ASST. COMMISSIONER OF INCOME TAX, CIRCLE-16(1), HYDERABAD vs. LANCO THERMAL POWER LIMITED, HYDERABAD

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ITA 421/HYD/2018Status: DisposedITAT Hyderabad06 June 2018AY 2014-152 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that Section 14A of the Act does not apply if no exempt income is received during the relevant assessment year. The CIT(A)'s order was upheld based on this principle.

What were the facts?

The Revenue appealed the CIT(A)'s deletion of disallowance under Section 14A. The disallowance pertained to expenses incurred in relation to exempt income.

What were the issues?

The primary issue was whether disallowance under Section 14A is applicable when the assessee has not earned any exempt income during the assessment year.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, Hyderabad ‘ B ‘ Bench, Hyderabad

Before: Smt. P. Madhavi Devi & Shri S.Rifaur Rahman

Hearing: 01.06.2018Pronounced: 06.06.2018

Per Smt. P. Madhavi Devi, J.M.

This is Revenue’s appeal for the A.Y 2014-15 against the order of the CIT (A)-4, Hyderabad, dated 4.1.2017. The Revenue has raised the following grounds of appeal: “1. The CIT(A) erred in deleting the disallowance u/s 14A of Rs.5, 79,05,000/-. 2. The CIT(A) erred in ignoring CBDTs circular No.5 of 2014 dated 11.02.2014. 3. The CIT(A) erred in ignoring the Supreme Court decision in the case of CIT vs. Walfort Share of Stock Brokers P Ltd [326 ITR 1], wherein it was held that the mandate of section 14A was to curb the practice of claiming deduction of expenses incurred in relation to exempt income against taxable income and at the same time avail of the tax incentive by way of exempt income without making any apportionment of expenses incurred in relation to exempt income.

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ITA No 421 of 2018 Lanco Thermal Power Ltd Hyderabad.

2.

Having regard to the rival contentions and the material on record, we find that the issue involved in this appeal is covered in favour of the assessee by the decision of the Hon'ble Delhi High Court in the case of Cheminvest Ltd vs. CIT reported in (2015) 378 ITR 33 (Del.) wherein it has been held that section 14A of the Act will not apply where no exempt income is received during the relevant A.Y. We find that in similar cases, the Coordinate Bench of this Tribunal has been following the above decision of the Hon'ble Delhi High Court (Supra) to delete the additions similarly made. We find that the CIT (A) has followed the decision of the Coordinate Bench of this Tribunal on this issue and therefore, we find see no reason to interfere with the order of the CIT (A).

3.

In the result, Revenue’s appeal is accordingly dismissed. Order pronounced in the Open Court on 6th June, 2018. Sd/- Sd/- (S.Rifaur Rahman) (P. Madhavi Devi) Accountant Member Judicial Member

Hyderabad, dated 6th June 2018. Vinodan/sps Copy to: 1 Dy. CIT, Circle 16(1) Room No.121, 1st Floor, Block B, IT Tower, Masab Tank, Hyderabad 2 M/s. Lanco Thermal Power Ltd, Lanco House, Plot No.4, Software Units Layout, Hitech City, Madhapur, Hyderabad 500081 3 CIT (A)-4 Hyderabad 4 Pr. CIT – 4, Hyderabad 5 The DR, ITAT Hyderabad 6 Guard File By Order

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