MAJESTIC INFRACON P.LTD,MUMBAI vs. DCIT 12(3)(2), MUMBAI

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ITA 2717/MUM/2017Status: DisposedITAT Mumbai19 September 2018AY 2012-132 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that no disallowance under Section 14A is to be made if the assessee has no exempt income during the year. The matter was restored to the AO to verify the assessee's claim of no exempt income.

What were the facts?

The assessee company appealed against a disallowance made under Section 14A of the Income Tax Act, read with Rule 8D. The disallowance was made by the Assessing Officer (AO) for the assessment year 2012-13.

What were the issues?

Whether disallowance under Section 14A is permissible when the assessee has no exempt income. The applicability of the Delhi High Court's decision in Cheminvest Ltd. was considered.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, D Bench, Mumbai

Before: Shri R.C. Sharma & Shri Ram Lal Negi

For Appellant: Shri K.G. Bohra
For Respondent: Shri Chaitnya S. Anjaria
Hearing: 17.09.2018Pronounced: 19.09.2018

This appeal has been filed by the assessee against the order of the CIT(A)-20, Mumbai dated 02.12.2016 for A.Y. 2012-13 in the matter of order passed under Section 143(3) of the Income Tax Act, 1961 (hereinafter “the Act”).

2.

In this appeal assessee is aggrieved for the disallowance made under Section 14A of the Act r.w. Rule 8D of I.T. Rules.

3.

We have heard the rival contentions and found that the disallowance has been made under Section 14A of the Act without considering the fact that the assessee is having no exempt income during the year under consideration. In view of the decision of the Hon'ble Delhi High Court in the case of M/s. Cheminvest Ltd. in of 2014 dated 02.09.2015, no disallowance under Section 14A is to be made when there is no exempt income. Accordingly we restore the matter back to the file of the AO to verify assessee’s claim that no exempt income has been earned during the M/s. Majestic Infracon P. Ltd. year and to decide the same in terms of the decision of the Hon'ble Delhi High Court in the case of Cheminvest Ltd. (supra).

4.

In the result, the appeal filed by the assessee is allowed for statistical purposes.

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