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Income Tax Appellate Tribunal, Hyderabad ‘ A ‘ Bench, Hyderabad
Before: Smt. P. Madhavi Devi & Shri D.S. Sunder Singh
This is assessee’s appeal for the A.Y 2012-13 against the order of the CIT (A)-8, Hyderabad, dated 25.09.2017.
All the grounds of appeal raised by the assessee in this appeal are relating to disallowance made u/s 14A r.w.Rule 8D(2) of the I.T. Rules. The AO made the addition of Rs.23,56,350/- relating to exempt income u/s 14A of the I.T. Act invoking Rule 8D(2) of I.T. Rules. On appeal before the CIT (A), the Ld.CIT (A) dismissed the appeal of the assessee. Hence, the assessee is in appeal before us.
During the appeal hearing, the learned AR submitted that the AO made the disallowance u/s 14A r.w.rule 8D(2) of the Page 1 of 3 of 2017 Andhra Cardiology Associates P Ltd Hyderabad..
I.T Rules, but the assessee did not earn any exempt income during the year under consideration. Referring to page No.38 of the Paper Book, the assessee submitted that other income reported in the Profit &Loss account was interest income which was offered to tax and there was no exempt income claimed by the assessee. Referring to page No.1A of the Paper Book, the assessee has shown the computation of statement of income and submitted that there was no exempt income claimed by the assessee. The Ld.A.R further argued that in the absence of exempt income, there is no case for making the disallowance u/s 14A, as decided in the case of Pr. CIT vs. GVK Projects & Technical Services Ltd (106 Taxmann.com 180(Delhi). The Ld.A.R further submitted that the Hon'ble Supreme Court also dismissed the SLP filed by the Revenue holding that there is no case for making the disallowance u/s 14A in the absence of exempt income. The learned AR further argued that similar view was expressed by the Hon'ble Supreme Court in the case of Pr. CIT vs. Moonstar Securities Trading & Finance Co (P) Ltd reported in 105 taxmann.com 275 (SC) and dismissed the SLP. The ld A.R. also taken support from the decision of this Tribunal in the case of M/s C&K management Ltd in dated 08/01/2020 by SMC bench.
On the other hand, the learned DR relied on the orders of the lower authorities.
We have heard both the parties and perused the material placed on record. The Hon'ble Delhi High Court in the case of CIT vs. GVK Projects & Technical Services Ltd (Supra) upheld the order of the ITAT wherein disallowance made u/s 14A was deleted in the absence of exempt income and the Hon'ble Apex Court dismissed the SLP filed by the Revenue against the Page 2 of 3 of 2017 Andhra Cardiology Associates P Ltd Hyderabad..
order of the Hon'ble Delhi High Court. Similar view was taken by the ITAT Hyderabad in SMC case cited (Supra). There is no dispute that there is no exempt income claimed by the assessee to disallow the expenditure relatable to exempt income. The Ld.AR established from the information that there was no exempt income earned by the assessee. The Ld.D.R did not bring any case law to controvert the decision relied upon by the assessee. Therefore, respectfully following the decisions of Hon'ble High court of Delhi (Supra), we hold that no disallowance is called for u/s 14A of the Act in the absence of exempt income. Accordingly, we set aside the order of the learned CIT (A) and delete the addition made by the AO.