SEVEN HILLS BYTES PVT. LTD.,KOLKATA vs. DCIT, CIR-1(1), KOLKATA

PDF · subscribers
ITA 246/KOL/2023Status: DisposedITAT Kolkata27 June 2023AY 2015-164 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 no disallowance under Section 14A is attracted if the assessee has not earned any exempt income. Following the Delhi High Court's decision, the explanation to Section 14A was held to be prospective.

What were the facts?

The assessee claimed no expenses in relation to exempt income. The Assessing Officer made an addition under Section 14A for notional expenses, which was confirmed by the CIT(A). The assessee argued that no exempt income was earned during the year.

What were the issues?

Whether disallowance under Section 14A is attracted when no exempt income is earned, and the retrospective applicability of the explanation to Section 14A.

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

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, “B” BENCH KOLKATA

Before: Shri Sanjay Garg & Dr. Manish Borad

order : June 27, 2023 आदेश / ORDER संजय गग�, �या�यक सद�य �वारा / Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 03.02.2023 of the National Faceless Appeal Centre (hereinafter referred to as the ‘CIT(A)’) passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’).

2.

The assessee in this appeal has assailed the action of the lower authorities in making/confirming the addition of Rs.1,31,797/- u/s 14A of the Act in respect of notional expenses incurred for earning of exempt income. At the outset, the ld. counsel for the assessee has invited our attention to para 5 of the impugned order of the CIT(A) to submit that the undisputed fact is that the assessee has not earned any exempt Assessment year: 2015-16 Seven Hills Bytes Pvt. Ltd income during the year. He in this respect has relied upon the following case laws:

1.

Cheminvest Ltd. vs. CIT 378 ITR 33 (Del). CIT vs. M/s. Holcim India Pvt. Ltd. in and ITA no. 299/2014; Judgment dt. 5-9-2014 CIT v. Shivam Motors (P.) Ltd. [2015] 230 Taxman 63 CIT vs. Ashika Global Securities Ltd. (G.A. No. 2122 of 2014) dt. 11/06/2018 In these case laws, Hon’ble High Courts have been unanimous to hold that where the assessee has not derived any tax exempt income from investments, then no disallowance is attracted u/s 14A of the Act.

3.

The ld. D/R, however, has relied upon the newly inserted explanations to Section 14A of the Act, which is extracted for the sake of ready reference:- “14A. [(1)] [Notwithstanding anything to the contrary contained in this Act, for the purposes of] computing the total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act.] ************************ *********************** [Explanation.—For the removal of doubts, it is hereby clarified that notwithstanding anything to the contrary contained in this Act, the provisions of this section shall apply and shall be deemed to have always applied in a case where the income, not forming part of the total income under this Act, has not accrued or arisen or has not been received during the previous year relevant to an assessment year and the expenditure has been incurred during the said previous year in relation to such income not forming part of the total income.]”

More judgments on Section 14A

All 15,875 judgments and leading authorities on Section 14A →

Recent GST High Court judgments

Search GST case law →