SHAH GOVARDHANDAS BHIKARIDAS,JALGAON vs. INCOME TAX OFFICER, WARD-2(4), JALGAON, JALGAON

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ITA 473/PUN/2023Status: DisposedITAT Pune09 June 2023AY 2014-154 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 if no exempt income is received, no disallowance under Section 14A can be made, following the precedent set by the Delhi High Court. The amendment to Section 14A by the Finance Act, 2022, was considered retrospective.

What were the facts?

The Assessing Officer made a disallowance under Section 14A of the Income Tax Act. The assessee contended that no dividend income was received during the assessment year. The CIT(A) confirmed the disallowance.

What were the issues?

Whether disallowance under Section 14A is permissible 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(2)Show list

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Income Tax Appellate Tribunal, SMC BENCH, PUNE

Before: SHRI R.S. SYAL

For Appellant: Smt. Deepa Khare
For Respondent: Shri Gurmel Singh

आदेश / ORDER

PER R.S. SYAL, VP:

1.

This appeal by the assessee arises out of the order dated 28-03-2023 passed by the CIT(A) in National Faceless Appeal Centre, Delhi u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in relation to the assessment year 2014-15.

2.

The only issue raised in this appeal is against the confirmation of disallowance of Rs.1,59,879/- made by the Assessing Officer (AO) u/s.14A of the Act.

3.

Briefly stated, the facts of the case are that the AO recorded in para 5.3 of his order that the assessee earned exempt income. He,

Shah Govardhandas Bhikaridas (HUF) therefore, proceeded to compute the disallowance u/s.14A r.w.r 8D.

The ld. CIT(A) dismissed the assessee’s appeal after duly noting the assessee’s contention that no dividend was received during the year under consideration.

4.

Having heard the rival submissions and gone through the relevant material on record, it is seen that the assessee specifically stated before the ld. CIT(A), as has been recorded on page 5 of the impugned order, that no dividend was received during the year. The Hon'ble Delhi High Court in Cheminvest Ltd. vs. CIT (2015) 378 ITR 33 (Del) has held that if there is no exempt income, there can be no question of making any disallowance u/s 14A of the Act. Similar view has been taken by the Hon'ble Delhi High Court in CIT vs. Holcim India P. Ltd. (2014) 90CCH 081-Del-HC.

5.

It is seen that an amendment has been carried out to section 14A by the Finance Act, 2022 providing that the disallowance u/s 14A would be called for notwithstanding no receipt of exempt income during the year. The Hon’ble Delhi High Court in Pr.CIT Vs. Era Infrastructure (India) Ltd. (2022) 448 ITR 674 (Delhi) has held such amendment to be retrospective. In that view of the matter, the case pertaining to the A.Y. 2014-15 under consideration, having no exempt income during the year, would be governed by the ruling

Shah Govardhandas Bhikaridas (HUF) in Cheminvest (supra). Respectfully following the precedent, I order to delete the disallowance.

6.

In the result, the appeal is allowed. Order pronounced in the Open Court on 09th June, 2023.

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