REMARKABLE CONSUMER ELECTRONICS PRIVATE LIMITED,NEW DELHI vs. PR.CIT-7, NEW DELHI

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ITA 668/DEL/2021Status: DisposedITAT Delhi17 August 2022AY 2017-184 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 can be made if the assessee has not earned any exempt income, following the Delhi High Court's decision in Era Infrastructure India Limited. The AO was directed to delete the addition.

What were the facts?

The Assessing Officer (AO) disallowed Rs. 59,392/- under Section 14A of the Income Tax Act, 1961, on the grounds that the assessee had significant investments but claimed expenses. The CIT(A)/NFAC confirmed this 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

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Income Tax Appellate Tribunal, DELHI BENCH ‘H’, NEW DELHI

Before: SH. N. K. BILLAIYA & SH. ANUBHAV SHARMA

Hearing: 17/08/2022Pronounced: 17/08/2022

Date of hearing: 17/08/2022 Date of Pronouncement: 17/08/2022 ORDER PER N.K. BILLAIYA, AM:

This appeal by the assessee is preferred against the order dated 15.04.2021 framed by National Faceless Appeal Centre NFAC), Delhi.

2.

The solitary grievance of the assessee is that the CIT(A) / NFAC erred in confirming the disallowance of Rs.59,392/-made by the AO u/s. 14A of the Act.

3.

Briefly stated the facts of the case are that during the course of the scrutiny assessment proceedings the AO noticed that the assessee has shown total investments of Rs. 64.74 crores in its balance sheet. The AO further found that the assessee has claimed expenses to the extent of Rs.59,392/-.

4.

Invoking the provisions of section 14A r.w. rule 8D the AO asked the assessee to show cause why disallowance u/s. 14A should not be made. On receiving no plausible reply the AO computed the disallowance and made addition of Rs.59,392/-.

5.

This issue is no more resintera and has been decided by the Hon’ble High Court of Delhi in the case of Era Infrastructure India Limited in vide order dated 20.07.2022 wherein Hon’ble High court had considered the decision of Hon’ble High Court in the case of IF & FS Energy Development Company Limited 2017 SCC Online Del 9893 wherein it has been held that no disallowance u/s. 14A of the Act can be made if the assessee had not earned any exempt income.

6.

Considering the amendment brought in the statue by the Finance Act, 2022 the Hon’ble High Court held as under :-

7.

In the light of the above the AO is directed to delete the impugned addition. The appeal of the assessee is allowed.

8.

Decision announced in the open court on 17.08.2022.

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