on the decision of the this Tribunal in assessee’s own case for the AY 2006-07, 2008-09, 2009-10 & 2010-11 in 2028, 2029 & 2030/Mds/2014.
3.0 Appearing for the Revenue, the Ld.DR relied on the orders of the Assessing Officer. On the other hand, the Ld.AR relied on the decisions of this Tribunal in the assessee’s own case cited(supra) and the order of the Ld. CIT(A). The ITAT ‘D’ Bench of this Tribunal in the order cited (supra) held on the same facts that the provisions of Sec.14A would not be applicable for the AY 2006-07 & 2008-09 2009-10 & 2010-11in the assessee’s own case. For the sake of convenience, the relevant part in Para No. 9 of the ITAT order is reproduced as under:
We have considered the rival submissions on either side and perused the relevant material available on record. Section 14A of the Act provides for disallowance of expenditure incurred by the assessee for earning the income which does not form part of total income. Rule 8D of the Income-tax Rules, 1962 provides for method of computation for disallowance. The CIT(Appeals), after considering the material available on record and the investment made by the assessee, directed the Assessing Officer to consider the disallowance of Rs.24,39,220/- and Rs.35,43,108/- for the assessment years 2009-10 and 2010-11 respectively against Rs.1,20,90,107/- and Rs.1,83,22,970/- disallowed by the Assessing Officer in his order. The balance disallowance of Rs.96,50,887/- and Rs.1,47,79,862/- were deleted. In fact, the CIT(Appeals) applied the provisions of Rule 8D for computing the disallowance for the assessment years 2009-10 and 2010-11. For the assessment years 2006-07 and 2008-09, the investments were made in 100% foreign & 1670/Mds/2016 :- 3 -:
subsidiary companies. No fresh investment had been made in the financial years 2008-09 and 2009-10. Since the investment was made in the subsidiary companies in the form of equity, the CIT(Appeals) found that such investment is outside the scope of Section 14A of the Act. When the assessee invested the funds in subsidiary companies, as rightly submitted by the Ld.counsel for the assessee, the intention is not for earning the exempt income but because of commercial expediency. Therefore, as rightly found by the CIT(Appeals), the provisions of Section 14A would not be applicable for the assessment year 2006-07 and 2008-09. In view of this, we find no reason to interfere with the order of the CIT(Appeals) and accordingly, the same is confirmed.
The Ld.AR submitted that no fresh investment was made in the assessment years under consideration. The assessee continued the investments in the subsidiary companies made in earlier years. There was no change in the facts of the case compared with the facts of the Assessment Years 2006-07, 2010-11 on which facts the ITAT has confirmed the order of the Ld.CIT(A). The Ld. DR did not controvert the facts and did not place any decision controverting the above decision.
Therefore, following the order of the ITAT we hold that the provisions of Sec.14A would not be applicable for the AYs 2008-09 & 2011-12 also.
Accordingly, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the Revenue.
In the result, the appeals of the Revenue are dismissed.
Order pronounced in the Open Court on 26th May, 2017, at Chennai.