THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(3) Vs. M/S. CHETTINAD LOGISTICS PVT. LTD.
INCOME TAX APPELLATE TRIBUNAL
The Assistant Commissioner Of Income Tax, Company Circle I(3)
M/S. Chettinad Logistics Pvt. Ltd.
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Vikas Awasthy, Member (J) -
(1.) THE appeal has been filed by the Revenue against the order of Commissioner of Income Tax (Appeals) -II, Chennai, dated 25.10.2013 relevant to the assessment year 2006 -2007.
(2.) THE assessee is a private limited company engaged in the business of clearing & forwarding, manufacturing, trading and ship management services. The assessee filed its return for the assessment year 2006 -07 on 30.12.2006 declaring its income as Rs. 7,06,89,035/ -. During the course of scrutiny assessment, the Assessing Officer made certain addition/disallowance in the income returned by the assessee. In return of income the assessee had claimed deduction u/s. 10B. The Assessing Officer observed that the assessee had incurred expenditure of Rs. 79,15,484/ - on freight for delivery of goods outside India and excluded the same from export turnover without reducing the same from total turnover. The Assessing Officer further made disallowance u/s. 14A r.w. Rule 8D to the tune of Rs. 12,34,799/ -. Aggrieved against the assessment order dated 11.12.2008, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals).
The Commissioner of Income Tax (Appeals) directed the Assessing Officer to exclude freight expenses from export turnover as well as from total turnover in accordance with the decision of the Special Bench of Tribunal in the case of ITO vs. M/s. Sak Soft Ltd. reported as : 313 ITR (AT) 353. As regards disallowance u/s. 14A, the Commissioner of Income Tax (Appeals) held that the provisions of Rule 8D are not applicable in the assessment year under consideration and thus made disallowance of 5% of dividend income.
Now the Revenue has come in appeal assailing the order of Commissioner of Income Tax (Appeals).
We have heard the submissions made by the representatives of both sides and have also perused the orders of the authorities below. The Revenue has assailed the findings of Commissioner of Income Tax (Appeals) directing the Assessing Officer to exclude freight on export and insurance from the export turnover as well as total turnover to compute deduction u/s. 10B and restricting disallowance u/s. 14A to 0.5% of the dividend income.
(3.) AS far as the first issue u/s. 10B is concerned, it is a well settled law that whatever is to be reduced from export turnover has to be reduced from total turnover as well. The Special Bench of the Tribunal in the case of M/s. Sak Soft Ltd (supra) has laid down this principle which has been consistently followed. Keeping in view the decision of Special Bench, we do not find any infirmity in the order of Commissioner of Income Tax (Appeals) on the issue.;
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