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Facts
The assessee filed an appeal against an order that confirmed an addition of Rs.1,49,298/- made by the AO invoking Section 14A r.w. Rule 8D. The assessee had not earned any exempt income during the assessment year 2013-14.
Held
The Tribunal held that Section 14A r.w. Rule 8D cannot be invoked when the assessee has not earned any exempt income. The addition made by the AO and confirmed by the CIT(A) was deleted.
Key Issues
Whether the addition made under Section 14A r.w. Rule 8D is sustainable when the assessee has not earned any exempt income.
Sections Cited
14A, Rule 8D
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH, KOLKATA
Before: SHRI GEORGE MATHAN & SHRI RAKESH MISHRA
आदेश / O R D E R Per Bench :
This is an appeal filed by the assessee against the order dated 16.07.2024 passed by the ld. Addl/JCIT(A)-2, Office of the CIT(A), Jaipur in DIN & Order No.ITBA/APL/S/250/2024-25/1066763322(1) for the assessment year 2013-2014.
None represented on behalf of the assessee when the matter was called for hearing. Shri Jitendra Kantilal Surti, ld JCIT/Sr DR appeared for the revenue.
It was submitted by ld Sr. DR that the only issue in assessee’s appeal is against the confirmation of addition of Rs.1,49,298/- made by the AO invoking the provisions of section 14A r.w. Rule 8D. It was the submission that the ld Addl/JCIT(A) has confirmed the addition and the same is liable to be upheld.
4. We have considered the submissions of ld Sr DR and perused the orders of authorities below. Page 23 of the order of ld Addl./JCIT(A)-2, Jaipur shows that the assessee has not earned any exempt income during the said year. This finding of the ld Addl/JCIT(A) has not been dislodged by the revenue. When there is no exempt income earned and the impugned year in the present case is assessment year 2013-14, obviously the provisions of section 14A r.w. Rule 8D cannot be brought into play. As there is no exempt income earned by the assessee nor claimed by the assessee in his return of income, the addition as made by the AO and as confirmed by ld Addl/JCIT(A)-2, Jaipur stands deleted.
It would also be worthwhile to mention that even in page 4 of the assessment order in para 3(d), the AO admits that the assessee did not earn any income during the year under consideration, which is exempt from tax. It is also noticed that the Assessing Officer and ld Addl./JCIT(A) have relied on the CBDT Circular No.5/14 dated 11.02.2014. Admittedly, the circulars issued by CBDT are binding on the Assessing Authority. However, we are surprised that the learned Appellate Authority, who is supposed to be an independent authority, has succumbed to the pressure of the circular issued by the CBDT.