Loading judgment…
No AI summary yet for this case.
आदेश/Order
Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the Revenue against the order dated 31/07/2018 of the Commissioner of Income Tax (Appeals)- I, Ludhiana [hereinafter referred to as CIT(A)] agitating the action of the Ld. CIT(A) in deleting the addition made by the Assessing officer on account of disallowance of ₹ 2,14,68,549/- u/s 14A of the Income Tax
Act read with Rule 8D of the Income Tax Rules in respect of the expenditure incurred for earing of tax exempt income.
ITA No. 1263-c-18 M./s B.B.F. Industries ltd., Ludhiana 2 2. At the outset, it was the plea of the Ld. Counsel for the assessee
that all the investments in the subsidiary companies were made in the
earlier years out of own funds and that the assessee had not earned any
exempt income from such investments as is evident from the profit and
loss account. That it is also a matter of record that no dividend income
was received by the assessee company during the year under
consideration. The Ld. Counsel for the assessee has relied upon certain
case laws and the decision of the Hon'ble Jurisdictional High Court in
‘CIT, Faridabad Vs. Lakhani Marketing Inc.’ [2014] 49 taxmann.com
257 wherein the Hon'ble Court by making reference to the earlier
decisions of the of ‘CIT Vs. Hero Cycles Ltd.’ [2010] 323 ITR 518 and
‘CIT Vs. Winsome Industries Ltd.’ [2009] 319 ITR 203, categorically
held that unless and until there is a receipt of exempt income for the
concerned assessment year, provisions of section 14A cannot be
invoked.
The Ld. DR, though supported the order of the Assessing officer
but could not rebut the factual findings given by the Ld. CIT(A).
We have considered the rival submissions. From the record it is
an undisputed fact that the assessee has not earned tax exempt income
during the year. We find that the issue is now squarely covered by the
various decisions of the Hon'ble High Courts. Even the different
Hon'ble High Courts of the country have been unanimous to hold that no
ITA No. 1263-c-18 M./s B.B.F. Industries ltd., Ludhiana 3 disallowance is attracted u/s 14A in case the assessee has not earned any
income not forming part of the total income. Reliance in this respect
can be placed on various decisions of the Hon'ble High Courts
including that of the Hon'ble Jurisdictional High Court of Punjab and
Haryana in the case of ‘CIT Vs. Winsome Textiles’ (2009) 319 ITR 204
(P&H) and in the case of CIT Faridabad v. Lakhani Marketing INC 226
Taxmann 45 (P&H); Hon'ble Delhi High Court in the case of
‘Cheminvest Ltd Vs. ITO’ (2015) 378 ITR 33 (Delhi) and of the
Hon'ble Gujarat High Court in the case of ‘Corrtech Energy P. Ltd.
(2014) 45 Taxman.com 116’ and further of the Hon'ble Allahabad High
Court in the case of ‘CIT Vs. M/s Shivam Motors (P) Ltd’ (2014) 272
CTR (All) 277.
Since the assessee did not earn any tax exempt income, hence, no
disallowance u/s 14A is attracted. In view of this, we do not find
reason to interfere with the order of the Ld. CIT(A) and the same is
accordingly upheld.
The appeal of the Revenue is hereby allowed.
Order pronounced in the Open Court on 03.06.2019.
Sd/- Sd/- (संजय गग� / SANJAY GARG) (एन. के. सैनी / N.K. SAINI) उपा�य� / Vice President �या�यक सद�य/ Judicial Member Dated : 03.06. 2019 “आर.के.”
ITA No. 1263-c-18 M./s B.B.F. Industries ltd., Ludhiana 4 आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File
आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar