ITO, NEW DELHI vs. M/S. ATHENA ENERGY VENTURES P.LTD., NEW DELHI

PDF · subscribers
ITA 5656/DEL/2016Status: DisposedITAT Delhi25 February 2020AY 2012-135 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 upheld the CIT(A)'s decision, agreeing that since the assessee earned no exempt income, no disallowance under Section 14A read with Rule 8D was permissible. The disallowance made by the Assessing Officer was directed to be deleted.

What were the facts?

The Assessing Officer disallowed Rs. 3,55,46,083/- under Section 14A for investments made by the assessee. The assessee contended that no exempt income was earned during the year, hence no disallowance was warranted.

What were the issues?

Whether disallowance under Section 14A is permissible when no exempt income has been earned by the assessee during the relevant 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(3)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, DELHI ‘A’ BENCH,

Before: SHRI H.S. SIDHU, & SHRI N.K. BILLAIYA

Hearing: 24.02.2020Pronounced: 25.02.2020

PER N.K. BILLAIYA, ACCOUNTANT MEMBER,

1.

This appeal by the revenue is preferred against the order of the CIT(A) - 1, New Delhi dated 01.08.2018 pertaining to A.Y 2012-13.

2.

The solitary grievance of the revenue is that the CIT(A) erred in deleting the addition of Rs. 3,55,46,083/- made by the Assessing Officer u/s 14A of the Income-tax Act, 1961 [hereinafter referred to as 'The Act']

3.

Briefly stated, the facts of the case are that during the course of scrutiny assessment proceedings, the Assessing Officer noticed that the assessee has made investment in shares amounting to Rs. 789.02 lakhs.

The Assessing Officer was of the firm belief that such investments have been made for the purpose of earning exempt income and long term capital gains which are exempt and not taxable to tax. Invoking the provisions of section 14A of the Act r.w.r 8D of the Rules, the Assessing Officer computed the disallowance at Rs. 3,55,46,8,083/-.

4.

The assessee challenged the addition before the ld. CIT(A) and vehemently contended that during the year, the assessee has not earned any exempt income. Therefore, no disallowance need be made u/s 14A of the Act.

5.

The ld. CIT(A) was convinced with the contention of the assessee that the assessee has not earned any exempt income, therefore, no disallowance need be made u/s 14A of the Act.

6.

Before us, the ld. DR strongly supported the findings of the Assessing Officer.

7.

None appeared on behalf of the assessee. Therefore, we decided to proceed ex-parte.

8.

We have given thoughtful consideration to the orders of the authorities below. There is no dispute that during the year the assessee did not earn any exempt income from tax. We find that the assessee has pointed out to the ld. CIT(A) that no exempt income is earned during the year under consideration. Since there is no exempt income earned during the year under consideration, no disallowance is to be made u/s 14A r.w.r 8D of the Act. This issue is by now well settled in favour of the assessee and against the revenue by the decision of the Special Bench of the Tribunal in the case of M/s Cheminvest Ltd 121 ITD 318 which was reversed by the Hon'ble High Court of Delh 61 Taxman.com 118. Same view is taken by the Hon'ble Gujarat High Court in the case of Corrtech Energy (P) Ltd 372 ITR 97.

In view of the above, disallowance of Rs. 3,55,46,083/- is directed to be deleted. Ground raised by the revenue is dismissed.

9.

In the result, the appeal of the Revenue in is dismissed.

The order is pronounced in the open court on 25.02.2020.

More judgments on Section 14A

All 15,875 judgments and leading authorities on Section 14A →

Recent GST High Court judgments

Search GST case law →