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Acit Corporate Circle 3(1) v/s Tamilnadu Water Investment, Chennai


Company & Directors' Information:- P V T INVESTMENT LIMITED [Amalgamated] CIN = U74899DL1988PLC121600

Company & Directors' Information:- P V T INVESTMENT LTD [Not available for efiling] CIN = U67120PB1988PLC008068

Company & Directors' Information:- S T INVESTMENT PRIVATE LIMITED [Amalgamated] CIN = U65993WB1990PTC050032

Company & Directors' Information:- H. L. INVESTMENT COMPANY LIMITED [Amalgamated] CIN = U65990WB1975PLC128186

Company & Directors' Information:- M M INVESTMENT PRIVATE LIMITED [Converted to LLP] CIN = U65921CT2008PTC020533

Company & Directors' Information:- G. N. G. INVESTMENT LIMITED [Active] CIN = U65910GJ1981PLC004128

Company & Directors' Information:- A S G S INVESTMENT PRIVATE LIMITED [Active] CIN = U74120DL2008PTC173938

Company & Directors' Information:- G L INVESTMENT PVT LTD [Active] CIN = U65993WB1991PTC051072

Company & Directors' Information:- C & C INVESTMENT LTD [Active] CIN = U67120AS1976PLC001654

Company & Directors' Information:- S M S INVESTMENT CORPORATION PRIVATE LIMITED [Active] CIN = U74899DL1963PTC003988

Company & Directors' Information:- V R V INVESTMENT PRIVATE LIMITED [Active] CIN = U67120WB1985PTC039793

Company & Directors' Information:- S P INVESTMENT PVT LTD [Active] CIN = U70109WB1961PTC025099

Company & Directors' Information:- R H INVESTMENT PRIVATE LIMITED [Active] CIN = U99999MH1978PTC020633

Company & Directors' Information:- T N B INVESTMENT PRIVATE LIMITED [Active] CIN = U74899DL1986PTC025590

Company & Directors' Information:- A R S INVESTMENT PVT LTD [Active] CIN = U65993WB1990PTC048513

Company & Directors' Information:- V P INVESTMENT PRIVATE LIMITED [Active] CIN = U74899DL1983PTC015714

Company & Directors' Information:- S M D INVESTMENT LIMITED [Strike Off] CIN = U65993TN1995PLC033139

Company & Directors' Information:- G R D INVESTMENT PVT LTD [Amalgamated] CIN = U67120WB1980PTC032727

Company & Directors' Information:- C AND N INVESTMENT PRIVATE LIMITED [Active] CIN = U74899DL1983PTC015710

Company & Directors' Information:- R INVESTMENT PRIVATE LIMITED [Strike Off] CIN = U65993TZ1988PTC002181

Company & Directors' Information:- H N G L INVESTMENT PRIVATE LIMITED [Active] CIN = U74899DL1995PTC066774

Company & Directors' Information:- K M S INVESTMENT PRIVATE LIMITED [Active] CIN = U67120UP1993PTC015287

Company & Directors' Information:- U M INVESTMENT PVT LTD [Active] CIN = U70101WB1979PTC032160

Company & Directors' Information:- A S T INVESTMENT PRIVATE LIMITED [Strike Off] CIN = U67120DL1996PTC082812

Company & Directors' Information:- B N E INVESTMENT LTD [Not available for efiling] CIN = U67120WB1974PLC029360

Company & Directors' Information:- K S J INVESTMENT COMPANY PRIVATE LIMITED [Strike Off] CIN = U74899DL1994PTC061335

Company & Directors' Information:- P T INVESTMENT PVT LTD [Strike Off] CIN = U65999WB1995PTC067065

Company & Directors' Information:- K. S. R. INVESTMENT LIMITED [Strike Off] CIN = U65992UP1988PLC010253

Company & Directors' Information:- J T INVESTMENT PVT LTD [Strike Off] CIN = U65923WB1979PTC032344

Company & Directors' Information:- R K INVESTMENT LTD [Strike Off] CIN = U65993WB1969PLC027398

Company & Directors' Information:- N M G C INVESTMENT PRIVATE LIMITED [Strike Off] CIN = U74899DL1982PTC014603

Company & Directors' Information:- T M INVESTMENT CO PVT LTD [Active] CIN = U67120WB1971PTC028172

Company & Directors' Information:- S. A. F. INVESTMENT LIMITED [Active] CIN = U67120DL1997PLC088611

Company & Directors' Information:- H K (INVESTMENT) COMPANY PRIVATE LIMITED [Active] CIN = U65990GJ1950PTC000511

Company & Directors' Information:- P N INVESTMENT PRIVATE LIMITED [Under Liquidation] CIN = U65910GJ1988PTC010715

Company & Directors' Information:- INVESTMENT CORPORATION LIMITED [Under Liquidation] CIN = U65993KL1942PLC000449

Company & Directors' Information:- S R M INVESTMENT PVT LTD [Strike Off] CIN = U67120WB1979PTC031888

Company & Directors' Information:- A TO Z INVESTMENT PVT LTD [Dissolved] CIN = U67120WB1988PTC044464

Company & Directors' Information:- R J INVESTMENT PRIVATE LIMITED [Active] CIN = U67120MH1976PTC018954

Company & Directors' Information:- B N K INVESTMENT CO PVT LTD [Active] CIN = U65993WB1971PTC028169

Company & Directors' Information:- A D INVESTMENT CO PVT LTD [Active] CIN = U67120WB1971PTC028170

Company & Directors' Information:- T D INVESTMENT CO PVT LTD [Strike Off] CIN = U65921CH1987PTC007637

Company & Directors' Information:- C G K INVESTMENT P LTD [Strike Off] CIN = U65910AP1986PTC006088

Company & Directors' Information:- L D INVESTMENT COMPANY PVT LTD [Strike Off] CIN = U65921HP1988PTC008425

Company & Directors' Information:- G K INVESTMENT PRIVATE LIMITED [Active] CIN = U65993TZ1987PTC001919

Company & Directors' Information:- G V INVESTMENT PRIVATE LIMITED [Active] CIN = U65993TZ1987PTC001920

Company & Directors' Information:- B C K H INVESTMENT CO PVT LTD [Active] CIN = U67120MH1982PTC026819

Company & Directors' Information:- H V INVESTMENT PRIVATE LIMITED [Active] CIN = U67120MH1997PTC107686

Company & Directors' Information:- M L INVESTMENT PVT LTD [Strike Off] CIN = U67120WB1979PTC032180

Company & Directors' Information:- S & G INVESTMENT COMPANY PRIVATE LIMITED [Active] CIN = U65100DL2012PTC244271

Company & Directors' Information:- S B INVESTMENT PVT LTD [Liquidated] CIN = U99999RJ1959PTC001090

Company & Directors' Information:- R AND P INVESTMENT PVT LTD [Strike Off] CIN = U67120PB1995PTC016124

Company & Directors' Information:- M M B INVESTMENT PRIVATE LIMITED [Active] CIN = U65993RJ1996PTC012698

Company & Directors' Information:- M G A INVESTMENT COMPANY PRIVATE LIMITED [Strike Off] CIN = U99999MH1980PTC022406

Company & Directors' Information:- D S N INVESTMENT PVT LTD [Strike Off] CIN = U65993TG1988PTC008554

Company & Directors' Information:- V. I INVESTMENT PVT LTD [Strike Off] CIN = U67120HR1988PTC030206

Company & Directors' Information:- R J P INVESTMENT PRIVATE LIMITED [Strike Off] CIN = U65993GJ1981PTC004678

Company & Directors' Information:- D D P INVESTMENT PRIVATE LIMITED [Strike Off] CIN = U65910GJ1981PTC004695

Company & Directors' Information:- C J P INVESTMENT PVT LTD [Strike Off] CIN = U99999GJ1981PTC004662

Company & Directors' Information:- M P INVESTMENT CO PRIVATE LIMITED [Under Process of Striking Off] CIN = U65993KA1974PTC002646

Company & Directors' Information:- INVESTMENT COMPANY PRIVATE LIMITED [Dissolved] CIN = U65990KL1946PTC000461

Company & Directors' Information:- INVESTMENT CORPORATION LIMITED [Not available for efiling] CIN = U99999MH1943PLC007730

    I.T.A. Nos. 3084 & 3085/Chny of 2017

    Decided On, 20 November 2018

    At, Income Tax Appellate Tribunal Chennai

    By, THE HONOURABLE MR. ABRAHAM P. GEORGE
    By, ACCOUNTANT MEMBER & THE HONOURABLE MR. DUVVURU RL REDDY
    By, JUDICIAL MEMBER

    For the Appellant: AR.V. Sreenivasan, JCIT. For the Respondent: R. Viswanathan, C.A.



Judgment Text

Duvvuru Rl Reddy, Judicial Member:

Both the appeals filed by the Revenue are directed against the common order of the ld. Commissioner of Income Tax (Appeals) 11, Chennai dated 29.08.2017 relevant to the assessment years 2013-14 and 2014-15. The common grounds raised in both the appeals of the Revenue are reproduced as under:

"1. The order of the learned CIT(A) is erroneous in law and opposed to the facts and circumstances of the case.

2.1 The learned CIT(A) erred in holding that if there is no exempt income in a previous year, there cannot be a disallowance of expenditure during the relevant assessment year.

2.2. The learned CIT(A) ought to have seen that decision of the Hon'ble Delhi High Court in the case of M/s. Cheminvest Limited reported in 378 ITR 33 on similar issue is not accepted by the Department and SLP filed before the Hon'ble Supreme Court is admitted and is pending in Civil Appeal No.121 of 2015.

2.3. The learned CIT(A) failed to consider the CBDT's Circular No.5 of 2014 wherein it is clarified that the Assessing Officer is duty bound to apply section 14A if the assessee has made investments which may fetch exempted income even if the assessee has not declared any exempt income in the previous year.

2.4. The learned CIT(A) erred in directing the AO to recalculate the disallowance u/s 14A read with rule 8D after excluding the investment in SPV (subsidiary companies) without appreciating the fact that the assessee had invested in shares of the subsidiary companies of assessee which are capable of earning exempt income which does not form part of the total income under this Act and thereby attracting disallowance u/s 14A.

2.5. The ld. CIT(A) erred in restricting the disallowance u/s 14A to the extent of exempt income earned by the assessee though there is no such provision in Section 14A of the Income Tax Act, 1961.

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 be restored."

2. Brief facts of the case are that the returns of income filed by the assessee were selected for scrutiny under CASS. The assessee filed details against statutory notices. The Assessing Officer observed that the investment portfolio of the assessee as on 31.12.2013 and as on 31.03.2014 stands at an aggregate value of Rs. 193,06,41,330/-. However, the assessee has not quantified the expenditure under section 14A of the Income Tax Act r.w. Rule 8D of the Income Tax Rules. Therefore, by invoking the provisions of section 14A r.w. Rule 8D, the Assessing Officer quantified the expenditure and made disallowance at Rs. 9,65,17,006/- for the assessment year 2013-14 and Rs. 3,24,08,909/- for the assessment year 2014-15.

3. On appeal, after considering various case law, the ld. CIT(A) partly allowed the ground raised by the assessee.

4. Aggrieved, the Revenue is in appeal before the Tribunal for both the assessment years.

5. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below including paper book. By considering various case law including the decision of Hon'ble High Court of Punjab & Haryana in the case of CIT v. Lakhani Marketing Inc., 49 taxmann.com 257, the ld. CIT(A) has held that unless and until there is receipt of exempted income for concerned assessment years, section 14A of the Act cannot be invoked. Further on perusal of the statement of account, the ld. CIT(A) noticed that it does not show any exempt income, but, there is a credit of other income of Rs. 70,66,971/- for the assessment year 2013-14 and Rs. 15,15,297/- for the assessment year 2014-15. Further, for the assessment year 2013-14, the schedule of other income reveals interest income of Rs. 4,32,932/- and other income of Rs. 66,34,039/- without any details. Similarly, for the assessment year 2014-15, other income includes interest income of Rs. 13,81,750/- and other income of Rs. 1,33,547/-. In the absence of any details, the ld. CIT(A) directed the Assessing Officer to verify whether the receipts classified as other income i.e., Rs. 66,34,039/- and Rs. 1,33,547/- for the assessment years 2013-14 and 2014-15 respectively are exempt income and held that either entire expenses disallowed will stand deleted or the disallowance will be restricted to the earning of exempt income, as the case may be. Further, by considering various decisions including the decision of the Tribunal in the case of EIH Associated Hotels v. DCIT in I.T.A. No. 1503/Mds/2012 & 1624/Mds/2012, the ld. CIT(A) has directed the Assessing Officer to verify as to whether the investment made in SPV is a subsidiary company of the assessee and if so, no disallowance is warranted under section 14A of the Act.

6. In a recent judgment in the case of Maxopp Investment Ltd. v. CIT in Civil Appeal Nos. 104-109 of 2015 dated12.02.2018, after analysing various judgments of High Courts, the Hon'ble Supreme Court has given concurrent findings on various issues relating to the disallowance under section 14A r.w. Rule 8D. The Hon'ble Supreme Court has ruled out the dominant theory of investment in subsidiary and not relevant for applicability of section 14A and moreover, the Hon'ble Apex Court confirmed the view of restricting the disallowance to the quantum of exempt income, though not subscribed to dominant purpose theory. Various decisions relied on by the ld. CIT(A) are no longer res-integra havin

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g regard to the decision of the Hon'ble Apex Court and thus, we set aside the order of the ld. CIT(A) on various issues relating to disallowance under section 14A r.w. Rule 8D and remit the same to the file of the Assessing Officer to re-examine the issues in the light of the above judgement of the Hon'ble Supreme Court and decide the issues afresh after giving an opportunity of being heard to the assessee. Accordingly, both the appeals filed by the Revenue are allowed for statistical purposes. 7. In the result, both the appeals filed by the Revenue are allowed for statistical purposes.
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