DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 5(1)(1), BANGALORE vs. M/S. NITESH ESTATES LIMITED, BENGALURU

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ITA 1295/BANG/2019Status: DisposedITAT Bangalore18 November 2019AY 2013-143 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, stating that no disallowance under Section 14A is required when the assessee has not earned any exempt income during the year. The CIT(A)'s order was based on co-ordinate bench decisions.

What were the facts?

The assessee, engaged in real estate development, made investments in funds yielding exempt income. The AO disallowed a sum under Rule 8D(2)(iii) as the assessee had not made any disallowance under Section 14A. The CIT(A) deleted this disallowance.

What were the issues?

Whether disallowance under Section 14A is mandatory even if no exempt income is earned. The applicability of Rule 8D(2)(iii) in the absence of exempt income.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BANGALORE BENCHES “ C ” BENCH: BANGALORE

Before: SHRI B.R. BASKARAN & SHRI PAVAN KUMAR GADALE

For Respondent: Smt. R. Premi, JCIT (D.R)
Hearing: 18.11.2019Pronounced: 18.11.2019

PER SHRI B.R. BASKARAN, AM :

1.

The revenue has filed this appeal challenging the order dated 22-03-2019 passed by Ld CIT(A)-5, Bengaluru and it relates to the assessment year 2013- 14. The revenue is aggrieved by the decision of Ld CIT(A) in deleting the disallowance made u/s 14A of the Act.

2.

None appeared for the assessee. We heard Ld D.R and perused the record. The facts relating to the issue are that the assessee is engaged in the business of development, sale, management and operation of residential buildings, rental and hotel projects. The AO noticed that the assessee has made huge investments in various funds, income from which are exempt. However, the assessee has not made any disallowance u/s 14A of the Act. Hence the AO disallowed a sum of Rs.141.50 lakhs u/r 8D(2)(iii) @ 0.50% of average value of investments.

3.

The Ld CIT(A) noticed that the assessee has not earned any exempt income during the year. Accordingly he held that there is no requirement of making any disallowance u/s 14A of the Act. In this regard, he followed the decision rendered by the co-ordinate benches in the cases of John Distelleries Ltd vs. DCIT (ITA No.1429/Bang/2014) and BPL Limited (ITA No.1055/Bang/2017 dated 03-11-2017). The revenue is aggrieved by the decision so rendered by Ld CIT(A).

4.

The Ld D.R supported the order passed by the AO. We notice that the Ld CIT(A) has followed the decision rendered by the co-ordinate benches of Tribunal in holding that no disallowance u/s 14A of the Act is called for, when the assessee did not have any exempt income. No other contrary decision was brought to our notice. Hence we do not find any reason to interfere with his order. Accordingly we uphold the order passed by Ld CIT(A).

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