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Facts
A search and seizure operation was conducted at the premises of Jupiter Group. The Assessing Officer made additions/disallowances under Section 14A and other sections. The assessee appealed to the CIT(Appeals) who allowed the appeal concerning Section 14A disallowance.
Held
The Tribunal held that since the assessee had no exempt income during the year, the disallowance of expenditure under Section 14A was not sustainable. The Tribunal relied on various judicial pronouncements, including decisions from the Hon'ble Madras High Court and the assessee's own case.
Key Issues
Whether disallowance under Section 14A is permissible when no exempt income has been earned by the assessee.
Sections Cited
132, 153A, 142(1), 143(3), 36(1)(va), 2(24)(x), 14A, 8D
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Income Tax Appellate Tribunal, ‘B’ BENCH, KOLKATA
Before: Shri Duvvuru RL Reddy, Vice-(KZ) & Shri Rajesh Kumar
Per Duvvuru RL Reddy, Vice-President (KZ):- The present appeal is preferred by the Revenue against the order of ld. Commissioner of Income Tax (Appeals), Kolkata-20 dated 13th November, 2024 passed for assessment year 2012-13.
The appeal is time barred by 80 days in filing the appeal by the Revenue before the Tribunal. However, The Revenue did not file any condonation petition in support of condonation of delay. We are of the view that the Revenue was prevented in filing the appeal within the stipulated time. Therefore, we are inclined to condone the delay of 80 days. Hence the delay is condoned.
The facts in brief are that the appellant-assessee is an importer and dealer in computer peripherals and consumables, manufacturing of CDR and DVDR. A search and seizure operation was conducted in the residential, office and factory premises of the Jupiter Group at Kolkata on 24.03.2015 and subsequent dates, lockers belonging to the various persons of this group were also covered under section 132 of the Income Tax Act, 1961 and cash, gold and silver jewellery articles were found during the course of search. Consequent upon, search and seizure operation proceedings under section 153A of the Act, were initiated and notice under section 153A dated 06.05.2016 was duly served upon the assessee. In response to the said notice, return of income admitting total income at NIL was filed on 28.06.2016. Subsequently notice under section 142(1) dated 18.07.2016 along with detailed questionnaire was issued and duly served upon the assessee-company. The ld. Assessing Officer computed the assessment under section 143(3) on 26.03.2015 determining the total income of the assessee at (-)Rs.28,81,49,180/- by making the addition/disallowance of Rs.84,523/- u/s 36(1)(va) read with section 2(24)(x) of the Act towards employees’ contribution of (A.Y. 2012-2013) Jupiter International Limited Provident Fund and ESIC deposited by the assessee-company and Rs.2,11,82,000/- under section 14A with regard to disallowance of expenditure incurred in relation to income not forming part of the total income.
On being aggrieved, the assessee preferred an appeal before the ld. CIT(Appeals). The ld. CIT(Appeals) allowed the ground of appeal of the assessee with regard to exempt income on account of section 14A of the Act by relying on the decision of this Tribunal dated 19.06.2019 in assessee’s own case and also respectfully following the various other orders of Hon’ble High Court including Hon’ble Jurisdictional High Court and directed the ld. Assessing Officer to delete the disallowance made under section 14A of the Act as no exempt income earned by the assessee and dismissed the other grounds raised by the assessee as not pressed and finally partly allowed the appeal of the assessee.
1. 5. On being aggrieved, the Revenue preferred an appeal before the ITAT. It was the submission of the ld. Departmental Representative that the ld. CIT(Appeals) wrongly deleted the addition made by the ld. Assessing Officer under section 14A read with Rule 8D. He further submitted that the decisions which were relied by the ld. CIT(Appeals) are not applicable to the facts of the present case. Therefore, he pleaded to set aside the order passed by the ld. CIT(Appeals).
6. On the other hand, it was the submission of the ld. Counsel for the assessee that the assessee has not received any exempt (A.Y. 2012-2013) Jupiter International Limited income during the year under consideration. The ld. CIT(Appeals) at the time of passing of the order relied on various judicial pronouncements especially relying on the decision of the Hon’ble Madras High Court in the case of Redington India Pvt. Ltd. -vs.- ACIT reported in 392 ITR 692 (Mad.) deleted the addition made by the ld. Assessing Officer. He further submitted that the ld. CIT(Appeals) also relied on the decision of the Tribunal dated 19.06.2019 which was passed in assessee’s own case. Therefore, he pleaded to confirm the order passed by the ld. CIT(Appeals).
We have heard both the sides and perused the material available on record. It is an admitted fact that the assessee has not received any dividend income on the investment made by the assessee-company for the assessment year 2012-13. The ld. Counsel for the assessee heavily relied on the judgment of the Hon’ble Madras High Court in the case of Redington India Pvt. Ltd. -vs.- ACIT reported in 392 ITR 692 (Mad.), wherein it was held that “if there is no exempt income, there cannot be any disallowance of expenditure under section 14A”. He also relied on the judgment of the Hon’ble Madras High Court in the case of CIT -vs.- Chettinad Logistics Pvt. Ltd. reported in [2017] 80 taxmann.com 221, wherein it was observed that “section 14A can only be triggered, if assessee seeks to square off expenditure against income, which does not form part of total income under the Act and Rule 8D only provides for a method to determine the amount of expenditure incurred in relation to income, which does not form part of total income of assessee and it cannot go beyond what is provided in section 14A. Accordingly, section 14A could not be invoked”. The (A.Y. 2012-2013) Jupiter International Limited ld. CIT(Appeals) also categorically mentioned in his order and respectfully following the order passed in appellant’s own case and various other orders of the Hon’ble High Court including Hon’ble Jurisdictional High Court as referred above, directed the ld. Assessing Officer to delete the disallowance made under section 14A of the Act and deleted the addition made by the ld. Assessing Officer under section 14A of the Act. After considering the facts and circumstances of the case, we notice that admittedly in this case, there is no exempt income and also considering the decision relied by the Hon’ble Madras High Court and Hon’ble Jurisdictional High Court, we have no hesitation to come to the conclusion that the ld. CIT(Appeals) has rightly deleted the addition made by the ld. Assessing Officer under section 14A of the Act.
In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open Court on 30/09/2025.