DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 6(4), MUMBAI, MUMBAI vs. RAB ENTERPRISES (INDIA) PRIVATE LIMITED, MUMBAI

"Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition u/s. 14A by holding that the disallowance u/s 14A cannot exceed the exempt income by ignoring the CBDT Circular No.5/2014 which clarificatory in nature."

"Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in ignoring the explanation to the section 14A introduced w.e.f. 01.04.2022 which clearly states that the provisions of the section 14A shall apply and shall be deemed to have always applied in a case where the income, not forming part of the total income under this Act, has not accrued or arisen or has not been received during the previous year relevant to an assessment year and the expenditure has been incurred during the said previous year in relation to such income not forming of the total income"

"Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance u/s.36(1)(iii) of the Act of Rs. 75,07,57,405/-without appreciating the facts that (a) such loans were not used for the purpose of business of the assessee and (b) was on the contrary invested in subsidiaries, in the form of share capital?"

None appeared on behalf of the assessee despite repeated calls. On going through the case records, we noticed that this is the 10th opportunity granted to the assessee. Since nobody has appeared and no application seeking adjournment has been filed, in the absence of the assessee or his representative.

Ground Nos. 1 and 2 raised by the Revenue are interconnected and interrelated and relates to challenging the order of the Ld. CIT(A) in deleting the addition made by the AO under Section 14A of the Act.

We have heard the learned Departmental Representative (Ld. DR) and perused the material available on record. The Ld. CIT(A) has dealt with this issue in detail in his order, and the operative findings are contained in paragraphs 5 to 5.3.5 and the same is reproduced herein below:

After having considered the order passed by the Ld. CIT(A) and the submissions of the Ld. DR, we find that the assessee had not earned or received any exempt income during the year under consideration. The Ld. CIT(A), while deleting the addition, has passed a well-reasoned order by following the decisions of the Coordinate Benches of the ITAT as well as the higher judicial authorities.

No new facts, circumstances, or documentary evidence have been brought on record by the Revenue to controvert or rebut the findings recorded by the Ld. CIT(A). Accordingly, we find no reason to interfere with or deviate from the findings of the Ld. CIT(A). Consequently, the grounds raised by the Revenue are dismissed, and the order of the Ld. CIT(A) is upheld.

Ground No. 3 relates to challenging the order of the Ld. CIT(A) deleting the disallowance under Section 36(1)(iii) of the Act.

In the result appeal filed by Revenue stands partly allowed.