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Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: SHRI VIKAS AWASTHY & SHRI GAGAN GOYAL
This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-41, Mumbai [in short ‘the CIT(A)] dated 14/02/2020 for the assessment Year 2014-15.
The Revenue in appeal has assailed the findings of CIT(A) on two counts:
(i) Deleting addition of Rs.5,38,98,756/- u/s. 68 of the Income Tax Act, 1961 [in short ‘the Act’]
(ii)Deleting disallowance u/s. 14A of the Act r.w.r 8D.
Shri Chetan M. Kacha representing the Department submitted that during the course of assessment proceedings, the Assessing Officer observed that in the Balance Sheet of assessee there are huge unsecured loans. The assessee was asked to furnish creditworthiness of lenders , genuineness of the loans and the identity of the lenders. The assessee failed to discharge its onus in proving creditworthiness of parties and genuineness of the loans, hence, the Assessing Officer made addition of Rs.5,38,98,756/-. The ld.Departmental Representative further submitted that during the period relevant to the assessment year under appeal, the assessee had made investments to the tune of Rs.4,88,48,347/- and had paid interest expenditure of Rs.1,02,54,981/- . The assessee had not made any suo-motu disallowance under section 14A of the Act. The Assessing Officer computed the disallowance u/r 8D at Rs.18,71,657/-. The CIT(A) deleted the disallowance without considering CBDT Circular No.4/2014 dated 11/02/2014.
Per contra, Shri Vijay Shah appearing on behalf of the assessee vehemently defended the impugned order and prayed for dismissing the appeal of Revenue. The ld. Authorized Representative of the assessee submitted that in First Appellate proceedings, the assessee had furnished additional evidences. The CIT(A) had sought remand report from the Assessing Officer The Assessing Officer made no adverse comments in respect of the loan creditors in the remand report, hence, the CIT(A) deleted the addition.
As regards disallowance u/s. 14A of the Act, the ld. Authorized Representative of the assessee submitted that the assessee had not earned any exempt income, therefore, no disallowance was warranted.
Both sides heard and orders of authorities below examined. In ground No.1 of appeal, the Revenue has assailed deleting of addition u/s. 68 of the Act. We find that the assessee had taken unsecured loans from two parties:
(i) M/s.R.S. Enterprises : Rs. 5,35, 98,756/- (ii) Dinesh Kumar Joshi : Rs. 3,00,000/- Total : Rs.5,38,98,756/- In remand proceedings the Assessing Officer had issued notices u/s. 133(6) of the Act to both the aforesaid parties. M/s. R.S. Enterprises vide letter dated 13/03/2019 confirmed advancing of unsecured loan amounting to Rs.4,66,36,755/- as on 31/03/2013 and Rs.69,62,000/- as on 31/03/2014. Thus, the unsecured loans on which the Assessing Officer had raised objection were continuing from preceding assessment years and for the relevant period no objection was raised by the Assessing Officer In the case of unsecured loan from Dinesh Kumar Joshi, confirmation along with PAN and bank statements were submitted in the remand proceedings. The Assessing Officer made no comments on the said loan transactions. The CIT(A) after considering the aforesaid facts deleted the addition. The findings of the CIT(A) on the issue are fair and reasonable, hence, warrants no interference. The ground No.1 and 2 of the appeal are dismissed.
In ground No.3 of appeal, the Revenue has assailed deleting of disallowance u/s.14A of the Act. Undisputedly, during the period relevant to the assessment year under appeal the assessee has earned no exempt income. The Hon'ble Supreme Court of India in the case of DCIT vs. State Bank of Patiala, 99 taxmann.com 286 has held that disallowance u/s. 14A of the Act cannot be made where the assessee has earned no exempt income. The findings of CIT(A) on this issue are in accordance with law propounded by Hon’ble Apex Court. Ground No.3 of the appeal is dismissed being devoid of any merit.
In the result, appeal by the Revenue is dismissed.
C.O No.121/MUM/2022
The assessee has filed Cross Objections in appeal by the Revenue supporting the findings of CIT(A) Since, we have dismissed appeal of the Revenue, the Cross Objections filed by assessee have become infructuous and the same are dismissed as such.
In the result, appeal by Revenue and cross objections by assessee are dismissed.
Order pronounced in the open court on Friday the 07th day of October , 2022.