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Income Tax Appellate Tribunal, “B” BENCH, PUNE
Before: SHRI D. KARUNAKARA RAO, AM & SHRI VIKAS AWASTHY, JM
आदेश / ORDER
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.
2 ITA Nos.985 & 986/PUN/2016 A.Ys.2009-10 & 2012-13
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.
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.
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
3 ITA Nos.985 & 986/PUN/2016 A.Ys.2009-10 & 2012-13
the Tribunal in the case of Lally Motors India (P) Ltd. Vs. Pr. Commissioner
of Income Tax reported as 170 ITD 370.
We have heard the submissions made by representatives of rival sides
and have perused the orders of Authorities below. The solitary issue raised
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
Cheminvest Ltd. Vs. Commissioner of Income Tax, 378 ITR 33 (Delhi) has
held that where no exempt income has been earned by the assessee in the
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
Redington (India) Ltd. Vs. Additional Commissioner of Income Tax reported
as 392 ITR 633 and the Hon'ble Gujarat High Court in the case of
Commissioner of Income Tax Vs. Corrtech Energy P. Ltd. reported as 372
ITR 97. Thus, in view of unrebutted facts and in the light of judgments
mentioned above, we are of considered view that no disallowance under
Rule 8D is called for in the impugned assessment years. Accordingly, the
impugned orders for assessment years 2009-10 and 2012-13 are set aside
and both the appeals of assessee are allowed.
4 ITA Nos.985 & 986/PUN/2016 A.Ys.2009-10 & 2012-13
In the result, both the appeals of the assessee are allowed.
Order pronounced on Thursday, the 29th day of November, 2018.
Sd/- Sd/- (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.
// True Copy // आदेशानुसार / BY ORDER,
�नजी स�चव / Private Secretary आयकर अपील�य अ�धकरण, पुणे / ITAT, Pune.