SIEMENS GAMESA RENEWABLE POWER PRIVATE LIMITED,CHENNAI vs. ACIT, CORPORATE CIRCLE 6(1), CHENNAI

�ी महावीर िसंह,उपा�� एवं �ी मनोज कुमार अ�वाल,लेखा सद� के सम� BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. 753/CHNY/2023 िनधा�रण वष� /Assessment year :2016-2017 Siemens Gamesa Renewable The Assistant Commissioner of Power Private Limited, Vs. Income Tax, No.489, Thandalkazhani Village, Corporate Circle 6(1) GNT Road, Chennai. Vadagarai Post, Chennai 600 052. [PAN AACCG 6027C] (अपीलाथ�/Appellant) (��यथ�/Respondent) : Shri Vinay Jain, C.A. अपीलाथ� क� ओर से/ Appellant by ��यथ� क� ओर से /Respondent by : Shri. Nandakumar, IRS, CIT सुनवाई क� तारीख/Date of Hearing : 17.10.2023. घोषणा क� तारीख /Date of Pronouncement : 17.10.2023. आदेश / O R D E R PER MAHAVIR SINGH, VICE PRESIDENT:

This appeal filed by the assessee is arising out of the order of the Commissioner of Income Tax (Appeals)-18, Chennai in 18/2022-2023, Dated 21.04.2023. The assessment was framed by the Assistant Commissioner of Income Tax, Corporate Circle 6(1), Chennai for the assessment year 2016-17 u/s.143(3) r.w.s.250 of the Income Tax Act, 1961 (hereinafter ‘the Act’), vide order dated 13.09.2021.

ITA No.753/Mds/2023 :- 2 -:

After the decision of Hon’ble Madras High Court in Writ Petition 2. No.34174 of 2019, whereby the Hon’ble Madras High Court had allowed the Writ Petition and quashed the transfer pricing order passed by the Transfer Pricing Officer u/s.92CA(3A) of the Act and thereby only one issue remains is with regard to the disallowance of expenditure relatable to exempt income by invoking the provisions of Section 14A of the Act r.w.r 8D (2) (ii) and (iii) of the Income Tax Rules, 1962 (hereinafter ‘’the Rules’’). For this, the assessee has raised the following grounds of appeal.

‘’3. Disallowance under section 14A of the Act 3.1 On the facts and circumstances of the case and in law, the Ld. CIT(A) and the Ld. AO erred in disallowing a sum of INR 0.25 crores under section 14A of the Act by applying the provisions of Rule 8D of the Income tax Rules, 1962 ("the Rules"). 3.2. On the facts and circumstances of the case and in law, the Ld. CIT(A) and the Ld. AO erred in applying the provisions of under section 14A of the Act read with Rule 8D of the Rules, without sufficient satisfaction on record and without appreciating that no exempt income was earned by the Appellant during the impugned AY. 3.3 On the facts and circumstances of the case and in law, the Ld. CIT(A) and the Ld. AO failed to appreciate that the issue is squarely covered in favor of the Appellant by the decision of this Hon'ble Tribunal in the Appellant's own case for the AYs 2011-12 and 2o12-13, wherein it was held that there cannot be any disallowance under section 14Ain the absence of exempt income’’. The brief facts of the case are that the Assessing Officer made 3. disallowance of expenditure relatable to exempt income under Rule 8D 2(ii) at ₹14,01,291/- and administrative expenses under Rule 8D (2) (iii) :- 3 -: being 0.5% average value of investments at ₹6,14,500/-, thereby aggregated disallowance of ₹20,15,792/-. Aggrieved, assessee preferred an appeal before the ld. CIT(A).

We have heard rival contentions and gone through the facts and 5. circumstances of the case. We noted that assessee before the Assessing Officer as well as the ld. CIT(A) raised this issue that there is no dividend income earned by the assessee. Even before us, the ld. Counsel for the assessee made statement at bar that there is no exempt income earned by the assessee which is evident from the Audited books of accounts of the assessee. This fact is not denied by the ld. CIT –DR. Since there is no exempt income earned by assessee no disallowance can be made by invoking the provisions of Section 14A of the Act r.w.r 8D of the Rules. This view was supported by the decision of Hon’ble Supreme Court in the case of Maxopp Investment Ltd vs. CIT, (2018) 402 ITR 640, wherein it was held as under:-

‘’41. Having regard to the language of section 14A(2) of the Act, read with rule 8D of the Rules, we also make it clear that before applying the theory of apportionment, the Assessing Officer needs to record satisfaction that having regard to the kind of the assessee, suo motu disallowance under section 14A was not correct. It will be in those cases where the assessee in his return has himself apportioned :- 4 -: but the Assessing Officer was not accepting the said apportionment. In that eventuality, it will have to record its satisfaction to this effect. Further, while recording such a satisfaction, the nature of the loan taken by the assessee for purchasing the shares/ making the investment in shares is to be examined by the Assessing Officer’’.

Respectfully, following the above decision of Hon’ble Supreme Court in the case of Maxopp Investment Ltd (supra), we decide the issue in favour of the assessee and allow the ground raised by the assessee.

In the result, the appeal filed by the assessee in ITA 6. No.753/CHNY/2023 for the assessment year 2016-2017 stands allowed.

Order pronounced in the open court at the time of hearing on 17th October, 2023, at Chennai.