AVINASH BHOSALE INFRASTRUCTURE PVT. LTD.,PUNE vs. DEPUTY COMMISSIONER OF INCOME-TAX,

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ITA 985/PUN/2016Status: DisposedITAT Pune29 November 2018AY 2009-104 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that no disallowance under Section 14A read with Rule 8D is warranted if the assessee has not earned any exempt income in the relevant assessment year. This decision was based on various High Court judgments.

What were the facts?

The assessee company claimed no disallowance under Section 14A read with Rule 8D for assessment years 2009-10 and 2012-13, stating it earned no exempt income. The Assessing Officer made disallowances based on investments.

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

Income Tax Appellate Tribunal, “B” BENCH, PUNE

Before: SHRI D. KARUNAKARA RAO, AM & SHRI VIKAS AWASTHY, JM

For Appellant: Shri Nikhil Pathak
For Respondent: Shri Pankaj Garg
Hearing: 11.09.2018Pronounced: 29.11.2018

PER VIKAS AWASTHY, JM

These two appeals by the assessee are directed against the order of Commissioner of Income Tax (Appeals)-1, Pune for the assessment years 2009-10 & 2012-13, respectively. Both the impugned orders are of even date i.e. 01.02.2016. A.Ys.2009-10 & 2012-13

2.

Since the issue raised in both the appeals is identical i.e. disallowance

u/s.14A r.w.r 8D, these appeals are taken up together for adjudication and are disposed of vide this common order.

3.

Shri Nikhil Pathak appearing on behalf of the assessee submitted that the assessee is a Private Limited company and is engaged in the business of building, operating infrastructure facilities etc. In assessment year 2009-10,

the Assessing Officer vide order dated 06.02.2015 passed u/s.143(3) r.w.s.

147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) made

disallowance of Rs.5,12,810/- u/s.14A r.w.r.8D. The ld. AR submitted that during the period relevant to the assessment year under appeal, the assessee has not earned any exempt income. The ld. AR contended that where no exempt income has been earned by the assessee, no disallowance

u/s.14A r.w.r. 8D is warranted.

3.

1 The ld. AR further submitted that in assessment year 2012-13 as well, the Assessing Officer made disallowance of Rs.52,14,723/- u/s.14A

r.w.r.8D. The assessee in the period relevant to assessment year 2012-13

also has not earned any exempt income, therefore, no disallowance u/s.14A

r.w.r.8D is warranted.

4.

On the other hand, Shri Pankaj Garg representing the Department

vehemently defended the impugned order. The ld. DR submitted that disallowance under Rule 8D is mandatory where the assessee has made

investment irrespective of the fact whether the assessee has earned dividend

income from the investment or not. The ld. DR placed reliance on the CBDT

Circular No.5/2014 dated 11.02.2014 and the decision of Amritsar Bench of A.Ys.2009-10 & 2012-13 in both the appeals is with respect to disallowances made u/s.14A r.w.r.8D

as under:

Assessment year Disallowance 2009-10 Rs.5,12,810/- 2012-13 Rs.52,14,723/-

A perusal of the assessment orders for the respective assessment

years show that disallowance has been made under clause (iii) of Rule 8D(2)

i.e. .5% of the average value of investment. It is an undisputed fact that in both the assessment years under appeal, the assessee has not earned any exempt income. We find that the Hon'ble Delhi High Court in the case of relevant assessment year, no disallowance u/s.14A is to be made. Similar

view has been taken by the Hon'ble Madras High Court in the case of as 392 ITR 633 and the Hon'ble Gujarat High Court in the case of impugned orders for assessment years 2009-10 and 2012-13 are set aside

and both the appeals of assessee are allowed. A.Ys.2009-10 & 2012-13

6.

In the result, both the appeals of the assessee are allowed.

Order pronounced on Thur ay, the 29th day of November, 2018. (डी. क"णाकरा राव/D. KARUNAKARA RAO) ("वकास अव"थी /VIKAS AWASTHY) लेखा सद"य/ACCOUNTANT MEMBER "या"यक सद"य/JUDICIAL MEMBER

पुणे / Pune; "दनांक / Dated : 29th November, 2018. SB आदेश क" ""त"ल"प अ"े"षत / Copy of the Order forwarded to :

अपीलाथ" / The Appellant.

1.

""यथ" / The Respondent.

2.3.

The CIT(Appeals)-1, Pune.

4.

The Pr. CIT-1, Pune. "वभागीय ""त"न"ध, आयकर अपील"य अ"धकरण, “बी” ब"च, 5. पुणे / DR, ITAT, “B” Bench, Pune. गाड" फ़ाइल / Guard File. 6. //// आदेशानुसार / BY ORDER,

"नजी स"चव / Private Secretary आयकर अपील"य अ"धकरण, पुणे / ITAT, Pune.

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