TMI Blog2019 (4) TMI 411X X X X Extracts X X X X X X X X Extracts X X X X ..... sumed income. See M/s. Redington (India) Ltd. Versus ACIT [2017 (1) TMI 318 - MADRAS HIGH COURT] - Decided against revenue - I.T.A. No.2995/Chny/2018 - - - Dated:- 7-3-2019 - Shri George Mathan, Judicial Member And Shri S. Jayaraman, Accountant Member For the Appellant : Mr. B.Sagadevan, JCIT For the Respondent : Mr. Rajiv Raghav Menon, Advocate ORDER PER S.JAYARAMAN, AM: The Revenue filed this appeal against the order of Commissioner of Income Tax (Appeals)-15, Chennai, in ITA No.398/2016-17 CIT(A)-15 dated 25.07.2018 for the assessment year 2014-15. 2. The Revenue filed an affidavit pleading to condone two days delay in filing of appeal. After hearing both the parties, we condone the delay in filing of app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2016 for the A.Y. 2012-13 in the assessee s own case decided in favour of the assessee. 3.1. The Ld. CIT(A) failed to appreciate that the Revenue has filed an appeal against the order of the Hon ble Tribunal before the Hon ble High Court Madras, which is pending. 4. The Ld. DR presented the case on the lines of the grounds of appeal. Per contra, the Ld. AR supported the order of the Ld. CIT(A). 5. We heard the rival submissions and gone through the relevant material. On the above issues, the relevant portion of the order of this Tribunal in ITA No.2827/Mds/2016 dated 29.03.2017 in the assessee s case is extracted as under:- 3. We have heard Shri Shiva Srinivas, the Ld. Departmental Representative and Shri R. Sivaraman, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of Income-tax Act. However, on appeal by the assessee, the CIT(Appeals) allowed the claim of the assessee on the ground that no dividend income was earned during the year under consideration. According to the Ld. D.R., earning of dividend income is immaterial when the expenditure was computed under Rule 8D(2). When the assessee borrowed funds and paid interest, definitely a part of expenditure incurred by the assessee has to be relatable to earning of dividend income. Moreover, the salary paid to managerial staff for taking decision to invest the money, a part of salary paid to them relates to expenditure for earning the income. Therefore, according to the Ld. D.R., the CIT(Appeals) is not justified in allowing the claim of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration, the contention of the Ld. D.R. is that irrespective of the income, the expenditure has to be computed as per the method prescribed under Rule 8D(2). 9. We have carefully gone through the Rule 8D(2) of the Incometax Rules, 1962, which reads as follows:- METHOD FOR DETERMINING AMOUNT OF EXPENDITURE IN RELATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME (1) Where the Assessing Officer having regard to the accounts of the assessee of the previous year, is not satisfied with- (a) the correctness of the claim of expenditure made by the assessee ; or (b) the claim made by the assessee that no expenditure has been incurred in relation to income which does not form part of the total income under the Act for such previous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appearing in the balance-sheet excluding the increase on account of revaluation of assets but including the decrease on account of revaluation of assets. 10. We have also carefully gone through the judgment of Madras High Court in Redington (India) Ltd. (supra). The Madras High Court has observed at paragraphs 14 and 15 as follows:- 14. Nothing much turns on the use of the word includable and the phrase under the Act in s.14A and we are not persuaded to accept the emphasis laid or the interpretation of the same by the Revenue. An assessment in terms of the Income-tax Act is specific to an assessment year and related previous year. S.4 of the Act, which imposes the charge to tax reads thus: Charge of income-tax 4. (1) Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. v. CIT (1997) 225 ITR 802/91 Taxman 340 (SC). The language of s.14A (1) should be read in that context and such that it advances the scheme of the Act rather than distort it. 11. In view of the judgment of Madras High Court, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. 12. The next issue arises for consideration is computation of book profit under Section 115JB of the Act. 13. We have heard Shri Shiva Srinivas, the Ld. Departmental Representative and Shri R. Sivaraman, the Ld. counsel for the assessee. The CIT(Appeals), by following the order of this Tribunal, deleted the addition made by the Assessing Officer. In fact, the CIT(Appeals) rep ..... X X X X Extracts X X X X X X X X Extracts X X X X
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