Income Tax Appellate Tribunal - Chennai
Chettinad Logistics Pvt Ltd., Chennai vs Department Of Income Tax on 16 April, 2014
आयकर अपील य अ धकरण, 'ए' यायपीठ, चे नई
IN THE INCOME TAX APPELLATE TRIBUNAL
"A" BENCH, CHENNAI
ी ए. मोहन अलंकामणी, लेखा सद य एवं
ी वकास अव थी, या यक सद य के सम
BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER &
SHRI VIKAS AWASTHY, JUDICIAL MEMBER
आयकर अपील सं./ I.T.A. No.429/Mds/2014
( नधारण वष / Assessment Year : 2006-2007)
The Assistant Commissioner of M/s. Chettinad Logistics Pvt. Ltd,
Income Tax, Vs Rani Seethai Hall, V floor,
Company Circle I(3) No.603, Anna Salai,
Chennai 600 034. Chennai 600 006
[PAN :AABCC4551C]
(अपीलाथ /Appellant) ( यथ /Respondent)
अपीलाथ क ओर से / Appellant by : Shri. Shaji P. Jacob, IRS, Addl CIT.
यथ क ओर से / Respondent by : Shri. S. Sridhar, Advocate
सन
ु वाई क तार ख/Date of hearing : 16.04.2014
घोषणा क तार ख /Date of Pronouncement : 09.05.2014
आदे श / O R D E R
PER VIKAS AWASTHY, JUDICIAL MEMBER
The appeal has been filed by the Revenue against the order of Commissioner of Income Tax (Appeals)-II, Chennai, dated 25.10.2013 relevant to the assessment year 2006-2007.
:- 2 -: I.T.A.No.429/Mds/2014 .
2. The assessee is a private limited company engaged in the business of clearing & forwarding, manufacturing, trading and ship management services. The assessee filed its return for the assessment year 2006-07 on 30.12.2006 declaring its income as 7,06,89,035/-. During the course of scrutiny assessment, the Assessing Officer made certain addition/disallowance in the income returned by the assessee. In return of income the assessee had claimed deduction u/s 10B. The Assessing Officer observed that the assessee had incurred expenditure of 79,15,484/- on freight for delivery of goods outside India and excluded the same from export turnover without reducing the same from total turnover. The Assessing Officer further made disallowance u/s.14A r.w. Rule 8D to the tune of 12,34,799/-. Aggrieved against the assessment order dated 11.12.2008, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals).
The Commissioner of Income Tax (Appeals) directed the Assessing Officer to exclude freight expenses from export turnover as well as from total turnover in accordance with the decision of the Special Bench of Tribunal in the case of ITO vs M/s. Sak Soft Ltd, :- 3 -: I.T.A.No.429/Mds/2014 .
reported as 313 ITR(AT) 353. As regards disallowance u/s.14A, the Commissioner of Income Tax (Appeals) held that the provisions of Rule 8D are not applicable in the assessment year under consideration and thus made disallowance of 5% of dividend income.
Now the Revenue has come in appeal assailing the order of Commissioner of Income Tax (Appeals).
3. We have heard the submissions made by the representatives of both sides and have also perused the orders of the authorities below. The Revenue has assailed the findings of Commissioner of Income Tax (Appeals) directing the Assessing Officer to exclude freight on export and insurance from the export turnover as well as total turnover to compute deduction u/s.10B and restricting disallowance u/s.14A to 0.5% of the dividend income.
4. As far as the first issue u/s10B is concerned, it is a well settled law that whatever is to be reduced from export turnover has to be reduced from total turnover as well. The Special Bench of the Tribunal in the case of M/s. Sak Soft Ltd (supra) has laid down this :- 4 -: I.T.A.No.429/Mds/2014 .
principle which has been consistently followed. Keeping in view the decision of Special Bench, we do not find any infirmity in the order of Commissioner of Income Tax (Appeals) on the issue.
5. In the second ground of appeal, the Revenue is aggrieved against restricting of disallowance u/s14A to 0.5% of dividend income. A perusal of the impugned order shows that the assessee has made investments of over 24 Crore yielding tax free income of 1,21,22,449/- for the assessment year under consideration. The Hon'ble Bombay High Court in the case of Godrej and Boyce Manufacturing Co. Ltd vs. DCIT (328 ITR 81) has held that the provisions of Rule 8D are applicable from assessment year 2008-09 onwards. Thus, the provision of Rule 8D cannot be applied in the present assessment year i.e. 2006-07. However, disallowance u/s.14A has to be made keeping in view huge investments made by the assessee. The Commissioner of Income Tax (Appeals) has made disallowance at the rate of 5% of dividend received by the assessee for assessment year under consideration. The contention of the Revenue that Commissioner of Income Tax (Appeals) has made disallowance of 0.5% is wrong. The Commissioner of Income Tax :- 5 -: I.T.A.No.429/Mds/2014 .
(Appeals) has taken a fair and reasonable view. We do not find any reason to interfere with the impugned order.
6. In result, the appeal of the Revenue is dismissed.
Order pronounced on Friday, the 09th of May, 2014, at Chennai.
Sd/- Sd/-
(ए. मोहन अलंकामणी) ( वकास अव थी)
(A.MOHAN ALANKAMONY) (VIKAS AWASTHY)
लेखा सद य/ ACCOUNTANT MEMBER या यक सद य /JUDICIAL MEMBER
दनांक/Dated:09.05.2014.
K.V
आदे श क त ल प अ े षत/Copy to: 1. अपीलाथ /Appellant
2. यथ / Respondent
3. आयकर आयु त (अपील)/CIT(A)
4. आयकर आयु त/CIT
5. वभागीय त न ध/DR
6. गाड फाईल/GF.
:- 6 -: I.T.A.No.429/Mds/2014 .