TCA.No.713 of 2018 IN HIGH COURT OF JUDICATURE AT MADRAS DATED : 29.9.2020 CORAM HONOURABLE MR.JUSTICE T.S.SIVAGNANAM and HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN T.C.A.No.713 of 2018 Commissioner of Income Tax, Corporate Circle-3, Chennai ...Appellant Vs 1.M/s.Zylog Systems Ltd., Chennai-34. 2.The Official Liquidator, High Court, Madras, Corporate Bhavan, II Floor, No.29, Rajaji Salai, Chennai-1. (R2 was suo motu impleaded vide order of court dated 29.1.2020 by NKKJ & PVJ) ...Respondents APPEAL under Section 260A of Income Tax Act, 1961 against order dated 25.4.2018 passed by Income Tax Appellate Tribunal, Chennai B Bench in I.T.A.No.2048/Chny/2017 for assessment year 2011-12. For Appellant : Mr.M.Swaminathan, SSC assisted by Mrs.V.Pushpa, SC For Respondents : No appearance 1/6 http://www.judis.nic.in TCA.No.713 of 2018 Judgment was delivered by T.S.SIVAGNANAM,J This appeal, filed by Revenue under Section 260A of Income Tax Act, 1961 ( Act for brevity), is directed against order dated 25.4.2018 passed by Income Tax Appellate Tribunal, Bench B Chennai (for short, Tribunal) in I.T.A.No.2048/Chny/ 2017 for assessment year 2011-12. 2. above appeal has been admitted on 19.11.2018 on following substantial question of law: Whether Tribunal was right and justified in holding that disallowance under Section 14A read with Rule 8D should be restricted to extent of exempted income especially when neither Section 14A nor Rule 8D provides for any such restriction? 3. assessee filed their return of income for assessment year under consideration namely AY 2011-12 disclosing total income of Rs.1,50,46,75,014/-. case was selected for scrutiny, during which, Assessing Officer found that assessee was in receipt of dividend income of Rs.13,754/- and that assessee made investment of Rs.1,55,24,901/- in shares on 31.3.2012 whereas total investment as on 01.4.2011 was Rs.1,23,54,78,573/-. 4. Not being satisfied with claim that no expenditure was 2/6 http://www.judis.nic.in TCA.No.713 of 2018 incurred for investment during year for earning exempted income, Assessing Officer disallowed amount of Rs.3,64,27,793/- as per Rule 8D(2)(ii) of Income Tax Rules (for brevity, Rules) and another amount of Rs.69,70,172/- as per Rule 8D(2)(iii) of Rules and accordingly, assessment was completed by order dated 30.4.2015 under Section 143(3) read with Section 92CA of Act. 5. Aggrieved by said order dated 30.4.2015, assessee preferred appeal before Commissioner of Income Tax (Appeals)-13, Chennai-34, who partly allowed appeal by order dated 23.6.2017. As against said order dated 23.6.2017, Revenue preferred appeal before Tribunal and it was dismissed by impugned order. Challenging same, Revenue is before us. 6. We have elaborately heard Mr.M.Swaminathan, learned Senior Standing Counsel assisted by Mrs.V.Pusha, learned Standing Counsel appearing for appellant Revenue. respondents were served. However, none appears for respondents. 7. Subsequently, it is brought to our notice by learned Senior Standing Counsel that first respondent assessee is in process of being liquidated and Hon'ble Mr.Justice S.Rajeswaran, former Judge of this Court has been appointed as 3/6 http://www.judis.nic.in TCA.No.713 of 2018 Administrator and one Mr.S.Ulaganathan, advocate is appearing on behalf of Hon'ble Administrator. In order to give effective disposal, learned Official Liquidator was suo motu impleaded as second respondent by earlier Division Bench by order dated 29.1.2020, notice has been served and his name has been printed in cause list. 8. As we have been informed that Hon'ble Administrator is now looking after affairs of assessee company, it is fit and proper that learned Administrator is heard in matter. We find that before Tribunal, none appeared for assessee. However, Tribunal recorded that it had heard rival submissions, which would mean that both parties were heard. However, preamble portion of impugned order shows that none represented assessee. Since first respondent assessee is under liquidation and Hon'ble Administrator has been appointed and he is also represented through counsel, we are of considered view that Tribunal can decide matter afresh on merits after giving opportunity to Hon'ble Administrator represented by his counsel to put forth their submissions. For such reason alone, we are inclined to interfere with impugned order. 4/6 http://www.judis.nic.in TCA.No.713 of 2018 9. Accordingly, above tax case appeal is allowed, impugned order is set aside and matter is remanded to Tribunal. Tribunal is directed to issue notice to said Mr.S.Ulaganathan, learned counsel, office of Official Liquidator, II Floor, Corporate Bhavan, Rajaji Salai, Chennai-1, representing Hon'ble Administrator for M/s.Zylog Systems Limited and after hearing Revenue as well as Hon'ble Administrator, Tribunal is directed to pass fresh orders on merits and in accordance with law. Consequently, substantial question of law framed is left open. 29.9.2020 To Income Tax Appellate Tribunal, Chennai B Bench RS 5/6 http://www.judis.nic.in TCA.No.713 of 2018 T.S.SIVAGNANAM,J AND V.BHAVANI SUBBAROYAN,J RS TCA.No.713 of 2018 29.9.2020 6/6 http://www.judis.nic.in Commissioner of Income-tax, Corporate Circle-3, Chennai v. Zylog Systems Ltd. / Official Liquidator, High Court Madras, Chennai