ASSISTANT COMMISSIONER OF INCOME TAX 14(3)(2), MUMBAI vs. SUNDARAM MULTIPAP LIMITED, MUMBAI

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ITA 1851/MUM/2018Status: DisposedITAT Mumbai25 July 2019AY 2014-155 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 CIT(A) deleted the disallowance, holding that Section 14A cannot be invoked when no exempt income is earned. The Tribunal upheld this decision, agreeing that the dividend income was taxable and not exempt.

What were the facts?

The assessee company, engaged in manufacturing and trading of stationery, had investments and earned dividend income of Rs. 7,500/-. The Assessing Officer disallowed expenses under Section 14A read with Rule 8D, considering this dividend income as exempt.

What were the issues?

Whether disallowance under Section 14A is permissible when the dividend income earned is taxable and not exempt, and whether such disallowance impacts book profit under Section 115JB.

Which sections of the Income-tax Act were involved?

Section 14A,Section 115JB

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI

Before: SHRI RAMIT KOCHAR, AM & SHRI AMARJIT SINGH, JM

Hearing: 23/07/2019Pronounced: 25/07/2019

O R D E R

PER AMARJIT SINGH, JM:

1.

The revenue has filed the present appeal against the order dated 12.12.2017 passed by the Commissioner of Income Tax (Appeals) -22, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2014- 15.

2.

The revenue has raised the following grounds: - "

1. Whether on the facts and in the circumstances of the case Ld. CIT(A) was justified in relying o the precedents cited which were distinguishable in as much as they were rendered in cases A.Y.2014-15 decided prior to introduction of rule 8D or prior to clarification issued by CBDT Circular No. 5 of 2014.

2. The appellant prays that the order of the Ld. CIT(A) on the above ground of appeal to be set aside that of the AO be restored.

3. The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary.”

3. The brief facts of the case are that the assessee filed its return of income on 29.11.2014 declaring total income to the tune of Rs.59,46,330/-. The return was processed u/s 143(1) of the I.T. Act. 1961. The case was selected for scrutiny. Notices u/s 143(2) & 142(1) of the Act were issued and served upon the assessee. The assessee company was engaged in the business of manufacturing and trading of school note books and paper stationery. On verification, it was found that the assessee has shown the investment amounting to Rs.15,00,50,000/- as on 31.03.2013 and 15,00,50,000/- as on 31.03.2014. The assessee also received the dividend income to the tune of Rs.7,500/-. The assessee did not show the expenditure to earn the exempt income, therefore, the AO applied the provisions of Section 14A r.w.s. 8D of the I.T. Act, 1961 and assessed the expenditure to earn the exempt income in sum of Rs.93,56,125/-. The total income of the assessee was assessed to the tune of Rs.1,53,02,454/- and book profit u/s 115JB of the Act was assessed to the tune of Rs.1,61,00,861/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who deleted the addition raised in view of the provisions u/s 14A r.w. Rule 8D of the Act, therefore, the revenue has filed the present appeal before us.

4.

We have heard the arguments advanced by the Ld. Representative of the parties and perused the record. The Ld. Representative of the revenue has argued that the CIT(A) has wrongly deleted the addition raised in view 2 A.Y.2014-15 of the provisions u/s 14A r.w. Rule 8D of the Act, therefore, the finding of the CIT(A) is not justifiable, hence, is liable to be set aside. However, on the other hand, the Ld. Representative of the assessee has refuted the said contention and argued that the assessee nowhere earn any exempt income, therefore, the CIT(A) has rightly deleted the addition in accordance with law. Before going further, we deem it necessary to advert the finding of the CIT(A) on record.:-

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