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Income Tax Appellate Tribunal, DELHI BENCH “A”, NEW DELHI
Before: SHRI H.S. SIDHU & SHRI N.K. BILLAIYA
ORDER PER H.S. SIDHU, JM
Revenue has filed the present appeal against the impugned order dated 15.5.2017 passed by the Ld. CIT(A)-32, New Delhi relating to assessment year 2014-15 on the following grounds:-
1. Ld. CIT(A) erred in law and on facts in deleting addition of Rs. 2,28,62,725/- made on account of disallowance u/s. 14A r.w.s. 8D of Income Tax Rules.
2. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.
The facts relating to issue in dispute are that during the assessment proceedings the AO observed that the assessee company had made investment in shares of other companies. The total investment as on 31.3.2014 by the company amounting to Rs. 23.25 cores. However, in the computation of income, no disallowance u/s. 14A of the Income Tax Act, 1961 (In short “Act”), read with Rule 8D had been made on account of expenditure incurred in relation to exempt income. Hence, the AO asked the assessee regarding applicability of section 14A of the Act read with rule 8D of I.T. Rules in his case. In response to this, the assessee replied that no exempt income had been earned by it during the relevant year. Hence, AO observed that there is no disallowabilty u/s. 14A of the Act. The reply filed by the assessee was considered by the AO, but the AO was not satisfied with the same. After recording his reasons in detail, the AO proceeded to compute the disallowances u/s. 14A, in accordance with Rule 8D of I.T. Rules and accordingly made the total disallowance of Rs. 2,28,62,725/- u/s. 14A of the Act vide order dated 28.12.2016 passed u/s. 143(3) of the Act by assessing the income at Rs. 12,55,30,790/-. Against the assessment order dated 28.12.2016, assessee appealed before the Ld. CIT(A), who vide his impugned order dated 15.5.2017 has partly allowed the appeal of the assessee by deleting the disallowance made by the AO u/s. 14A of the Act. Aggrieved with the impugned order dated 15.5.2017, the Revenue is in appeal before the Tribunal.
At the time of hearing, Ld. CIT(DR) relied upon order passed by the AO and the reiterated the contention raised in the grounds of appeal of the Revenue and requested that appeal of the Revenue may be allowed.
In this case, Notice of hearing to the assessee was sent by the Registered AD post, in spite of the same, assessee, nor its authorized representative appeared to prosecute the matter in dispute, nor filed any application for adjournment. Keeping in view the facts and circumstances of the present case and the issue involved in the present Appeal, we are of the view that no useful purpose would be served to issue notice again and again to the assessee, therefore, we are deciding the present appeal exparte qua assessee, after hearing the Ld. CIT(DR) and perusing the records. 2
We have heard the Ld. CIT(DR) and perused the orders of the authorities below, especially the impugned order passed by the Ld. CIT(A). We find that Ld. CIT(A) has discussed the issue in dispute vide para no. 5.7 to 5.8 at page no. 4 of the impugned order which are reproduced as under:-
“5.7 I have carefully considered the arguments raised by the appellant and the decisions relied upon him. I find that no exempt income had been earned by the appellant in the relevant year. The Hon’ble Delhi High Court in the case of Cheminvest Ltd. vs. CIT decieed on 02.09.2015 (ITA No. 749/2014) 61 taxmann.com 118 (Delhi)/ 378 ITR 33 has held as under:-
“In the context of the facts enumerated hereinbefore the Court answers the question framed by holding that the expression ‘does not form part of the total income’ in Section 14A of the envisages that there should be an actual receipt of 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. In other words, section 14A will not apply if no exempt income is received as receivable during the relevant previous year.” 5.8 As the appellant company has not earned any exempt income during the year, respectfully following the decision of the jurisdictional High Court, the disallowance made by the AO u/s. 14A is deleted.”
5.2 After perusing the aforesaid finding of the Ld. CIT(A), as reproduced above, we are of the considered view that Ld. CIT(A) has rightly deleted the addition in dispute by holding that no exempt income had been earned by the assessee in the relevant year, which does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A) on the issue in dispute and accordingly, reject the grounds raised by the Revenue.
In the result, the appeal of the Revenue is dismissed.
Order pronounced on 06.03.2020.