CREAMLINE DAIRY PROJECTS LIMITED,HYDERABAD vs. DY. COMMISSIONER OF INCOME TAX, CIRCLE-1(2), HYDERABAD

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ITA 937/HYD/2018Status: DisposedITAT Hyderabad06 May 2021AY 2014-153 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that Section 14A applies only to exempt income. Since the assessee had no dividend income in the relevant year, the disallowance made under Section 14A was deleted.

What were the facts?

The assessee incurred expenditure which the Assessing Officer disallowed under Section 14A of the Income Tax Act. The CIT(A) upheld this disallowance. The assessee appealed to the ITAT.

What were the issues?

Whether disallowance under Section 14A is permissible when the assessee has no exempt income.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(3)Show list

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Income Tax Appellate Tribunal, HYDERABAD BENCHES “B” : HYDERABAD

Before: SHRI S.S.GODARA & SHRI LAXMI PRASAD SAHU

Creamline Dairy The Deputy Commissioner Projects Limited, Vs of Income Tax, HYDERABAD Circle-1(2), [PAN: AABCC6780D] HYDERABAD (Appellant) (Respondent) For Assessee : Shri K.C.Devdas, AR For Revenue : Shri Rohit Mujumdar, DR Date of Hearing : 09-02-2021 Date of Pronouncement : 06-05-2021 O R D E R

PER S.S. GODARAA, JM :

1.

This assessee’s appeal for AY.2014-15 arises from the CIT(A)-1, Hyderabad’s order dated 18-12-2017 passed in case No.0227/CIT(A)-1/Hyd/2016-17/2017-18, in proceedings u/s.143(3) of the Income Tax Act, 1961 [in short, ‘the Act’]. Heard both the parties. Case file perused.

2.

The assessee has raised the following substantive grounds in the instant appeal: “2. The Ld.CIT(A) ought to have observed that the assessing officer erred in arriving at the conclusion that the expenditure incurred would come into the ambit of provisions of section 14A of the I.T.Act.

3. The Ld.CIT(A) ought to have directed the assessing officer that in the facts and circumstances of the case there was no scope for applying provisions of section 14A and disallow expenditure of Rs.14,90,000/- 4. The ld.CIT(A) ought to have observed that the assessing officer erred in working out the disallowance at Rs.14,90,000/- by invoking provisions of section 14A and therefore, the same liable to be deleted.”

3.

At the outset, learned authorised representative submitted that there is no dividend income earned in the relevant previous year. In this connection, he relied on the following case law:

i. CIT Vs. Chettinad Logistics Pvt. Ltd., [80 taxmann.com 221] (Madras); ii. CIT Vs. Corrtech Energy Pvt. Ltd., [223 Taxman 130] (Guj); iii. Cheminvest Ltd., Vs. CIT (2015) [378 ITR 33] (Del)

Their lordships hold that Section 14A read with Rule 8D applies only in relation to an assessee’s exempt income and not otherwise. We therefore delete the impugned disallowance.

4.

This assessee’s appeal is allowed in above terms.

Order pronounced in the open court on 06th May, 2021

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