ACIT, NEW DELHI vs. M/S IL & FS ENERGY DEVELOPMENT CO. LTD., NEW DELHI

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ITA 329/DEL/2017Status: DisposedITAT Delhi19 December 2019AY 2012-133 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 no disallowance under Section 14A can be made if the assessee has not earned any exempt income, even if expenses were incurred. The decision of the jurisdictional High Court in Cheminvest Ltd. was relied upon.

What were the facts?

The Revenue appealed against the CIT(A)'s order which reversed the disallowance made under Section 14A. The CIT(A) held that no disallowance could be made as the assessee had not earned any dividend income during the year.

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

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Income Tax Appellate Tribunal, DELHI BENCH ‘C’, NEW DELHI

For Appellant: DR ूयथ क ओर से /
Hearing: 19.12.2019

आदेश आदेश / ORDER आदेश आदेश PER SUSHMA CHOWLA, JM:

1.

The appeal filed by Revenue is against order of CIT(A)- 12, New Delhi dated 28.10.2016 relating to assessment year 2012-13 against the order passed under section 143(3) of the Income Tax Act, 1961 (in short “Act”).

2.

Despite service of notice, none appeared on behalf of the assessee nor any application was filed seeking adjournment.

3.

However, on perusal of the record, we find that only issue raised in this appeal is against the disallowance made u/s 14A of the Act by the Assessing Officer at approx.Rs.11.02 crores, which was reversed by the CIT(A) on the ground that the assessee during the year under consideration had not earned any dividend income. The CIT(A) relied on the ratio laid down by the Hon’ble Delhi High Court in Cheminvest Ltd. vs CIT, 378 ITR 33 (Delhi). The Revenue is in appeal against the order of CIT(A).

4.

We find that the issue raised in the present appeal stands squarely covered by the decision of the Hon’ble Delhi High Court in Cheminvest Ltd. vs CIT (supra) wherein it has been laid down that where the assessee has made strategic investment in which it had not earned any exempted income and genuineness of expenditure was not in doubt, no disallowance u/s 14A read with Rule 8D could be made. The relevant findings of the Delhi High Court are as under:-

“Expression ‘does not form part of the total income’ in section 14A envisages that there should be an actual receipt of income which was 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.”

5.

The CIT(A) has relied on the decision of Hon’ble High Court in para 9.5 in view of the issue being decided by the Jurisdictional High Court. We find no merit in the present appeal filed by the Revenue.

6.

In the result, appeal of Revenue is dismissed.

Order pronounced in the open court on 19th day of December, 2019.

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