BABANRAO DAGADU SHELKE,PUNE vs. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE - 6, PUNE

PER R.S. SYAL, VP :

This appeal by the assessee arises out of the order passed by the CIT(A)-4, Pune on 06-06-2017 in relation to the assessment year 2013-14. 2. The only issue raised in this appeal is against the confirmation of disallowance of Rs.850,066/- made by the Assessing Officer (AO) u/s.14A of the Income-tax Act, 1961 (hereinafter also called ‘the Act’).

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on which liability to pay interest was incurred and certain amounts

were invested in earning tax free dividend income. He, therefore,

computed the disallowance u/s.14A r.w.Rule 8D at Rs.8,50,066/-.

The assessee contended before the ld. CIT(A), as has been recorded on page 10 para 5.2.3 of the impugned order, that no exempt income was earned during the year. The ld. CIT(A)

echoed the assessment order on this point.

through the relevant material on record. It is seen that the assessee

specifically raised the issue before the ld. CIT(A) that no exempt

income was earned. The same was not controverted. Still the authorities proceeded to make and confirm the disallowance

u/s.14A. In the absence of any finding to this effect, we have proceeded to examine the contention. A copy of the assessee’s

Profit and loss account has been placed at page 4 of the paper

book, which shows the figure of net profit at Rs.2,46,98,881/-. In the computation of income, at page 2 of the paper book, same

figure has been adopted for computing income from Business and profession. Thus, it is evident that the entire income from business, as shown in the Profit and loss account, has been 3 Babanrao Dagadu Shelke

considered as taxable forming part of business profits of the assessee and there is no exempt income.

(2015) 378 ITR 33 (Del) has held that if there is no exempt income,

there can be no question of making any disallowance u/s 14A of the Act. Similar view has been taken by the Hon'ble Delhi High

Court in CIT vs. Holcim India P. Ltd. (2014) 90CCH 081-Del-HC.

More recently the Hon’ble jurisdictional High Court in Pr. CIT VS.

Kohinoor Projects Pvt. Ltd. (2020) 425 ITR 700 (Bom) has held

that in the absence of any exempt income, there cannot be any disallowance of expenses u/s 14A of the Act. As the assessee in the instant case did not earn any exempt income, respectfully

following the precedent, we hold that no disallowance was called

for. The impugned order is overturned and the sustenance of the disallowance is deleted.

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आदेश क" क" "ितिलिप "ितिलिप अ"ेिषत अ"ेिषत/Copy of the Order is forwarded to: क" क" "ितिलिप "ितिलिप अ"ेिषत अ"ेिषत आदेश आदेश आदेश अपीलाथ" / The Appellant;

Date