Commissioner Of Income Tax vs M/S.Sundaram Clayton Ltd
2021 Latest Caselaw 16283 Mad

                                                                                TCA.No.836 of 2015


                                   IN THE HIGH COURT OF JUDICATURE AT MADRAS

                                                 DATED: 10.08.2021

                                                      CORAM :

                                   The Honourable Mr.Justice T.S.SIVAGNANAM
                                                        and
                           The Honourable Ms.Justice SATHI KUMAR SUKUMARA KURUP

                                            Tax Case Appeal No.836 of 2015


                     Commissioner of Income Tax,
                     Chennai.                                                  ...Appellant

                                                          Vs

                     M/s.Sundaram Clayton Ltd.,
                     Jayalakshmi Estates,
                     No.29, Haddows Road,
                     Nungambakkam,
                     Chennai – 600 006.
                     [PAN: AAACS4920J]                                         ...Respondent



                             APPEAL under Section 260A of the Income Tax Act, 1961 against the

                     order dated 22.01.2015 made in ITA.No.2611/Mds/2014 on the file of the

                     Income Tax Appellate Tribunal, 'C' Bench, Chennai for the assessment year

                     2007-2008.



                     1/8



https://www.mhc.tn.gov.in/judis/
                                                                                        TCA.No.836 of 2015


                                     For Appellant     :   Mr.J.Narayansasamy

                                     For Respondent :      Mr.R.Vijayaraghavan
                                                           for M/s.Subbaraya Aiyar Padmanabhan

                                                       JUDGMENT

(Delivered by T.S.Sivagnanam,J)

The appeal has been filed by the revenue under Section 260A of the

Income Tax Act ['the Act' for brevity] against the order passed by the

Income Tax Appellate Tribunal [hereinafter referred to as "the Tribunal"],

'C' Bench, Chennai in I.T.A.No.2611/Mds/2014 dated 22.01.2015 for the

assessment year 2007-2008.

2.The appeal was admitted on 28.09.2015 to decide the following

substantial questions of law:

“(i) Whether on the facts and in the

circumstances of the case, the Tribunal was right in

directing the Assessing Officer to accept the disallowance

arrived by the assessee since the disallowance of 2% of the

dividend income as expenditure was approved by the

jurisdictional court? and

https://www.mhc.tn.gov.in/judis/ TCA.No.836 of 2015

(ii) Whether on the facts and in the

circumstances of the case, the Tribunal was right in

holding that the computation of expenditure cannot be

made by applying Rule 8D for the purpose of arriving at

the eligible exemption of dividend income by invoking the

provisions of Section 14A for the present assessment

year?”

3.We have elaborately heard Mr.J.Narayanasamy, learned senior

standing counsel appearing for the appellant/revenue and

Mr.R.Vijayaraghavan, learned counsel appearing for the

respondent/assessee.

4.The question involved in the instant case is with regard to the

disallowance to be made under Section 14A of the Act. The present round

of litigation is the second round as the earlier round of litigation which

travelled up to the Tribunal, the Tribunal allowed the appeal and remanded

the matter for fresh consideration. Pursuant to which, an order was passed

https://www.mhc.tn.gov.in/judis/ TCA.No.836 of 2015

by the Assessing Officer fixing the disallowance under Section 14A at

Rs.3,96,16,351/-. Aggrieved by the same, the assessee preffered an appeal

before the Commissioner of Income Tax [Appeals]-VI [CIT(A)], Chennai,

who by order dated 30.07.2014 allowed the appeal filed by the assessee on

this issue by holding that the Assessing Officer while making the

disallowance under Section 14A of the Act has omitted to reduce the

disallowance under Section 14A of the Act already made as per the earlier

assessment order. In view of the same, the Assessing Officer was directed

to re-compute the correct disallowance. So far as the quantum of

disallowance is concerned, the CIT(A) fixed at Rs.40,53,203/- as against

Rs.3,96,16,351/- adopted by the Assessing Officer. The reasons have been

given by the CIT(A) for arriving at such a conclusion which we find to be

cogent and after taking note of all the factual issues. The revenue

challenged the said order before the Tribunal and the Tribunal took note of

the decision in the case of M/s.Simpson & Co. Ltd., vs. DCIT

[T.C.A.No.2621 of 2006 dated 15.10.2012] and restricted the disallowance

at Rs.33,56,354/- which was disallowed by the assessee himself. The

revenue is before us challenging the correctness of the said order.

https://www.mhc.tn.gov.in/judis/ TCA.No.836 of 2015

5.With regard to the percentage of disallowance which can be fixed

prior to the amendment, was considered in several decisions. One such

decision is in the case of EID Parry vs. The Assistant Commissioner of

Income Tax, Chennai [T.C.A.No.2511 of 2006 dated 30.10.2012] which

was followed by the Hon'ble Division Bench in the case of the

Commissioner of Income Tax vs. M/s.Tube Investments of India Ltd.,

[T.C.A.No.524 of 2007 dated 17.12.2014]. The operative portion of the

judgment reads as follows:

“8.It is brought to the notice of this Court that the 2nd question of law has also been decided against the Revenue by this Court in the decision reported in EID Parry – vs- The Asst. Commissioner of Income Tax, Chennai [T.C.(A).No.2511/06 dated 30.12.2012]. In the said judgment, this Court considered two questions of law as under:

(i) Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in upholding the estimate of expenses at 2% deemed to have been incurred in respect of dividend income, when no such expenses

https://www.mhc.tn.gov.in/judis/ TCA.No.836 of 2015

were incurred?

(ii) Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in upholding the addition of the estimate expenses at the rate of 2% on dividend income while computing book profits, when no such expenses were incurred?

and answered the same as under:

“2.As far as first and second questions of law are concerned, learned counsel for the assessee fairly submits that the same is covered against the assessee by reason of decision of this Court renderd in assessee's own case in T.C.No.2287 of 2006 dated 08.08.2012. Accordingly, the above two questions of law are answered against the assessee.” The said judgment squarely applies to the facts of the present case and, the 2nd question of law is answered accordingly.”

6.Thus, we find that the Tribunal had followed the decision of the

jurisdictional High Court and fixed the disallowance at Rs.33,56,354/-

https://www.mhc.tn.gov.in/judis/ TCA.No.836 of 2015

which was already disallowed by the assessee. Therefore, we find that there

is no question of law, much less the substantial question of law arisen for

consideration in this appeal. Accordingly, the tax case appeal is dismissed.

No costs.

                                                                       (T.S.S.,J.)    (S.S.K,J.)
                                                                              10.08.2021
                     Index: Yes/No
                     Internet:Yes/No

Speaking Judgment/Non speaking Judgment cse

To

The Income Tax Appellate Tribunal, 'C' Bench, Chennai.

https://www.mhc.tn.gov.in/judis/ TCA.No.836 of 2015

T.S.SIVAGNANAM,J.

AND SATHI KUMAR SUKUMARA KURUP,J.

cse

TCA.No.836 of 2015

10.08.2021

https://www.mhc.tn.gov.in/judis/