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Income Tax Appellate Tribunal - Chennai

Eih Associated Hotels Ltd., Chennai vs Dcit Corporate Circle 2(1), Chennai on 4 December, 2019

             आयकर अपील य अ धकरण, 'बी'  यायपीठ, चे नई

               IN THE INCOME TAX APPELLATE TRIBUNAL
                        'B' BENCH, CHENNAI
 ी एन.आर.एस. गणेशन,  या यक सद य एवं  ी इंटूर रामा राव, लेखा सद य केसम&

        BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND
           SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER

                 आयकर अपील सं./ITA No.2831/chny/2017
                                      &
                           C.O. No.35/Chny/2018
                       (in I.T.A. No.2831/Chny/2017)
                  नधा)रण वष) /Assessment Year : 2007-08

The Deputy Commissioner of               M/s EIH Associated Hotels Ltd.,
Income Tax,                       v.     No.1/24, G.S.T. Road,
Corporate Circle - 2(1),                 Meenambakkam, Chennai - 600027.
Chennai - 600 034.
                                         PAN : AAACE 2125 M
       (अपीलाथ-/Appellant)                (Respondent & Cross-objector)

 अपीलाथ- क. ओर से/Appellant by : Shri AR.V. Sreenivasan, JCIT
 01यथ- क. ओर से/Respondent by :        None

       सन
        ु वाई क. तार ख/Date of Hearing          : 24.10.2019
       घोषणा क. तार ख/Date of Pronouncement : 04.12.2019


                             आदे श /O R D E R

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

The Revenue has filed the appeal against the order of the Commissioner of Income Tax (Appeals)-6, Chennai, dated 15.09.2017, for the assessment year 2007-08. The assessee has also filed cross-objection against the very same order of the CIT(Appeals). Therefore, we heard the appeal of the Revenue and 2 I.T.A. No.2831/Chny/17 C.O. No.35/Chny/18 the cross-objection of the assessee together and disposing the same by this common order.

2. Let's first take the Revenue's appeal. The first issue arises for consideration is disallowance made by the Assessing Officer under Section 14A of the Income-tax Act, 1961 (in short 'the Act').

3. It is not in dispute that there was no exempt income earned by the assessee during the year under consideration. The CIT(Appeals) placing his reliance on the judgment of Madras High Court in Redington (India) Ltd. v. Addl. CIT (2017) 392 ITR 633, has deleted the addition made by the Assessing Officer. This Tribunal is of the considered opinion that when the CIT(Appeals) has placed his reliance on the judgment of Madras High Court, which is binding on all the authorities in State, there is no error in the order of the CIT(Appeals). Even in respect of investments made in subsidiary company, there was no exempt income earned by the assessee. therefore, there is no question of any addition / disallowance with regard to expenditure. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.

C.O. No.35/Chny/18

4. The next issue arises for consideration is disallowance of bad debt to the extent of ₹1,21,967/-.

5. The only grievance of the Revenue is that this amount of ₹1,21,967/- was due from Ministry of External Affairs, therefore, it cannot be written off. The Income-tax Act does not say that the amount due from Government cannot be written off. What is to be seen is whether the assessee has written off the amount as irrecoverable. It is not in dispute that the assessee has in fact written off the above said amount due from Ministry of External Affairs. Therefore, this Tribunal is of the considered opinion that the claim of the assessee has to be allowed. In case, it was recovered subsequently, the same has to be taken as income of the assessee in the year in which it was recovered, subject to the above observation. This Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.

6. Now coming to the cross-objection filed by the assessee, the only issue raised in the cross-objection is with regard to leave encashment to the extent of ₹14,41,057/-.

C.O. No.35/Chny/18

7. The Assessing Officer as well as the CIT(Appeals) disallowed the provision for leave encashment on the basis of the judgment of Calcutta High Court in Exide Industries Ltd. v. Union of India (2007) 292 ITR 470. In the grounds of appeal, the assessee has raised an issue with regard to stay granted by Apex Court on the operation of the judgment of Calcutta High Court in Exide Industries Ltd. (supra). The Assessing Officer found that the stay was granted on 27.06.2007 by the Calcutta High Court and subsequent development was not available. The fact remains that the judgment of Calcutta High Court was stayed by the Apex Court and the appeal / SLP filed before the Apex Court is still pending. Therefore, for all practical purposes, it has to be construed that Section 43B(f) of the Act continued to be in the statute book. Since, admittedly, leave encashment was not paid by the assessee, the CIT(Appeals) has rightly confirmed the order of the Assessing Officer. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.

8. In the result, both the appeal of the Revenue as well as the cross-objection of the assessee stand dismissed. 5 I.T.A. No.2831/Chny/17 C.O. No.35/Chny/18

Order pronounced in the court on 4th December, 2019 at Chennai.

         sd/-                                     sd/-
       (इंटूर रामा राव)                        (एन.आर.एस. गणेशन)
    (Inturi Rama Rao)                           (N.R.S. Ganesan)
लेखा सद य/Accountant Member              या यक सद य/Judicial Member

चे नई/Chennai,
                   th
7दनांक/Dated, the 4 December, 2019.

Kri.


आदे श क. 0 त8ल9प अ:े9षत/Copy to:
             1. अपीलाथ-/Appellant
             2. 01यथ-/Respondent
             3. आयकर आयु;त (अपील)/CIT(A)-6, Chennai
             4. Principal CIT- 2, Chennai
             5. 9वभागीय 0 त न ध/DR
             6. गाड) फाईल/GF.