PRINCIPAL COMMISSIONER OF INCOME TAX - 7 vs. M/S RATTAN INDIA INFRASTRUCTURE LTD.

PDF · subscribers
ITA/312/2018HC DelhiDLHC01077921201819 March 2018Bench: HON'BLE MR. JUSTICE S. RAVINDRA BHAT,HON'BLE MR. JUSTICE A. K. CHAWLA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no question of law arises for consideration. The Court agreed with the ITAT's confirmation of the CIT(A)'s order. The reasoning was based on the statutory mandate that a pre-condition for disallowance under Section 14A is the existence of exempt income. The Court followed the principles enunciated in Cheminvest Ltd. vs. Commissioner of Income Tax, 378 ITR 33, and Commissioner of Income Tax vs. Winsome Textiles Industries Ltd., 319 ITR 204. The appeal was dismissed on the grounds that the ITAT's order was in line with established legal principles regarding the requirement of exempt income for disallowance under Section 14A.

What were the facts?

The Principal Commissioner of Income Tax - 7 (the appellant/Revenue) challenged an order of the Income Tax Appellate Tribunal (ITAT) before the High Court of Delhi under Section 260A of the Income Tax Act. The ITAT had confirmed the deletion of amounts brought to tax under Section 14A of the Act, amounting to ₹1,48,12,500. The Assessing Officer (AO) had disallowed this amount, holding that the assessee's claim of no expenditure due to no income was unwarranted, and applied Rule 8D of the Income Tax Rules. The CIT(A) had deleted the disallowance, and the Revenue's appeal to the ITAT confirmed the CIT(A)'s order.

What were the issues?

1. Whether a question of law arises for consideration before this Court, concerning the deletion of amounts brought to tax under Section 14A of the Income Tax Act, 1961, to the extent of ₹1,48,12,500. The Revenue contended that the ITAT erred in confirming the deletion of the disallowance made under Section 14A, which was calculated as per Rule 8D. The Revenue argued that the AO's disallowance was justified as the assessee's claim of no expenditure due to no income was unwarranted. The Assessee did not appear before the High Court, and no arguments were recorded on their behalf.

Which sections of the Income-tax Act were involved?

Section 14A,Section 260A

AI-generated summary — verify with the full judgment below

$~52 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 312/2018

PRINCIPAL COMMISSIONER OF INCOME TAX - 7 ..... Appellant

Through Mr. Rahul Chaudhary, Adv.

versus

M/S RATTAN INDIA INFRASTRUCTURE LTD...... Respondent

Through

None.

CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE A. K. CHAWLA

O R D E R %

19.03.2018

The appellant challenging the order of ITAT on account of deletion of amounts brought to tax under Section 14A of the Income Tax Act (the Act) to the extent of `1,48,12,500/-, has approached this Court under Section 260A of the Act.

The Assessing Officer (AO) disallowed the amounts that were ultimately brought to tax holding that the assesse’s claim of no expenditure because of no income, was unwarranted. Rule 8D of the Income Tax Rules was applied to arrive at the figure of `1,48,12,500/-. The CIT(A) deleted the amounts brought to tax. The Revenue’s appeal confirmed the order of CIT(A) in the light of the principles enunciated in Cheminvest Ltd. vs Commissioner of Income Tax, 378 ITR 33 and Commissioner of Income Tax vs. Winsome Textiles Industries Ltd,. 319 ITR 204.

Having regard to the statutory mandate that there ought to be exempt income, as a pre-condition for disallowance, this Court is in agreement and follows the principles declared in Cheminvest Ltd. (supra) etc., no question of law arises. The appeal is dismissed.

S. RAVINDRA BHAT, J

A. K. CHAWLA, J MARCH 19, 2018 rc

More judgments on Section 14A

All 15,875 judgments and leading authorities on Section 14A →

Recent GST High Court judgments

Search GST case law →