DCIT, CHENNAI vs. TAFE MOTORS & TRACTORS LTD., CHENNAI

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ITA 2108/CHNY/2016Status: DisposedITAT Chennai23 November 2016AY 2012-134 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 the CIT(A)'s direction to exclude investments that did not yield taxable income was in line with Rule 8D(2)(iii). Therefore, the Tribunal found no reason to interfere with the CIT(A)'s order.

What were the facts?

The revenue appealed against the CIT(A)'s order concerning disallowance of expenditure under Section 14A read with Rule 8D. The CIT(A) directed the Assessing Officer to recompute the disallowance, excluding investments yielding taxable income.

What were the issues?

Whether investments yielding taxable income should be excluded when computing disallowance under Section 14A read with Rule 8D.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI

Before: SHRI N.R.S. GANESAN & SHRI D.S. SUNDER SINGH

For Respondent: Shri Saroj Kumar Parida, Advocate
Hearing: 18.10.2016Pronounced: 23.11.2016

आदेश /O R D E R

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

1.

Both the appeals of the revenue are directed against the common order of CIT(A) dated 17.03.2016 for the assessment years 2011-12 and 2012-13. Therefore, we heard the same together and disposing off the same by this common order.

2.

The only issue arises for consideration is disallowance of expenditure under Section 14A read with rule 8D of the Income Tax Rules. Shri A.V.Sreekanth, the learned department representative submitted that the CIT(A), by applying Rule 8D(2) (iii) found that the assessing officer has wrongly included the investment yielded taxable income. Therefore, he directed the assessing officer to examine the appellant’s submission and recompute the disallowance. In respect of disallowance made by the assessing officer under Rule 8D(2)(ii), this Tribunal confirmed the disallowance made by the assessing officer in assessee’s own case by an order dated 23.09.2016 in 1403 & 1404/Mds/2016. According to the learned representative, the assessing officer has correctly computed the income and the expenditure by strictly applying the provisions of Rule 8D(2). Therefore, the CIT(A) is not justified in directing the assessing officer to exclude the investment which resulted taxable income.

3.

We heard Shri Saroj Kumar Parida, the learned counsel for the assessee also. The assessee has filed the appeal against the very same order of CIT(A) in 1403 & 1404/Mds/2016. This Tribunal by an order dated 23.09.2016 examined the issue and found that the assessing officer has rightly computed the expenditure under Rule 8D(2)(ii). Referring to Rule 8D(2)(iii), 0.5% of the average investment which resulted exempted income has to be considered for disallowance.

The CIT(A) directed the assessing officer to exclude the investment which does not yielded taxable income. This direction of the CIT(A) is strictly as provided in Rule 8D (2)(iii). Therefore, this Tribunal do not find any reason to interfere with the order of the CIT(A) and accordingly, the same is confirmed.

4.

In the result, both the appeals of the revenue stands dismissed.

Order pronounced on 23rd November, 2016 at Chennai.

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