DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE- 1(1)(1), BENGALURU vs. M/S. ATRIA BRINDAVAN POWER PRIVATE LIMITED, BENGALURU

The revenue has filed this appeal challenging order passed by Ld. CIT(A)-1, Bengaluru for the assessment year 2016-17, wherein the Ld. CIT(A) had deleted the disallowance made by the Assessing Officer u/s 14A of the Income-tax Act,1961 ['the Act' for short].

We heard the parties and perused the records. The assessment in the hands of the company for the ITA 1814/Bang/2019 M/s. Atria Brindavan Power Pvt. Ltd., Bangalore assessment year 2016-17 was passed by the A.O. u/s 143(3) of the Act, wherein he made disallowance of Rs.2.63 crores u/s 14A of the Act. The contention of the assessee before Ld. CIT(A) was that he did not earn any exempt income and hence no disallowance u/s 14A of the Act is called for. The A.O. had made the disallowance by following the decision rendered by Delhi Special Bench of Tribunal in the case of Chem Invest Ltd. 121 ITD 318 and decision rendered by Hon’ble Kartakana High Court in the case of Pradeep Kar Vs. ACIT 319 ITR 416. The Ld. CIT(A) noticed that decision of Special Bench in the case of Cheminvest Ltd (supra) has been reversed by Hon'ble Delhi High Court and the decision in the case of Pradeep Kar (supra) was rendered in different context. Accordingly, the Ld CIT(A) accepted the contentions of the assessee and deleted the disallowance with the following observations:

The Ld. A.R. submitted that an identical issue was considered by the coordinate bench in the case of assessee’s sister concern named M/s. Atria Hydel Power Limited (ITA No.3365/Bang/2018) dated 28.6.19), wherein identical addition made was deleted.

On the contrary, the Ld. D.R. placed reliance on the order passed by the A.O.

We notice that an identical issue was considered by the coordinate bench in the assessee’s sister concern’s case referred above and addition made u/s 14A of the Act was deleted with the following observations:

Consistent with the view taken in the above said case, we are of the view that no disallowance u/s 14A of the Act is called for when the assessee did not earn any exempt income. Accordingly, we uphold the order passed by the Ld. CIT(A) on this issue.

In the result, the appeal of the revenue is dismissed.