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Income Tax Appellate Tribunal, VIRTUAL COURT
Before: SHRI JUSTICE P P BHATT & SHRI M.BALAGANESH, AM
आदेश / O R D E R PER M. BALAGANESH (A.M): This appeal in A.Y.2015-16 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-54, Mumbai in appeal No.CIT(A)-54/IT-10494/DC.CC/6(3)/2017-18 dated 25/01/2018 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act)
M/s. Skil Infrastructure Ltd., dated 28/12/2017 by the ld. Dy. Commissioner of Income Tax, Central Circle 6(3), Mumbai (hereinafter referred to as ld. AO).
The only issue involved in this appeal is that whether the ld. CIT(A) was justified in restricting the disallowance made u/s.14A of the Act to Rs.1,42,400/- as against Rs.132,51,00,000/- made by the ld. AO in the facts and circumstances of the instant case.
We have heard rival submissions and perused the materials available on record. We find that assessee is engaged in the business of infrastructure development, investment and project development apart from consultancy / logistic business. The return of income for A.Y.2015-16 has been filed by the assessee company on 27/11/2015 declaring loss of Rs.72,19,75,464/-. We find that the assessee had earned exempt income in the form of dividend to the tune of Rs.1,42,400/- against which no disallowance of expenses were made by the assessee u/s.14A of the Act. We find that the ld. AO had made disallowance u/s.14A of the Act by applying the computation mechanism provided under Rule 8D(2) of the rules as under:-
i) Under Rule 8D(2)(i) - Rs.145,00,00,000/- ii) Under Rule 8D(2)(ii) - Rs.10,82,11,657/- iii) Under Rule 8D(2)(iii) - Rs.25,00,05,000/- -------------------- Total Rs.180,82,16,657 =========== 3.1. We find that the ld. AO had observed that since the assessee has claimed total expenditure only to the extent of Rs.132,51,00,000/- in the M/s. Skil Infrastructure Ltd., computation of income, the disallowance u/s.14A of the Act r.w.r. 8D(2) of the Rules was restricted to Rs.132,51,00,000/- in the assessment. The ld. CIT(A) however, observed that the disallowance in any case u/s.14A of the Act could not exceed exempt income and accordingly, restricted the sum to the extent of Rs.1,42,400/- and granted relief for the balance sum of Rs.132,49,57,600/-.
Aggrieved, the revenue is in appeal before us.
We find that the ld. DR argued that the ld. CIT(A) had wrongly placed reliance on the decision of the Hon’ble Supreme Court in the case of CIT vs. Chettinad Logistics Pvt. Ltd., reported in 95 Taxmann.com 250 which only says that if no exempt income was earned by the assessee then there can be no disallowance u/s.14A of the Act. Moreover, this decision of the Hon’ble Supreme Court is not dismissal of a civil appeal rather it was only a dismissal of Special Leave Petition of the revenue. In the instant case, the assessee had indeed derived exempt income of Rs.1,42,400/- and hence, this decision is not at all applicable to the facts of the assessee.
5.1. Per contra, the ld. AR placed reliance on the decision of the Hon’ble Jurisdictional High Court in the case of Nirved Traders Pvt. Ltd., vs. DCIT reported in 421 ITR 142 wherein the impugned issue before us had been duly addressed in favour of the assessee. The Hon’ble Jurisdictional High Court in the said case had categorically held that disallowance u/s.14A of the Act r.w.r. 8D of the Rules cannot exceed exempt income at all. Respectfully following the decision of the Hon’ble Jurisdictional High Court, we do not find any infirmity in the order of the ld. CIT(A) and M/s. Skil Infrastructure Ltd., accordingly, we do not deem it fit to interfere in the same. Accordingly, the grounds raised by the revenue are dismissed.
In the result, the appeal of the revenue is dismissed.
Order pronounced on 28/10/2020 by way of proper mentioning in the notice board.