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Income Tax Appellate Tribunal, ‘B ’ BENCH : CHENNAI
Before: SHRI INTURI RAMA RAO & SHRI DUVVURU RL REDDY]
आदेश / O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER These are appeals filed by the assessee directed against different orders of ld. Commissioner of Income Tax (Appeals)-1, Madurai, (‘CIT(A)’ for short) dated 07.06.2019 for the Assessment Years 2014-2015 and 2015-2016.
& 2166 /2019 :- 2 -:
Since, the identical facts and issues are involved in these appeals, we proceed to dispose of the same vide this common order.
For the sake of convenience and clarity the facts relevant to the 3. appeal in for assessment year 2014-15 are stated herein.
The Assessee raised the following grounds of appeal: 4.
‘’1 The order of the Learned Commissioner of Income Tax (Appeals) is contrary to the law, facts and circumstances of the case.
2. For that the Learned Commissioner of Income Tax (Appeals) erred in confirming the disallowance of Rs. 6,53,361/- u/s 14A r.w.r Rule 8D of the Income Tax Act,1961 (Tax Effect Rs. 2,11,960/-).
For that the Learned Commissioner of Income Tax (Appeals) erred in confirming the disallowance of Rs.2,11,960/- u/s 14A of the Act, without appreciating the fact that the appellant had not earned any dividend income during the subject assessment year.
For that the Learned Commissioner erred in not appreciating the fact the investments were made out of own funds.
5. For that the Learned Commissioner erred in not appreciating the fact the investments were made out of own funds.
For that the Learned Commissioner of Income Tax (Appeals) erred in confirming levy of interest of Rs. 2,347/- u/s 234C of the Act’’.
& 2166 /2019 :- 3 -:
The brief facts of the case are as under:
The appellant namely M/s. Indian Ocean Garnet Sands Company Pvt. Ltd is a company incorporated under the provisions of the Companies Act, 1956. It is engaged in the business of processing and export of garnet sand. The return of income for the AY 2014-15 was filed on 26.09.2014 disclosing total income of Rs. 2,61,79,530/-.
Against the said return of income, the assessment was completed by the Assistant Commissioner of Income Tax, Circle I, Tuticorin (hereinafter called “AO”) vide order dated 14.11.2017 passed u/s. 143(3) of the Income Tax Act, 1961 (in short ‘the Act’) after disallowing a sum of �6,53,361/- invoking the provisions of Section 14A of the Act.
Being aggrieved by the above assessment order, an appeal 6. was preferred before the ld.CIT(A) who vide impugned order confirmed the action of the Assessing Officer.
Being aggrieved, the appellant is in appeal before us in the 7. present appeal. It is submitted before us that assessee had not earned exempt income during the previous year relevant to the & 2166 /2019 :- 4 -: assessment year under consideration and therefore resort to the provisions of Section 14A of the Act cannot be made.
On the other hand, the ld. Sr. Departmental Representative 8. placed reliance on the orders of lower authorities.
We heard the rival submissions and perused the material on 9. record. The only issue involved in the present appeal relates to disallowance made u/s.14A of the Act. The law is settled to the extent that in the absence of any exempt income earned during the previous year relevant to assessment year under consideration, resort to the provisions of Section 14A of the Act cannot be made. Reliance in this regard can be made on the decision of Hon’ble Jurisdictional High Court in the case of Redington (India) Ltd. vs. ACIT (2017) 77 taxmann.com 257. In the circumstances, the order of the ld. CIT(A) cannot be upheld and we, reverse the order of ld. CIT(A) on this issue.
The appeal of the assessee stands allowed.
Since, the facts in the present appeal are identical to the facts 10. in for assessment year 2014-15, for the reasons mentioned therein, we allow the appeal as in the same lines & 2166 /2019 :- 5 -: indicated in appeal supra. Hence, the above captioned appeal filed by the assessee stands allowed.
In the result, the appeals filed by the assessee in 11. & 2166/CHNY/2019 for assessment years 2014-15 and 2015-16 are allowed. Order pronounced on 21st day of January, 2020, at Chennai.