Income Tax Appellate Tribunal - Chennai
Ks Holdings Private Ltd, Chennai vs Ito, Corporate Ward 4(3), Chennai on 12 December, 2018
आयकर अपील
य अ धकरण, 'सी' यायपीठ, चे नई
IN THE INCOME TAX APPELLATE TRIBUNAL
'C' BENCH, CHENNAI
ी एन.आर.एस. गणेशन, या यक सद य एवं
ी अ ाहम पी.जॉज%, लेखा सद य केसम(
BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND
SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER
आयकर अपील सं./ITA No.65/Chny/2018
नधा%रण वष% /Assessment Year : 2014-15
M/s KS Holdings Private Limited, The Income Tax Officer,
Arihant Plaza, 3rd floor, v. Corporate Ward 4(3),
New No.193/232, Wall Tax Road, Chennai - 600 006.
Chennai - 600 003.
PAN : AAFCK 1594 D
(अपीलाथ-/Appellant) (./यथ-/Respondent)
अपीलाथ- क0 ओर से / Appellant by : Sh. Ajith Kumar Choradia, CA
./यथ- क0 ओरसे / Respondent by : Shri R. Clement Ramesh Kumar,
Addl.CIT
सन
ु वाई क0 तार
ख/Date of Hearing : 10.12.2018
घोषणा क0 तार
ख/Date of Pronouncement : 12.12.2018
आदे श /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) -8, Chennai, dated 25.10.2017 and pertains to assessment year 2014-15. 2 I.T.A. No.65/Chny/18
2. Sh. Ajith Kumar Choradia, the Ld. representative for the assessee, submitted that the only issue arises for consideration is disallowance of interest paid by the assessee on borrowed funds. Referring to the assessment order, the Ld. representative submitted that the Assessing Officer found that Section 115BBD of the Income-tax Act, 1961 (in short 'the Act') is not applicable to the facts of the case. However, she disallowed the claim of the assessee on the ground that there was no income earned by the assessee. According to the Ld. representative, admittedly, the assessee is an investment company and the borrowed funds were invested in the subsidiary company outside the country on Mauritius. It is also an admitted fact that no dividend was distributed or received, therefore, according to the Ld. representative, the expenditure has to be allowed while computing the taxable income.
3. On the contrary, Shri R. Clement Ramesh Kumar, the Ld. Departmental Representative, submitted that since no income was earned by the assessee on the investment, the interest paid by the assessee on the borrowed funds cannot be allowed.
4. We have considered the rival submissions on either side and perused the relevant material available on record. Admittedly, the 3 I.T.A. No.65/Chny/18 assessee is an investment company. The assessee borrowed funds to invest in a subsidiary company outside the country at Mauritius. It is also not in dispute that the assessee's subsidiary company at Mauritius has not declared any dividend or distributed any dividend. In those factual circumstances, the Assessing Officer found that since no income was earned by the assessee, the interest payment cannot be allowed. This Tribunal is of the considered opinion that when the assessee incurred expenditure, irrespective of the fact whether the assessee earned income or not, so long as the expenditure is for business purpose, it is to be allowed.
5. It is not the case of the Revenue that the interest payment is not for business. The Assessing Officer has disallowed the interest payment only on the ground that no dividend income was received from subsidiary company at Mauritius. This Tribunal is of the considered opinion that irrespective of the fact whether the assessee received dividend income from the subsidiary company at Mauritius or not, the payment of interest has to be allowed as business expenditure. Therefore, we are unable to uphold the orders of the authorities below. Accordingly, orders of both the 4 I.T.A. No.65/Chny/18 authorities below are set aside and the Assessing Officer is directed to allow the interest payment on the borrowed funds.
6. In the result, the appeal filed by the assessee is allowed.
Order pronounced in the court on 12th December, 2018 at Chennai.
sd/- sd/-
(अ ाहमपी.जॉज%) (एन.आर.एस. गणेशन)
(Abraham P. George) (N.R.S. Ganesan)
लेखा सद य/Accountant Member या यक सद य/Judicial Member
चे नई/Chennai,
th
7दनांक/Dated, the 12 December, 2018.
Kri.
आदे श क0 . त8ल9प अ:े9षत/Copy to:
1. अपीलाथ-/Appellant 2. ./यथ-/Respondent
3. आयकर आयु;त (अपील)/CIT(A)-8, Chennai
4. Principal CIT, Chennai-4, Chennai
5. 9वभागीय . त न ध/DR 6. गाड% फाईल/GF.