SHRI PADMESH GUPTA,NAGPUR vs. ACITCENTRAL-CIRCLE-2(3), NAGPUR

PER SHAMIM YAHYA, A.M.

This appeal by the assessee is against the impugned order dated

2nd August 2013, passed by the learned Commissioner (Appeals)–16,

Mumbai (Camp at Nagpur), pertaining to assessment year 2005–06.

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the provisions of Section 14A and making disallowance of expenses of Rs.4,26,086/- in nature of interest on loan, deprecation on fixed assets, vehicle insurance and professional expenses incurred during the course of carrying out business operations of the partnership concerns of the assessee for earning taxable business income and the learned CIT(A) further erred in confirming the action of the Assessing Officer.

grounds of appeal which are reproduced below:–

(1) "That the AO was unjustified in making separate addition of Rs. 4,26,086/- while computing the income, even after making disallowance of the loss of Rs. 4,26,086/- claimed under the head "Profits and Gains of Business and Profession" and the learned CIT(A) erred in not deleting the addition made erroneously by the AO. On the facts and circumstances of the case, the action of the AO has resulted into double addition in hands of the assessee."

(2) "That the AO was unjustified in making separate addition of Rs. 1,50,000/- while computing the income, even after making disallowance of the loss of Rs. 1,50,000/- claimed under the head "Income from House Property" and the learned CIT(A) erred in not deleting the addition made erroneously by the AO. On the facts and circumstances of the case, the action of the AO has resulted into double addition in hands of the assessee."

transpires that the same relates to double disallowance made by the

Assessing Officer which the learned CIT(A) has failed to address. We

find that on both the issues, it is the plea of the assessee that double

disallowance has been made by the Assessing Officer. The same was

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to put before the learned Departmental Representative. The learned

Departmental Representative fairly agreed with the statements of the

assessee in the additional ground of appeal as above. Accordingly, the

assessee succeeds in these additional grounds inasmuch as the

Assessing Officer is directed to delete the double disallowance.

the same relates to disallowance under section 14A of the Act when

the assessee has not earned any exempt income. It is undisputed fact

that the assessee has not earned any exempt income. Under these

circumstances, the learned Counsel for assessee placed reliance upon

the decision of the Hon’ble Jurisdictional High Court in PCIT s Ballarpur Paper Industries Ltd., ITA no.33 of 2016, order dated 16th September

2016. In the said case, the Hon’ble Jurisdictional High Court has

expounded as under:–

“By this income tax appeal, the appellant - Department challenges the orders of the Commissioner of Income Tax and the Income Tax Appellate Tribunal, Nagpur.

On hearing the learned Counsel for the Department and on a perusal of the impugned orders, it appears that both the Authorities have recorded a clear finding of fact that there was no exempt income earned by the assessee. While holding so, the Authorities relied on the judgment of the Delhi High Court in Income Tax Appeal No. 749/2014, which holds that the expression "does not form part of the total income" in Section 14A of the Income Tax Act, 1961 envisages that there should be an actual receipt of the 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. The Income Tax Appellate Tribunal held that the

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provisions of Section 14A of the Income Tax Act, 1961 would not apply to the facts of this case as no exempt income was received or receivable during the relevant previous year. It is not the case of the Assessing Officer that any actual income was received by the assessee and the same was includible in the total income. The Authorities have rightly held that since the order of the Assessing Officer was based on the order of the Income Tax Appellate Tribunal that was reversed by the Delhi High Court, the order of the Assessing Officer should fall as the order on the basis of which it was passed, was reversed. In the facts of the case, the Authorities held that since the investments made by the assessee in the sister concerns were not the actual income received by the assessee, they-could not have been included in the total income.

The findings of facts recorded by both the Authorities do not give rise to any substantial question of law.

Since no substantial question of law arises in this income tax appeal, the income tax appeal is dismissed with no order as to costs.”

Hon’ble Delhi High Court in Cheminvest Ltd. v/s CIT, [2015

taxmann.com 118 (Del.).

the authorities below.

material on record, we find that the issue before us is covered in

favour of the assessee by the aforesaid decision of the Hon’ble

Jurisdictional High Court and respectfully following the same, we set

aside the impugned order passed by the learned Commissioner

(Appeals) and decide the issue in favour of the assessee.

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Order pronounced in the open Court on 09.05.2018

Sd/- Sd/- RAM LAL NEGI SHAMIM YAHYA JUDICIAL MEMBER ACCOUNTANT MEMBER

NAGPUR, DATED: 09.05.2018

Copy of the order forwarded to:

(1) The Assessee; (2) The Revenue; (3) The CIT(A); (4) The CIT, Nagpur City concerned; (5) The DR, ITAT, Nagpur; (6) Guard file. True Copy By Order Pradeep J. Chowdhury Sr. Private Secretary

(Sr. P.S./P.S.) ITAT, Nagpur