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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEYAND SHRI RAJESH KUMAR
Date of Hearing – 06.01.2020 Date of Order – 15.01.20200
O R D E R PER SAKTIJIT DEY. J.M.
The aforesaid appeals filed by the Revenue arise out of two separate orders, both dated 30th May 2018, passed by the learned Commissioner of Income Tax (Appeals)–18, Mumbai, pertaining to the assessment years 2013–14 and 2014–15.
2 Qing Ambay City Developers Corporation Pvt. Ltd.
The grounds raised in both the appeals are identical and on the common issue of disallowance made under section 14A r/w rule 8D.
Brief facts common in both the appeals are, during the assessment proceedings for the impugned assessment years, the Assessing Officer on verifying the Balance Sheet of the assessee found that as on 31st March 2013 assessee’s investment in equity shares stood at ` 16,00,15,03,965. Similarly, as on 31st March 2014 the investments in equity shares stood at ` 17,36,45,81,715. Being of the view that these investments are capable of yielding exempt income, whereas, the assessee has not disallowed any expenditure attributable to investment in exempt income yielding asset, the Assessing Officer called upon the assessee to explain why disallowance under section 14A r/w rule 8D should not be made. Though, the assessee in response submitted that no disallowance can be made under section 14A r/w rule 8D, however, rejecting the explanation of the assessee, the Assessing Officer disallowed amounts of ` 4,24,29,846 and ` 8,36,24,954, in assessment years 2013–14 and 2014–15 respectively under section 14A r/w rule 8D. Contesting the aforesaid disallowances before learned Commissioner (Appeals), the assessee submitted that during the relevant assessment years the assessee has not earned any exempt income, therefore, no disallowance under section 14A r/w rule 8D can be made. Having found substantial merit in the aforesaid
3 Qing Ambay City Developers Corporation Pvt. Ltd. submissions of the assessee and relying upon the ratio laid down in various judicial precedents, learned Commissioner (Appeals) deleted the disallowances made by the Assessing Officer under section 14A r/w rule 8D in both the assessment years under dispute.
When the appeals were called for hearing, no one was present to represent the case on behalf of the assessee. Even, no application has been filed by the assessee seeking adjournment. In such circumstances, we consider it appropriate to dispose of the appeal ex– parte qua the assessee after hearing the learned Departmental Representative and on the basis of material available on record.
We have heard the learned Departmental Representative and perused the material on record. It is an undisputed fact that during the relevant assessment years, the assessee has not earned any exempt income. Now, it is fairly well settled that in the absence of any exempt income earned during the year, no disallowance under section 14A r/w rule 8D can be made, as, provisions of section 14A would come into play only in a case where exempt income is earned during the relevant year. The decisions referred to by learned Commissioner (Appeals) in Para–5.3 of his order clearly support the aforesaid view. Therefore, relying upon the consistent view expressed by the different High Courts including the Hon'ble Jurisdictional High Court in PCIT v/s
4 Qing Ambay City Developers Corporation Pvt. Ltd.
Ballarpur Industries Ltd., 2016, judgment dated 13th October 2016, we hold that learned Commissioner (Appeals) was justified in deleting the disallowances made by the Assessing Officer under section 14A r/w rule 8D. Grounds are dismissed.
In the result, both the appeals are dismissed. Order pronounced in the open Court on 15.01.2020