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

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ITA 1454/BANG/2017Status: DisposedITAT Bangalore25 May 2018AY 2013-144 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that Section 14A of the Income Tax Act cannot be invoked in the absence of any exempt income. The decision of the CIT(Appeals) deleting the addition was upheld.

What were the facts?

The Assessing Officer disallowed expenses under Section 14A for the assessment year 2013-14, invoking the provisions of the Act. The assessee contended that no exempt income was received, thus Section 14A was not applicable.

What were the issues?

Whether disallowance under Section 14A is permissible when no exempt income has been earned by the assessee.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, BANGALORE BENCH ‘ B ’

Before: SHRI N.V. VASUDEVAN & SHRI INTURI RAMA RAO

For Appellant: Smt. Padma Meenakshi, JCIT (D.R)

Per Shri Inturi Rama Rao, A.M. : This appeal filed by the revenue is directed against the order of Learned Commissioner of Income Tax (Appeals)-4, Bangalore dt.24.3.217 for the Assessment Year 2013-14.

2.

The revenue raised the following grounds :

3.

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.

4.

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.

5.

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

104.

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

CIT (Appeals). Hence the grounds raised by the revenue are dismissed.

6.

In the result, the appeal of revenue is dismissed.

Order pronounced in the open court on the 25th day of May, 2018.

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