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Income Tax Appellate Tribunal, DELHI BENCH: ‘B’ NEW DELHI
Before: SHRI BHAVNESH SAINI & SHRI O.P. KANT
ORDER PER O.P. KANT, AM:
This appeal by the Revenue is directed against order dated 08/11/2017 passed by the learned Commissioner of Income-tax (Appeals)-35, New Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2012-13 raising following grounds: 1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law in deleting the addition of Rs.5,57,54,022/- made on account of disallowance u/s 14A r.w.r. 8D of the Act by ignoring the fact that the assessee has incurred huge expenses in relation to large investments in shares and mutual funds. 2. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any gound(s) of appeal at any time before or during the hearing of this appeal.
2. Both the parties appeared before us through Video Conferencing facility. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The issue in dispute involved is disallowance in terms of section 14A of the Income-tax Act, 1961 (in short ‘the Act’) read with rule 8D of the Income-tax Rules, 1962 (in short ‘the Rules’).
3. We find that the Ld. CIT(A) has adjudicated the issue in dispute following the binding precedent of decision of the Hon’ble jurisdictional High Court in the case of Cheminvest Ltd. Vs. CIT- IV, 61 Taxmann.com 118 (Delhi). The relevant finding of the Ld. CIT(A) is reproduced as under: “4.3.3 The submission of the appellant and the case laws cited and the relevant orders have been considered. In the present case, the appellant has not earned any exempt income u/s. 14A, but has suo motu disallowed Rs.64,30,120/- in terms of provisions of section 14A. It is observed that the decision by the Hon'ble ITAT Delhi has been reversed by the Hon'ble Delhi High Court in the same case i.e. Chemnivest Ltd. vs. CIT-IV 61 Taxmann.com 118 (Delhi) vide order dated 02.09.2015 holding that "the the expression 'does not form part of the total income' in section 14A envisages that there should be an actual receipt of income, which is not includible in the total income, during the relevant previous year for the purpose of disallowing any expenditure incurred in relation to the said income. In other words, section 14A will not apply if no exempt income is received or receivable during the relevant previous year. [Para 23]." In the said judgment the Hon'ble Delhi High Court followed the case of CIT vs. Holcim India P. Ltd. 57 Taxmann.com 28 (2015) Delhi and distinguished the decision of Maxopp Investment Ltd. 347 ITR 272. However, the appellant has suo-moto disallowed an amount of Rs.64,30,120/- u/s. 14A of the I.T. Act. , thereby in principle the appellant has admitted that considering the facts of the case there
are expenses attributable to earning of exempt income. Now the only question which remains, was quantum of such expense. The AO has applied sec. 14A r.w. Rule 8D of the I.T. Act, 1961 for arriving at the quantum of expenses attributable to the earning of exempt income. In view of the decision Chemnivest Ltd. vs. CIT-IV 61 Taxmann.com 118 (Delhi), it is held that section 14A r.w. Rule 8D will not apply in the instant case. However, the amount of Rs.64,30,120/- which has been disallowed suo-moto by the appellant is considered to be sufficient in terms of the provision of Section 14A. Hence, Ground no. 3, 3.1 to 3.5 are allowed.”
Before us, the learned DR has not controverted the fact that no exempted income is earned in the year under consideration and, therefore, the decision of the Ld. CIT(A) following the binding precedent is well reasoned and we do not find infirmity in the same, accordingly, we uphold the same. The ground of the appeal of the Revenue is dismissed.
In the result, the appeal of the revenue is dismissed. Order pronounced in the open Court.