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Income Tax Appellate Tribunal, DELHI BENCH “D”: NEW DELHI
Before: SHRI AMIT SHUKLA & SHRI PRASHANT MAHARISHI
O R D E R PER PRASHANT MAHARISHI, A. M. 1. This is an appeal filed by the revenue against the order of the ld CIT(A)- VIII, New Delhi dated 27.01.2015 for the Assessment Year 2011-12. 2. The revenue has raised the following grounds of appeal:- “1. That on the facts and circumstances of the case and in law, the ld CIT(A) has erred in deleting the disallowance of Rs. 2378184/- made by the AO u/s 14A r/w Rule 8D of the Act.
2. That on the facts and circumstances of the case and in law, the ld CIT(A) has erred in deleting the disallowance of Rs. 2641449/- made by the AO on a/c of claim of deduction u/s 80IC of the Act.
3. That the order fo the ld CIT(A) is erroneous and is not tenable on facts and in law.
4. That the grounds of appeal are without prejudice to each other.”
Brief facts of the case shows that the assessee is a company engaged in the business of manufacturing of automobile components. It filed its return of income on 28.09.2011 showing normal income of Rs. 47947832/- and book profit u/s 115JB of the Income Tax Act, 1961 of Rs. 11708227/-. The case of the assessee was assessed u/s 143(3) of the Act ACIT Vs. Life Long Ltd (Assessment Year: 2011-12) on 13.03.2014, wherein, two disallowances were made. The ld AO made disallowance u/s 14A of Rs. 2378184/- and the second disallowance was with respect to deduction u/s 80Ic of the Act of Rs. 2641449/-. Both these disallowance travelled before the ld CIT(A) who deleted the same and therefore, the revenue is in appeal before us.
The first ground of appeal
is with respect of disallowance of Rs. 2378184/- u/s 14A read with Rule 8D of the Income Tax Rules. During the course of assessment proceedings the ld AO vide para No. 3 of the assessment order noted that the assessee has huge investment of Rs. 7.61 crores at the end of the year and Rs. 5.11 crores at the beginning of the year and therefore, disallowance u/s 14A is required to be made. The assessee submitted that it has not earned any exempt income during the year under consideration and therefore provision of Section 14A does not apply. The ld AO rejected the contention of the assessee and applied the provision of Rule 8D of the Act and worked out disallowance of Rs. 2378184/-. The ld CIT(A) deleted the same.
5. The ld AR supported the order of the ld AO. Despite notice none appeared on behalf of the assessee.
6. We have carefully considered the contention of the ld A R and the orders of the lower authorities. In the present case the assessee has not earned exempt income and therefore, there cannot be any disallowance u/s 14A of the Act. The Hon’ble Delhi High Court in Cheminvest Ltd Vs. CIT in… has held so. In view of this we do not find any reason to deviate from the order of the ld CIT(A), accordingly, ground No. 1of the appeal is dismissed.
7. Ground No. 2 of the appeal is with respect to disallowance of deduction u/s 80IC of the Act of miscellaneous income. The assessee is carrying on manufacturing activities at Haridwar Unit which is eligible for deduction u/s 80Ic. It was found by the ld AO that certain miscellaneous income were credited to the profit and loss account on which the assessee has claimed deduction u/s 80Ic of the Act considering them as income derived