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

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.

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.

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).

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).