INCOME TAX OFFICER, WARD-4(1)(3), BANGALORE vs. M/S. MILAN MINERALS PVT LTD, BANGALORE

The revenue raised the following grounds :

Brief facts of the case are that the assessee filed return of income for the Assessment Year 2013-14 declaring loss of Rs.17,50,940 against which the Assessing Officer completed the assessment vide order dt.20.12.2015 passed under Section 143(3) of the Income Tax Act, 1961 (in short 'the Act') after making disallowance of Rs.16,77,960 invoking the provisions of Section 14A of the Act.

The contention of the assessee is that the investments were made, but no exempt income or dividend income was received, therefore the provisions of Section 14A of the Act cannot be invoked, the Assessing Officer denied the claim of the assessee placing reliance on CBDT Circular No.5 of 2014 Dt.11.12.2014. Being aggrieved the assessee filed appeal before the Ld. CIT (Appeals). The learned CIT (Appeals) deleted the addition made under Section 14A of the Act on the ground that the assessee had not received any exempt income during the year under consideration. Being aggrieved the revenue is in appeal before us.

We have heard the rival contentions and perused the material on record. Now it is settled proposition of law that the provisions of Section 14A cannot be invoked in the absence of exempt income. Reliance in this regard can be placed on the decision of Special Bench of ITAT, Hyderabad in the case of ACIT Vs. Progressive Constructions Ltd. 92 taxmann.com

The decision of the learned CIT (Appeals) is in consonance with the ratio laid down in the Special Bench (supra). Therefore, we do not find

In the result, the appeal of revenue is dismissed.