DCIT, CENTRAL CIRCLE-26, NEW DELHI vs. ORIENTAL TOLLWAYS PVT. LTD., NEW DELHI

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ITA 8492/DEL/2019Status: DisposedITAT Delhi19 September 2022AY 2014-155 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that in the absence of any exempt income earned by the assessee, no disallowance under Section 14A can be made. This decision followed established judicial precedents, including Supreme Court and Delhi High Court rulings.

What were the facts?

The Assessing Officer disallowed Rs. 13,35,28,383/- under Section 14A read with Rule 8D on the ground that the assessee made investments in shares yielding exempt income. The assessee contended that no exempt income was earned during the year.

What were the issues?

Whether disallowance under Section 14A is permissible when the assessee has not earned any exempt income during the relevant assessment year.

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, DELHI ‘E’ BENCH,

Before: SHRI N.K. BILLAIYA, & SHRI ANUBHAV SHARMA

For Appellant: Shri K.V.S.R. Krishna, CA
For Respondent: Shri Jeetender Chand, Sr. DR
Hearing: 19.09.2022Pronounced: 19.09.2022

PER N.K. BILLAIYA, ACCOUNTANT MEMBER:-

1.

This appeal by the Revenue is preferred against the order of the ld. CIT(A) - 29, New Delhi dated 06.08.2019 pertaining to Assessment Year 2014-15.

2.

The solitary grievance of the Revenue is that the CIT(A) erred in deleting the addition of Rs. 13,35,28,383/- made by the Assessing Officer u/s 14A of the Income-tax Act, 1961 [hereinafter referred to as 'the Act'] r.w.r 8D of the ITAT Rules.

3.

Briefly stated, the facts of the case are that during the course of scrutiny assessment proceedings, the Assessing Officer noticed that the assessee company had made investment in shares of Indian companies which would give rise to exempt income. The Assessing Officer further noticed that the assessee has suo moto added back a sum of Rs. 8,81,03,143/- as disallowable interest. Invoking provisions of section 14A of the Act r.w.r 8D of Rules, the Assessing Officer computed total disallowance at Rs. 3,35,28,383/-.

4.

The assessee carried the matter before the CIT(A) and strongly contended that since the assessee has not earned any exempt income during the year under consideration, therefore, disallowance made by the Assessing Officer is uncalled for.

5.

After considering the facts and detailed submissions and relying upon certain judicial decisions, the CIT(A) came to the conclusion that since there is no exempt income, no disallowance can be made u/s 14A of the Act.

6.

Before us, the ld. DR strongly supported the findings of the Assessing Officer.

7.

Per contra, the ld. AR reiterated what has been stated before the lower authorities.

8.

We have given a thoughtful consideration to the orders of the authorities below. The undisputed fact is that there is no exempt income earned by the assessee during the year under consideration.

On such facts, the dispute is well settled in favour of the assessee and against the revenue by the decision of the Hon'ble Supreme Court in the case of Oil Industry Development Board by which the Hon'ble Supreme Court dismissed the Special Leave Petition preferred by the revenue against the order of the Hon'ble High Court of Delhi in 103 Taxmann.com 325 in which case the Tribunal had held that in the absence of any exempt income, disallowance u/s 14A of any amount was not permissible. The Hon'ble High Court of Delhi upheld the order passed by the Tribunal and the Hon'ble Supreme Court dismissed the SLP preferred by the Revenue.

9.

In another decision, the Hon'ble High Court of Delhi in the case of Caraf Builders & Constructions [P] Ltd I.T. Appeal No. 1260 of 2018 order dated 13.11.2018 has held that when no taxable income is earned, corresponding expenditure could not be worked out for disallowance.

10.

Similar view was taken by the Hon'ble Delhi High Court in the case of Cheminvest Ltd Vs. CIT 61 Taxmann.com 118. Respectfully following the judicial decisions cited hereinabove, we decline to interfere with the findings of the CIT(A). Accordingly, Ground of appeal raised by the Revenue is dismissed.

11.

In the result, the appeal of the Revenue in is dismissed.

The order is pronounced in the open court on 19.09.2022.

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