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Income Tax Appellate Tribunal, ‘B’ BENCH, KOLKATA
Before: Shri Rajpal Yadav, Vice- & Shri Rajesh Kumar
Per Shri Rajpal Yadav, Vice-President (KZ):- The present two appeals are directed at the instance of assessee against the separate orders of ld. Commissioner of Income Tax (Appeals), National Faceless 1 & 206/KOL/2023 A.Ys. 2013-2014 & 2014-2015 M/s. Sri Vinayak Fincon Pvt. Limited Appeal Centre (NFAC), Delhi both dated 19th January, 2023 passed for assessment years 2013-14 and 2014-15.
In both these years, the assessee has raised two grounds of appeal. However, Ground No. 2 is a general ground of appeal, hence it does not call for recording of any finding in both the years.
3. In Ground No. 1, the grievance of the assessee is that the ld. CIT(Appeals) has erred in confirming the addition of Rs.47,928/- and Rs.57,028/- in A.Y. 2013-14 and 2014-15 respectively. Both these disallowances have been made under section 14A read with Rule 8D of the Income Tax Act.
4. With the assistance of ld. Representatives, we have gone through the record carefully. A perusal of paragraph 4 of the assessment order would suggest that the ld. Assessing Officer has recorded a finding in both the years that assessee has no exempt income during these years, but he disallowed the expenditure on the ground that on these investments, in future the assessee will earn tax-free income, thus the ld. Assessing Officer was of the opinion that the expenditure attributable to tax-free anticipated income deserves to be disallowed to the assessee under section 14A read with Rule 8D of the Income Tax Act. He has observed that though in these & 206/KOL/2023 A.Ys. 2013-2014 & 2014-2015 M/s. Sri Vinayak Fincon Pvt. Limited years, the assessee has no tax-free income but in future years it will earn some income. Hence he calculated the disallowance.
On due consideration of the above facts and circumstances, we are of the view that this view of the ld. Assessing Officer is contrary to the judgment of the Hon’ble Delhi High Court in the case of Pr. Commissioner of Income Tax –vs.- M/s. Era Infrastructure Limited in of 2022. This decision has come on 20th July, 2022. The Hon’ble Delhi High Court has considered the latest amendment brought in section 14A by way of Finance Act, 2022 and thereafter held that if an assessee has no tax-free income, then no expenditure would be disallowed to it. Following this judgment, we allow this ground of appeal for both the years and delete the disallowances.
In the result, both the appeals of the assessee are allowed. Order pronounced in the open Court on May 23, 2023.