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Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL,
Before: SHRI
IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK ‘SMC’ BENCH, CUTTACK CUTTACK BEFORE SHRI BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL JUDICIAL MEMBER ITA No.76/Ran/2018 Assessment Year: 2015-16 16 M/s. Bhagirathi Bhagirathi Me Metal Vs. DCIT, DCIT, Circle Circle 1(1), Industries Pvt Ltd.,S-1/116 Bhubaneswar. Bhubaneswar. & & 101, 101, IDCO IDCO New New I/E, I/E, Rasulgarh, Bhubaneswar. Rasulgarh, Bhubaneswar.. PAN/GIR No No.AABCB 1788 L (Appellant (Appellant) .. ( Respondent Respondent) Assessee by : Shri Bibek Mohanty, AR Bibek Mohanty, AR Revenue by : Shri Subhendu Dutt Dutt, DR Date of Hearing : 14/0 06/ 2019 Date of Pronouncement : / /07/ 2019 O R D E R This is an appeal filed by the assessee against the order of This is an appeal filed by the assessee against the order of This is an appeal filed by the assessee against the order of the Commissioner of Income Tax(Appeals) the Commissioner of Income Tax(Appeals)-1 1 dated 30.1.2019 for the assessment year 201 for the assessment year 2015-16.
The sole issue involved in this appeal is that the The sole issue involved in this appeal is that the The sole issue involved in this appeal is that the Commissioner of Income Tax(Appeals), was not Commissioner of Income Tax(Appeals), was not Commissioner of Income Tax(Appeals), was not justified in confirming the addition of Rs.3 confirming the addition of Rs.34,815/- under section 14A of the under section 14A of the Act.
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ITA No.416/Ran/2018 Assessment Year: 2015-16
Ld A.R. of the assessee submitted that during the relevant assessment year i.e. 2015-16, the assessee has neither made any investment nor earned any exempt income. The borrowed fund is utilised for the business of the company and interest on loan is a legitimate expense. He submitted that the provisions of section 14A r.w.r 8D is applicable where there is exempt income received. He submitted that no disallowance u/s 14A can be made in a year in which no exempt income has been earned or received by the assessee. For this proposition, he relied on the decision of Hon’ble Madras High Court in the case of Redington India Ltd vs ACIT, 97 CCH 0219 (Chen), wherein, it is held that the provisions of section 14A read with rule 8D of the Rules cannot be made applicable in a vacuum i.e. in the absence of exempt income.
Ld D.R. could not controvert the above submission of ld A.R. of the assessee.
After hearing the rival submissions, we find force in the submissions of ld A.R. of the assessee that no disallowance u/s 14A can be made in a year in which no exempt income has been earned or received by the assessee as per the ratio laid down by Hon’ble Madras High Court in the case of Redington India Ltd(supra). In this case, we find that in the assessment order at
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ITA No.416/Ran/2018 ITA No.416/Ran/2018 Assessment Year: 2015 Assessment Year: 2015-16
page 13, it is been noted that if there is no exempt earned in the page 13, it is been noted that if there is no exempt earned in the page 13, it is been noted that if there is no exempt earned in the previous year, the question of disallowance of the expenditure ious year, the question of disallowance of the expenditure ious year, the question of disallowance of the expenditure incurred to earn exempt income in terms of section 14A read with incurred to earn exempt income in terms of section 14A read with incurred to earn exempt income in terms of section 14A read with rule 8D would not arise. But the Assessing Officer has made rule 8D would not arise. But the Assessing Officer has made rule 8D would not arise. But the Assessing Officer has made disallowance on the ground that neither any expenditure which disallowance on the ground that neither any expenditure which disallowance on the ground that neither any expenditure which are directly attributable to earning of exempted income is tly attributable to earning of exempted income is tly attributable to earning of exempted income is distinguished from the expenditures debited to P&L account nor distinguished from the expenditures debited to P&L account nor distinguished from the expenditures debited to P&L account nor any interest expenditure claimed by the assessee during the any interest expenditure claimed by the assessee during the any interest expenditure claimed by the assessee during the 15. Except the above findings, the Assessing financial year 2014 financial year 2014-15. Except the above findings, t officer has not m officer has not made out any nexus between the borrowed funds and tax ade out any nexus between the borrowed funds and tax- free investment by the assessee. In view of free investment by the assessee. In view of above, respectfully above, respectfully following the decision of Hon’ble Madras High Court in the case of the decision of Hon’ble Madras High Court in the case of the decision of Hon’ble Madras High Court in the case of Redington India Ltd(supra), we delete the disallowance of Rs India Ltd(supra), we delete the disallowance of Rs India Ltd(supra), we delete the disallowance of Rs34,815/- made u/s.14A of the Act. u/s.14A of the Act.
In the result, appeal In the result, appeal of the assessee is allowed. of the assessee is allowed.
Order pronounced on Order pronounced on /07/2019.
(Chandra Mohan Garg Chandra Mohan Garg) JUDICIALMEMBER JUDICIALMEMBER cUTTACK; Dated ; Dated /07/209 B.K.Parida, SPS B.K.Parida, SPS
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ITA No.416/Ran/2018 Assessment Year: 2015-16
Copy of the Order forwarded to : 1. The appellant : M/s. Bhagirathi Metal Industries Pvt Ltd.,S-1/116 & 101, IDCO New I/E, Rasulgarh, Bhubaneswar..
The Respondent. DCIT, Circle 1(1), Bhubaneswar 3. The CIT(A)-1, Bhubaneswar 4. Pr.CIT- 1, Bhubaneswar 5. DR, ITAT, Ranchi By order 6. Guard file. //True Copy// Sr. Pvt. Secretary, ITAT, Cuttack
Date Initial 1. Draft dictated on 14.6.19 Sr.PS 2. Draft placed before author 14.6.19a(dictation pad has Sr.PS been enclosed along with original file) 3. Draft proposed & placed before the AM second member 4. Draft discussed/approved by Second AM Member. 5. Approved Draft comes to the Sr.PS/P Sr.PS/PS S 6. Kept for pronouncement on Sr.PS 7. File sent to the Bench Clerk Sr.PS 8. Date on which file goes to the OS 9. Date on which file goes to the SPS 10. Date of dispatch of Order.
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