DWARKA INVESTMENT PVT LTD,DELHI vs. ITO WARD-7(1), DELHI

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ITA 3125/DEL/2025Status: DisposedITAT Delhi22 July 2025AY 2018-192 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 read with Rule 8D is not sustainable if the assessee has not declared any exempt income. Relying on Cheminvest Limited Vs. CIT (2015) and noting the prospective effect of the Finance Act, 2021 amendment to Section 14A, the tribunal allowed the appeal.

What were the facts?

The assessee challenged a disallowance of Rs. 16,75,506/- made under Section 14A read with Rule 8D by the lower authorities for the assessment year 2018-19. The disallowance was made despite the assessee not having derived any actual exempt income in the relevant assessment year.

What were the issues?

Whether disallowance under Section 14A read with Rule 8D is applicable when the assessee has not derived or declared any exempt income.

Which sections of the Income-tax Act were involved?

Section 14A,Section 143(3)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, DELHI BENCH: “SMC” NEW DELHI

Before: SHRI SATBEER SINGH GODARA

For Appellant: Adv. Sh. Harshit Chauhan, Adv
Hearing: 22.07.2025Pronounced: 22.07.2025

Assessment Year: 2018-19 Vs. Income Tax Officer, M/s. Dwarka Investment Pvt. Ltd., Ward-7(1), DSC-260, DLF South Court, Delhi Saket, New Delhi PAN: AADCD0098F (Appellant) (Respondent) Assessee by Sh. S. Krishnan, Adv. Sh. Harshit Chauhan, Adv. Department by Sh. Manoj Kumar, Sr. DR Date of hearing 22.07.2025 Date of pronouncement 22.07.2025 ORDER This assessee’s appeal for assessment year 2018-19, arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/NFAC/S/250/2024-25/1074644434(1), dated 18.03.2025 involving proceedings under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). Heard both the parties. Case file perused.

2.

It transpires during the course of hearing with the able assistance coming from both the parties that the learned lower authorities have invoked section 14A read with Rule 8D disallowance of Rs.16,75,506/- in the assessee’s case despite the fact that it has not derived any actual exempt income in the relevant assessment year. That being the case and in light of the fact that the legislature has inserted Explanation to section 14A making the same applicable even in absence of any exempt income vide Finance Act, 2021 with prospective effect only, I hereby quote Cheminvest Limited Vs.CIT (2015) 378 ITR 33 (Delhi HC) to conclude that the impugned disallowance is not sustainable once the assessee has not declared any exempt income in its case.

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