Income Tax Appellate Tribunal - Chandigarh
Haryana Financial Corporation, ... vs Acit, Panchkula on 31 August, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH, CHANDIGARH
BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER
AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER
ITA No.955/Chd/2016
(Assessment Year : 2011-12)
The D.C.I.T., Vs. Haryana Financial Corporation,
Panchkula Circle, Sector 17A,
Panchkula. Chandigarh.
P A N : AAACH4685B
And
ITA No.962/Chd/2016
(Assessment Year : 2011-12)
Haryana Financial Corporation, Vs. The D.C.I.T.,
Sector 17A, Panchkula Circle,
Chandigarh. Panchkula.
P A N : AAACH4685B
(Appellant) (Respondent)
Assessee by : Shri B.K. Nohria
Department by : Shri Manjit Singh, DR
Date of hearing : 16.08.2017
Date of Pronouncement : 31.08.2017
ORDER
Per Sanjay Garg, Judicial Member :
Th e a b o v e c a pt i o n e d a p pe a l s ha v e b e e n f i l e d b y t h e a s s e s s e e a nd t he R e v e n u e a g a i ns t t h e o r d e r p ass e d b y t h e L d . CI T( A p p e a l s ) , P a n c h k ul a d ate d 2 9 . 0 6. 2 0 1 6 r e l a t i n g t o a s s e s s m e nt y e a r 2 0 1 1 - 1 2 .
2. Th e common i ss u e raised in both the a p pe al s is whether the di sal l o wance of e xpendi ture rel atabl e to earni ng of ta x e xempt i ncome as provi ded under the provi si ons 2 o f s e c t i o n 1 4 A of t h e I n c om e Ta x A c t , 1 9 61 ( i n s h o r t ' t h e A c t ' ) ca n n ot e x ce e d t h e t o t al t a x e x e m p t i n c om e e a r n e d by t h e a s s e ss e e .
3. A t t h e o u t s et , b ot h t h e l d r e p re s en t a t i v e s of t h e pa r t i e s h a v e f a i r l y a dm i t t e d t h at t h e i s su e i s s qu a r e l y co v e r e d b y h e d e c i s i o n o f t he Tr i b u n a l i n t h e o w n c a s e o f t h e a s s e s s e e f o r a s s es s m e n t y e a r 2 0 1 0- 1 1 v i d e I TA N o . 7 6 3 /C h d / 2 0 1 5 , o r d e r d at e d 1 0.8 . 2 0 1 6 wh e r e i n o n t h e i d e n t i ca l i s s u e th e Tr i b u n a l h a s d i re c t e d t h e A s s e s si n g O f f i ce r t o res t r i c t t he d i s a l l o w an c e u /s 1 4 A o f t he A c t u p t o t h e e x t e n t o f e x e m p t i n c o m e e ar n e d by t h e a s se s s e e du r i n g t h e y e a r .
4. W e m a y n o t e h e re t h a t t h e H o n ' b l e D e l h i H i g h C o ur t i n t h e c a s e o f C hem i n v e s t L td . v s . C I T ( 2 0 1 5 ) 6 1 ta x m a n . c o m 1 1 8 h a s h e l d t ha t s e c t i o n 1 4 A w i l l n o t ap p l y i f n o e x e m p t income is r e c ei v e d or r e c e i v ab l e during the r e l e v a nt p r e v i o u s ye a r a nd t h a t t h e e x p r e ss i o n ' d o e s n o t f or m p a r t of t h e t o ta l i n c o m e' , i n s e c t i o n 14 A o f th e Ac t en v i s a g e s th a t t h e r e s h o u l d b e a n a c t u a l r e c ei p t o f i n c o m e w hi c h i s n o t i n c l u d e d i n th e t o t a l i n c om e d ur i n g t h e r e l e v a nt p r e v i o u s year f or the purpose of di sa l l o w i n g any e x p e n d i t u re i n c u r r e d i n re l at i o n t o t h e s a i d i n c o m e . A l m o st i d e n t i c a l i s s u e h as b e e n ta k e n b y t h e H on' b l e A l l a h a b a d Hi g h C o u rt i n t h e c a se o f "C I T K a n p u r v s . M / s . S h i va m M o t o r s P vt . L t d . " i n I TA N o .8 8 o f 2 0 1 4 v i d e o r d e r d a t e d 0 5. 05 . 2 0 1 4 ; b y t h e H o n 'b l e Gu ja r a t H i g h C ou r t i n t he c a se o f " CI T v s . 3 C o r r t e c t h E n e r g y P v t . L t d. " i n I TA N o . 2 3 9 of 2 0 1 4 v i d e o r d er d a t e d 2 4 . 0 3. 2 0 14 , b y t h e H o n ' b l e B o m b a y H i g h Co u r t i n t he c a s e o f " CI T v s . M / s . D e l i t e E n te r p r i s e s " i n I TA N o . 1 1 0 o f 2 0 0 9 v i de o r d er d a t e d 26 . 0 2 . 09 a n d b y t h e ju ri s d i c t i o na l Punjab & H a r ya n a High Court in the case of CIT Vs. L a k h a n i M a r k et i n g I n c. ( 2 0 1 4 ) 49 Ta x m a n n . c o m 2 5 7 ( P & H ) F u r t h e r i t ma y be n o t e d t h a t th e H o n ' b l e D e l h i Hi g h C o u r t i n t h e c as e o f Jo i n t I n v es t m e n t P r i v a t e Li m i t e d re p o r t e d i n 3 7 2 I TR 6 9 4 h a s h e l d t h a t s e c ti on 1 4 o f t h e A c t o r r u l e 8 D c a n n o t b e i nt e rp r e t e d s o a s t o m e a n t h a t t he e n t i r e t a x e x e m p t i n c o me o f t h e a s s e s s e e i s t o b e d i s a l l o we d . Th a t t h e w i n d o w f o r d i sa l l o w a n c e i s i n di ca t e d i n S e c t i on 1 4 A , a n d i s o n l y t o t h e e x ten t o f d i s a l l o w i ng e x p e n d i t ur e i n c u r r e d b y t h e a s s e s s e e i n r e l a t i o n t o t h e t a x e x e m p t i n co m e . Th i s p r o p o r t i on or portion of the ta x exempt i n c om e surely c a n n o t s wa l l o w th e e n t i r e a m o u nt o f t a x e x e m p t i nc o m e .
5. In view of the above discussion, this question is d e c i d e d i n f a vou r o f t he a s se ss e e b y ob s e r v i ng t h a t t h e d i s a l l o w an c e o f e x p e n d i t ur e r e l at a b l e t o e a r n i ng t a x e x e m pt i n c o m e as p r o vi d e d u n d e r t h e pr o v i s i o n s o f se c ti o n 1 4 A o f t h e A c t, c a n n o t e x c e e d t h e t o t a l t a x e x e m p t i n c om e e a r ned by the a s s es s ee . Th e Assessing O f f i c er is a c c o r d i n gl y d i r e c t e d t o r es t r i c t t h e di s a l l o w an c e u / s 1 4 t o t he e x t e n t o f e x e m p t i nc o m e ea r n e d b y t h e a sse s s e e .
4
6. I n t he r e s u l t, t he a p p e a l o f t h e as s e s s e e i s a l l o w ed a n d t h e a p p e al o f th e R e v e n u e i s d i smi s s e d .
O r d e r p r on o u n c ed i n t h e o p e n cou r t o n 3 1. 8 . 2 0 17.
Sd/- Sd/-
(ANNAPURNA GUPTA) (SANJAY GARG)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated : 31 s t August, 2017
*Rati*
Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A)
4. The CIT
5. The DR
Assistant Registrar,
ITAT, Chandigarh