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Income Tax Appellate Tribunal, JODHPUR BENCH, JODHPUR
Before: SHRI PAVAN KUMAR GADALE & DR. DIPAK P. RIPOTE
ORDER
PER DR. DIPAK P. RIPOTE, AM:
This is an appeal filed by the assessee against the order of ld. Commissioner of Income Tax (Appeals), Ajmer dated 06th June, 2018 emanating from assessment order under section 143(3) passed by ITO, Ward-4, Bhilwara on 30.11.2017. The assessee has raised the following grounds of appeal:-
“1. On the facts and in the circumstances of the case and in law, the Hon'ble CIT (A) erred in confirming the addition of Rs. 1,63,315/- by invoking the provisions of Section 14A read with Rule SD of the Income Tax Act 1961 without appreciating the fact that the assessee company has not earned any exempt income during the year under consideration and has not brought out any evidences on record which substantiates that it has incurred any expenditure for earning any exempt income.
Penalty U/s 271(1)(C) of IT Act1961 so proposed by A.O. is unlawful and unjustified as additions made are not based on the basis of the facts and hence should not be imposed. The assessee has consciously not made any /JODH/2020 Prime Suitings Pvt. Ltd. concealment and furnished inaccurate particulars and has no mensrea”
2. None appeared for the assessee. However, the assessee has filed a written submission and requested to consider the written submission.
Ld. DR supported the order of the Lower Authorities. Findings & Analysis 4. In this case, the only issue involved is disallowance under section 14A r.w.r. 8D of the Act. It has been submitted by the assessee in written submission that during the year there was no exempt income earned by the assessee. The said fact is mentioned in the assessment order also. Thus, it is an admitted fact that assessee has not earned any exempt income during the year. The Hon’ble Bombay High Court in the case of PCIT vs. Ballarpur Industries Ltd., in of 2016 has held that in absence of exempt income, disallowance under section 14A cannot be made. The Hon’ble Delhi High Court in the case of Cheminvest Ltd. vs. CIT 378 ITR 33 (Del) has also held that section 14A will not apply when exempt income was not earned during the year. 5. In the case under consideration, it is an admitted fact that no exempt income was earned by the assessee during the year. Therefore, respectfully following the Hon’ble High Courts (supra), it is held that disallowance under section 14A is unwarranted. 2 /JODH/2020 Prime Suitings Pvt. Ltd. Accordingly, Ground No. 1 is allowed. 6. Ground no. 2 is consequential in nature and needs no adjudication. Accordingly, Ground No. 2 is dismissed. 7. In the result, the appeal of the assessee is partly allowed. Order pronounced on 17th August, 2023.