TIDEL PARK LTD.,CHENNAI vs. ACIT CORPORATE CIRCLE 3(1), CHENNAI

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ITA 1469/CHNY/2019Status: DisposedITAT Chennai15 October 2019AY 2014-153 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the assessee did not derive any exempt income during the relevant assessment year, the disallowance under Section 14A read with Rule 8D was not warranted. The addition made by the AO was directed to be deleted.

What were the facts?

The assessee, engaged in IT enabled services, faced a disallowance under Section 14A read with Rule 8D. The CIT(A) dismissed the assessee's appeal against this disallowance.

What were the issues?

Whether disallowance under Section 14A read with Rule 8D is permissible when the assessee has not earned any exempt income.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI

Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN

For Respondent: Shri AR.V. Sreenivasan, JCIT
Hearing: 09.10.2019Pronounced: 15.10.2019

आदेश / O R D E R

PER S. JAYARAMAN, ACCOUNTANT MEMBER:

1.

The assessee filed this appeal against the order of the learned Commissioner of Income Tax (Appeals)-11, Chennai in dated 21.02.2019 for the assessment year 2014-15.

2.

M/s. Tidel Park Limited, is engaged in the business of IT enabled services and BPO service provider. While making the assessment for the assessment year 2014-15, the AO, inter-alia, made disallowance U/s.14A r.w. Rule 8D of Rs.64,22,758/-. Aggrieved against that order, the assessee filed appeal before the CIT(A). The ld.CIT(A) dismissed the appeal. Aggrieved against that order, the assessee filed an appeal before this Tribunal.

3.

The ld.AR pleaded that the ld.CIT(A) failed to appreciate that the assessee has not derived any exempt income during the year relevant to the assessment year and therefore, the AO was not correct in making the disallowance U/s.14A r.w. Rule 8D, as per the Hon’ble Supreme Court decision in the case of CIT vs. Chettinad Logistics P. Ltd., reported in [2018] 95 taxmann.com 250 (SC). In this regard, he filed a copy of the financial statement for the relevant period in support of the contention that the assessee has not received any dividend. Per contra, the ld.DR supported the orders of the lower authorities.

4.

We heard the rival submissions. Since, the assessee did not have any exempt income during the year relevant to the assessment year, in accordance with the Hon’ble Apex Court’s decision, the disallowance made U/s.14A r.w. Rule 8D is not warranted and hence, the AO is directed to delete the addition. The corresponding ground of the assessee is allowed.

5.

In the result, the appeal of the assessee is allowed.

Order pronounced in the court on 15th October, 2019 at Chennai.

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