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Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI
Before: SH. ANIL CHATURVEDI & SHRI KUL BHARAT
This appeal filed by the Revenue is directed against the order dated 21.12.2018 of the Commissioner of Income Tax (Appeals)-28, New Delhi relating to Assessment Year 2013-14.
The relevant facts as culled from the material on records are as under :
Assessee is a company stated to be engaged in the business of manufacturing of mono chrome picture tubes for computers, medical equipments. Assessee electronically filed its return of income for A.Y. 2013-14 on 09.10.2013 declaring loss of Rs.6,78,95,214/-. The case was selected for scrutiny and thereafter assessment was framed u/s 143(3) of the Act vide order dated 23.03.2016 determining the total income of Rs. 37,32,056/-. Aggrieved by the order of AO, assessee carried the matter before CIT(A) who vide order dated 21.12.2018 in Appeal No.269/17-18 granted substantial relief to the assessee. Aggrieved by the order of CIT(A), Revenue is now in appeal and has raised the following grounds: “
1. Whether on the facts and circumstances of the case, the Ld CIT(A) was justified in deleting the disallowance of Rs.1,97,88,967/- made u/s 14A of the IT Act, 1961.
2. The appellant craves leave to add, alter or amend any of the grounds of appeal before or during the course of hearing of the appeal.”
On the date of hearing, none appeared on behalf of the assessee nor any adjournment application was filed on its behalf though the case file reveals that the notice of hearing was served on the assessee. In such a situation, we proceed to dispose of the appeals ex parte qua the assessee and after hearing the Learned DR.
Learned DR submitted that the only issue is with respect to the deleting the disallowance made by AO u/s 14A of the Act.
During the course of assessment proceedings, AO noticed that assessee had made investments and no disallowance u/s 14A r.w.r 8D of the Income Tax Rules was worked out by the assessee. AO issued show-cause notice and asked the assessee to explain as to why the disallowance u/s 14A of the Act not be made.
Assessee inter alia submitted that it has not earned any exempt income and therefore placing reliance in the case of CIT vs. Holcim India Pvt. Ltd. [90 CCH 091] and Cheminvest Ltd. vs. ITO [378 ITR 33] submitted that when no exempt income has been earned, no disallowance u/s14A of the Act was called for. The submissions of the assessee not found acceptable to AO. AO thereafter worked out the disallowance u/s 14A r.w.r 8D of the Income Tax Rules at Rs.1,97,88,967/-.
Aggrieved by the order of AO, assessee carried the matter before CIT(A). CIT(A) noted the fact that assessee has not earned any exempt income during the year under consideration nor has incurred any expenditure for earning of exempt income. He by relying on the various decisions cited in the order held that no disallowance u/s 14A of the Act is called for in the absence of any exempt income. He accordingly deleted the addition made by AO u/s 14A of the Act. Aggrieved by the order of CIT(A), Revenue is now in appeal.
Before us, Learned DR supported the order of AO.
We have heard the Learned DR and perused the material available on record. The issue in the present ground is with respect to the disallowance u/s 14A r.w.r 8D of the Income Tax Rules. AO by applying Rule 8D r.w Section 14A of the Act made disallowance of Rs.1,97,88,967/-. CIT(A) by following the decisions of Jurisdictional High Court noted in the order has given a finding that no exempt income has been earned by assessee and therefore the legal requirements of involving the provisions of Section 14A of the Act was not fulfilled by the AO for making the disallowance. Before us, Revenue has not pointed to any contrary binding decision in its support nor has pointed to any fallacy in the findings of CIT(A). We therefore find no reason to interfere in the order of CIT(A) on this ground. Thus the ground of Revenue is dismissed.
In the result, appeal of the Revenue is dismissed.
Order pronounced in the open court on 09.05.2022