NELSUN PAPER MILL LIMITED,CHENNAI vs. ITO CORPORATE WARD 4(4), CHENNAI

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ITA 1711/CHNY/2019Status: DisposedITAT Chennai28 November 2019AY 2014-154 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that Section 14A cannot be invoked if the assessee has not earned any exempt income. Following the jurisdictional High Court and Supreme Court decisions, the disallowance under Section 14A was deleted.

What were the facts?

The assessee's appeals concerned the disallowance made under Section 14A of the Income Tax Act. The Revenue's appeal challenged partial relief granted by the CIT(A) on a similar disallowance.

What were the issues?

Whether Section 14A of the Income Tax Act can be invoked when the assessee has not earned any exempt income.

Which sections of the Income-tax Act were involved?

Section 14A

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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI

Before: SHRI GEORGE MATHAN & SHRI INTURI RAMA RAO

For Appellant: Mr. G. Baskar &, Mr. I. Dinesh, Advocates
Hearing: 28.11.2019

Assessee by : Mr. G. Baskar & Mr. I. Dinesh, Advocates Department by : Ms. R. Anitha, JCIT : 28.11.2019 सुनवाई क� तार�ख/Date of Hearing : 28.11.2019 घोषणा क� तार�ख /Date of Pronouncement आदेश / O R D E R

ITA Nos.1711 & 1712/Chny/2019 & :- 2 -: PER SHRI GEORGE MATHAN, JUDICIAL MEMBER: case of M/s. Nelsun Paper Mill Limited, Chennai against the order of the learned Commissioner of Income Tax (Appeals)-8, Chennai (hereinafter called as ‘CIT(A)’) in appeal Nos. & 289/16-17 dated 12.03.2019 for the Assessment Years 2014-15 & 2015-16. ITA No.1420/Chny/2019 is an appeal filed by the Revenue in the case of M/s. KGS Nelsun Paper Mill Limited against the order of the learned Commissioner of Income Tax (Appeals)-8, Chennai, in I.T.A No.65/17-18 dated 20.03.2019 for the Assessment Year 2015-16. As all these appeals are inter-connected and involve identical issues, they have been disposed of by this common order.

Mr. G. Baskar & Mr. I. Dinesh, Advocates represented on behalf of 2. the Assessee and Ms. R. Anitha, JCIT represented on behalf of the Revenue.

3.

It was submitted by the learned Authorized Representative that the only issue in the assessee’s appeals was against the action taken by the learned CIT(A) in confirming the disallowance made by the Assessing Officer by invoking the Provision of Section 14A of the Income Tax Act, 1961. It was a submission that the assessee has not earned exempt income and consequently in view of the decision of the Hon’ble Jurisdictional High Court in the case of Commissioner of Income Tax, (Central)-1, Chennai Vs. Chettinad Logistics (P.) Ltd., reported in [2017] 80 taxmann.com 221 (Madras), wherein it has been held that where no exempt income was earned in the relevant

ITA Nos.1711 & 1712/Chny/2019 & :- 3 -: assessment years by the assessee, Section 14A of the Income Tax Act, 1961 could not be invoked. It was a submission that the said decision of the Hon’ble Jurisdictional High Court has also been affirmed by the Hon’ble Supreme Court by dismissal of the SLP reported in [2018] 95 taxmann.com 250 (SC).

4.

The learned Authorized Representative drew our attention to the assessment order, wherein it has been categorically mentioned that the assessee has not earned any exempt income.

5.

In reply, the learned Departmental Representative vehemently supported the order of the learned Assessing Officer and the learned CIT(A).

6.

We have considered the rival submission and perused the materials available on record.

7.

As it is noticed that the assessee has not earned any exempt income during the relevant assessment years, respectfully following the decision of the Hon’ble Jurisdictional High Court in the case of the Commissioner of Income Tax, (Central)-1, Chennai Vs. Chettinad Logistics (P.) Ltd., which has been affirmed by the Hon’ble Supreme Court, the disallowance as made by the Assessing Officer and as confirmed by the learned CIT(A) by invoking the Provision of Section 14A of the Income Tax Act, 1961 stands deleted.

Consequently, the appeals of the assessee are allowed.

ITA Nos.1711 & 1712/Chny/2019 & :- 4 -: 8. In the appeal of the Revenue in ITA No.1420/Chny/2019, the Revenue has challenged the action of the learned CIT(A) in giving partial relief in respect of the disallowance made u/s.14A of the Income Tax Act, 1961. As we have already allowed the assessee’s appeal and held that no disallowance u/s.14A is liable to be made in the hands of the assessee for the relevant assessment years, as the assessee has not earned any exempt income, the appeal of the Revenue is dismissed.

9.

In the result, the appeals of the assessee are allowed and the appeal of the Revenue stands dismissed.

Order pronounced on the 28th day of November, 2019 in Chennai.

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