DY CIT -CC-1(4), MUMBAI vs. M/S. MARINE DRIVE HOSPITALITY & REALTY P. LTD., MUMBAI

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ITA 706/MUM/2021Status: DisposedITAT Mumbai17 December 2021AY 2017-183 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 if no exempt income is earned by the assessee, no disallowance under Section 14A of the Act can be made. The CIT(A)'s order deleting the disallowance was upheld.

What were the facts?

The Revenue appealed against the deletion of disallowance under Section 14A by the CIT(A). The Assessing Officer had disallowed Rs. 11,11,84,920/- under Section 14A r.w.r. 8D(2).

What were the issues?

Whether disallowance under Section 14A is permissible when the assessee has not earned any exempt income.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, MUMBAI BENCH “ B”, MUMBAI

Before: SHRI G.S.PANNU & SHRI VIKAS AWASTHY

Hearing: 02/12/2021

ORDER PER VIKAS AWASTHY, J.M: This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-47, Mumbai [in short ‘the CIT(A)] dated 11/03/2020 for the assessment year 2017-18. The solitary issue raised by the Revenue in appeal is against deleting of disallowance u/s. 14A of the Income Tax Act, 1961 ( in short ‘ the Act’) by the CIT(A).

2.

Shri Mahesh Akhade, representing the Department submitted that in assessment proceedings the Assessing Officer had computed disallowance of Rs.11,11,84,920/- under section 14A r.w.r. 8D(2) of the Act. In the first appellate proceedings, the CIT(A) deleted the aforesaid disallowance in entirety.

3.

Shri Kapil Bohra appearing on behalf of the assessee submitted that during the period relevant to the assessment year under appeal the assessee has not earned any exempt income, hence, the CIT(A) following the decision rendered by Hon'ble Bombay High Court in various cases deleted the disallowance made by the Assessing Officer under section 14A of the Act.

4.

Both sides heard. The solitary issue in the present appeal is deleting of disallowance under section 14A of the Act. During the period relevant to the assessment year under appeal the assessee has not earned any exempt income. It is no more res-integra that where no exempt income is earned no disallowance under section 14A of the Act is to be made. The Hon'ble Jurisdictional High Court in the case of CIT vs. Delight Enterprises in Income Tax Appeal No.110 of 2009 decided on 26/02/2009 has held that in the absence of exempt income no disallowance under section 14A of the Act could be made. Similar view has been expressed by the Hon'ble Bombay High Court in the case of PCIT vs. Red Chillies Entertainment Pvt. Ltd., 116 taxamann.com 770. The Hon'ble Supreme Court of India in the case of PCIT vs. Oil Industry Development Board, 262 Taxman 102 and PCIT vs. Cheminvest Ltd. has dismissed the SLP of Revenue against the Hon’ble Delhi High Court order holding that in absence of any exempt income, no disallowance under section 14A is permissible. In view of the settled legal position and undisputed facts, we find no infirmity in the impugned order, hence, the same is upheld and the appeal of Revenue is dismissed being devoid of any merit.

5.

In the result, appeal by the Revenue is dismissed. Order pronounced in the open court on Friday the 17th day of December, 2021.

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