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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI INTURI RAMA RAO, AM & SHRI S. S. VISWANETHRA RAVI, JM
ORDER
PER INTURI RAMA RAO, AM:
This is an appeal filed by the assessee directed against the order of ld. Commissioner of Income Tax (Appeals)- 9, Pune (‘CIT(A)’ for short) dated 30.10.2017 for the assessment year 2013-14.
The appellant raised the following grounds of appeal :- “A) The learned assessing officer has erred in making an addition of Rs.3,86,352/- on account of disallowance u/s 14A read with Rule- 8(D), while the appellant company has not received any sum by way of exempt income. Further, the appellant company has not made any additional investments generating exempt income during the year. The company has not utilized any borrowed funds for investments. On the similar facts, the Learned Commissioner of Income Tax (Appeals) has deleted the disallowance for A.Y. 2009-10 & 2011-12. The same has been upheld by ITAT (Pune Bench) for A.Y. 2009-10. Therefore, in the light of various judicial decisions, this disallowance being unwarranted needs cancellation. B) The Appellant craves leave to add, modify, expand the ground(s) of appeal and lay/produce the evidence(s) at the time of hearing.”
3. Briefly, the facts of the case are that the appellant is a company incorporated under the provisions of the Companies Act, 1956 and is engaged in the business of development of integrated township known as “Magarpatta City” at Hadapsar, Pune. The appellant company filed the return of income for the assessment year 2013-14 through electronic mode on 29.11.2013 declaring total income of Rs.32,07,26,150/-. Against the said return of income, the assessment was completed by the Dy. Commissioner of Income Tax, Circle-14, Pune (‘the Assessing Officer’) vide order dated 21.03.2016 passed u/s 143(3) of the Income Tax Act, 1961 (‘the Act’) at a total income of Rs.37,14,49,320/-. While doing so, the Assessing Officer treated the income received from letting out its business premises “Cybercity” of Rs.1,33,25,92,479/- under the head ‘income from house property’ as against the claim of the assessee that it should be assessed under the head ‘income from business’ and made addition of Rs.3,86,352/- u/s 14A of the Act.
Being aggrieved by the above assessment order, an appeal was preferred before the ld. CIT(A), who vide his impugned order held the issue of assessment of licence fee received from “Cybercity” as ‘income from business’, however, confirmed the disallowance u/s 14A of the Act rejecting the explanation of the appellant that the provisions of section 14A of the Act have no application in the absence of any exempt income. 5. Being aggrieved by the decision of the ld. CIT(A), the appellant is before us in the present appeal. 6. The ld. AR, during the course of hearing, filed the annual report in attempt to show that no exempt income had been received by the appellant. He further submitted that in the absence of any exempt income, the provisions of section 14A of the Act have no application. In support of this, he relied on the Jurisdictional High Court’s decision in the case of CIT vs.
M/s. Sociedade De Fomento Industrial Pvt. Ltd. in Tax Appeal No.34 of 2014 order dated 06.11.2020.
On the other hand, ld. Sr. DR placed reliance on the orders of the lower authorities.
We heard the rival submissions and perused the material on record. In the present case, the only issue relates to the addition u/s 14A of the Act. It is contention of the appellant that the appellant had not earned any exempt income and in the absence of any exempt income, the provisions of section 14A of the Act cannot be invoked. This fact was verified by us on pursing the annual audited financial statement for the year under consideration, this fact had also not been disputed by the departmental authorities. Now, it is settled position of law that in the absence of any exempt income, resort to the provisions of section 14A of the Act cannot be made. The various High Courts in catena of decisions held the same view and reference can be made to the following decisions :- (i) Redington (India) Ltd. vs. Addl. CIT, 392 ITR 633 (Mad); (ii) CIT vs. Celebrity Fashion Ltd., 428 ITR 470 (Mad); (iii) CIT vs. Chettinad Logistics Pvt. Ltd., 80 taxmann.com 221 (Mad) (Against which the SLP filed by the Department was dismissed by the Hon’ble Supreme Court in the case of CIT vs. Chettinad Logistics P. Ltd., 95 taxmann.com 250 (SC); (iv) CIT vs. Continuum Wind Energy (India) Pvt. Ltd., 430 ITR 52 (Mad); (v) PCIT vs. Kohinoor Project Pvt. Ltd., 425 ITR 700 (Bom.); (vi) Cheminvest Ltd. vs. CIT, 378 ITR 33 (Delhi); (vi) MAN Infraprojects Ltd. (ITA No.259 of 2017 dated 09.04.2019) (Bom.).
The Jurisdictional High Court in the case of PCIT vs. Kohinoor Project Pvt. Ltd. (supra) placing reliance on the decision of the Hon’ble Delhi High Court in the case of Cheminvest Ltd. vs. CIT (supra) and its own decision in the case of MAN Infraprojects Ltd. (supra) held as follows :-