ACIT, CIRCLE- 13(2), NEW DELHI vs. JINDAL PETROLEUM LTD., NEW DELHI

O R D E R PER PRASHANT MAHARISHI, A. M.

2. Revenue has raised the following grounds of appeal:- “

1. Whether, in facts and circumstances of the case and in law, the CIT (A) is justified in not upholding disallowance of Rs.55,06,261/- u/s 14A of Income Tax Act, 1961 without considering legislative intent of introducing section 14A by the Finance Act, 2001 as clarified by the CBDT Circular No. 5/2004 dated 10.02.2014?

2. Whether in facts and circumstances of the case and in law, the CIT (A) is justified in not upholding disallowance of Rs.55,06,261/- u/s 14A of the Act without considering legal principles that allowability / disallowability of expenditure under the Act is not conditional upon the earning of the income as upheld by Hon’ble Supreme Court in the case of CIT vs Rajendra Prasad Moody [1978] 115 ITR 519?

3. Whether in facts in circumstances of the case and in law, the CIT (A) is justified in not upholding disallowance of Rs.55,06,261 u/s 14A of the Act Page | 1 ITA 4313 (Del) of 2017 without considering ratio decidendi as upheld in case of Maxopp Investment vs. CIT [2012 347 ITR 272 (Delhi)] on application of provisions of section 14A of the Act?

4. That on the facts and circumstances of the case & in law, the Ld. CIT(A) has erred in deleting the addition of Rs.74,52,504/- made by AO on issue of disallowance on account of excess depreciation.

5. That on the facts and circumstances of the case & in law, the Ld. CIT (A) has erred in deleting the addition of Rs.52,54,295/- made by the AO on issue disallowance on account of pre-operative expenses. “

3. The ld. CIT (Appeals) deleted the disallowance under Section 14A of the Income Tax Act, 1961 (the Act) as there was no exempt income earned during the year and further deleted the disallowance of Rs.52,54,295/- on account of pre- operative expenses. He allowed deprecation on software @ 60 % based on his reading of the depreciation schedule that computer and software are alloeed 60 % depreciation. On these issues, the Revenue is aggrieved by the order of the ld. CIT (Appeals).

4. Brief facts of the case shows that assessee is a company which is providing services to Jindal Petroleum Georgia Ltd. It filed return on 28.11.2013 at a loss of Rs.67,78,020/-. The assessment order under Section 143(3) of the Act was passed on 30.03.2015 wherein disallowance under Section 14A of Rs.55,06,261/- was made by the Assessing Officer applying the provisions of Rule 8D under Section 14A of the Act, assessee submitted that it did not earn any exempt income. 5. The second disallowance was with respect to the pre-operative expenditure of Rs. 52,54,295/-, which was claimed in the profit and loss account. The third issue was that assessee has claimed depreciation on software at the rate of 60% whereas the learned assessing officer allowed it at the rate of 15%. 6. On appeal, CIT (Appeals) deleted the disallowance under Section 14A of the Act as no exempt income is earned by the assessee. On the issue of pre-operative expenses, she noted that the assessee itself had disallowed Rs.52,54,295/- while computing taxable income for the assessment year. Therefore, she held that once again disallowance made by the Assessing Officer is double addition of the same amount, hence deleted. On the issue of depreciation on software learned CIT appeal held that the depreciation is provided at the rate of 60% on computer and software. Therefore revenue is in appeal against the order of the learned CIT – A. 8. On appeal by the Revenue, the ld. DR supported the orders of the lower authorities. Page | 2 ITA 4313 (Del) of 2017 9. None appeared on behalf of the assessee; therefore, the issue is decided on the merits of the case.

Order pronounced in the open court on 14/07/2021.

Sd/- Sd/- (SUDHANSHU SRIVASTAVA) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 14/07/2021. *MEHTA* Copy forwarded to ITA 4313 (Del) of 2017 1. Appellant