ASSOCIATED BROADCASTING COMPANY PRIVATE LIMITED,HYDERABAD vs. INCOME TAX OFFICER, WARD-14(5), HYDERABAD

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ITA 1853/HYD/2019Status: DisposedITAT Hyderabad11 January 2021AY 2014-152 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 the disallowance under Section 14A is applicable only when exempt income is earned. Since the assessee had no exempt income, the disallowance was deleted.

What were the facts?

The assessee appealed against a proportionate interest disallowance made under Section 14A read with Rule 8D(2)(ii). The disallowance was made despite the assessee not deriving any exempt income in the relevant assessment year.

What were the issues?

Whether disallowance under Section 14A can be made when no exempt income has been earned by the assessee.

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 : BENCH “B” HYDERABAD

Before: SHRI SATBEER SINGH GODARA & SHRI LAXMI PRASAD SAHU

Hearing: 08/01/2021Pronounced: 11/01/2021

This assessee’s appeal for AY.2014-15 arises from the CIT(A)-6, Hyderabad’s order dated 30.09.2019 passed in case No.10153/2017- 18/A3/CIT(A)-6, in proceedings u/s.143(3) r.w.s. 92CA of the Income Tax Act, 1961 [in short, ‘the Act’].

2.

While dealing with the assessee’s instant early hearing application, it transpires during the course of hearing that its sole substantive grievance raised in the main appeal seeks to delete S.14A r.w.Rule 8D (2)(ii) proportionate interest disallowance of Rs.64,39,580/- made in both the lower proceedings. We notice that the assessee has not derived any exempt income in the relevant previous year. We rely on the following case laws:

AY 2014-15 Associated Broadcasting Co.Pvt.Ltd. (i) Cheminvest Ltd. Vs. CIT (2015) 378 ITR 33 (Delhi); (ii) CIT vs. Corrtech Energy Pvt.Ltd. (2014) 223 Taxman 130 (Guj.); (iii) CIT vs. Shivam Motors (2015) 230 Taxman 63 (All); (iv) CIT vs. Chettinad Logistics Pvt. Ltd. (2017) 80 Taxmann 55 (Mad) to hold that the impugned disallowance provision applies only in relation to exempt income than in absence thereof. We thus delete the impugned Sec.14A disallowance itself for this precise reason alone. Ordered accordingly. The assessee’s main appeal ITA 1853/Hyd/19 is allowed whereas its early hearing petition E.H.No.35/Hyd/2020 is dismissed since rendered infructuous. Pronounced in Open Court on 11th January, 2021.

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