M/S. TAPI PRESTRESSED PRODUCTS LTD,JALGAON vs. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE - 2, JALGAON

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ITA 1661/PUN/2018Status: HeardITAT Pune18 January 2022AY 2013-144 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that if there is no exempt income, no disallowance under Section 14A can be made. Following the precedents of various High Courts, the Tribunal decided that no disallowance was warranted in this case.

What were the facts?

The assessee did not offer any disallowance under Section 14A. The Assessing Officer computed a disallowance of Rs. 62,34,039/- by applying Rule 8D. The assessee contended that no exempt income was earned during the year.

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

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE – VIRTUAL COURT

Before: SHRI R.S. SYAL & SHRI S.S. VISWANETHRA RAVI

For Respondent: Shri S.P. Walimbe

आदेश / ORDER

PER R.S.SYAL, VP : This appeal by the assessee arises out of the order passed by the CIT(A) on 02-07-2018 in relation to the assessment year 2013-14. 2. The only issue raised in this appeal through various grounds is against the confirmation of disallowance of Rs.62,34,039/- made by the Assessing Officer (AO) u/s.14A of the Income-tax Act, 1961.

3.

Tersely, the facts of the case are that the assessee did not offer any disallowance u/s.14A. Applying Rule 8D of the M/s. Tapi Prestressed Products Ltd., Income-tax Rules, 1962, the AO computed disallowance at Rs.62,34,039/-. The assessee contended before the ld. CIT(A) that no exempt income was earned during the year. Not convinced, the ld. CIT(A) upheld the addition, against which the assessee has come up in appeal before the Tribunal.

4.

We have heard the ld. DR and perused the relevant material on record. There is no appearance from the side of the assessee despite notice. We are, therefore, proceeding to dispose of the appeal ex parte qua the assessee. It is found as an admitted position as has also already been recorded in the impugned order that the assessee did not earn any exempt income during the year. Despite that, the AO has computed disallowance u/s.14A amounting to Rs.62,34,039/-.

5.

The Hon'ble Delhi High Court in Cheminvest Ltd. vs. CIT (2015) 378 ITR 33 (Del) has held that if there is no exempt income, there can be no question of making any disallowance u/s 14A of the Act. Similar view has been taken by the Hon'ble Delhi High Court in CIT vs. Holcim India P.

1.

Ltd. (2014) 90CCH 081-Del-HC. More recently the Hon’ble jurisdictional High Court in Pr. CIT VS. Kohinoor Projects Pvt. Ltd. (2020) 425 ITR 700 (Bom) has held that in the M/s. Tapi Prestressed Products Ltd., absence of any exempt income, there cannot be any disallowance of expenses u/s 14A of the Act. As the assessee in the instant case did not earn any exempt income, respectfully following the precedent, we hold that no disallowance was called for. The impugned order is overturned and the sustenance of the disallowance is deleted.

6.

In the result, the appeal is allowed. Order pronounced in the Open Court on 18th January, 2022.

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