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Income Tax Appellate Tribunal, “D” BENCH: KOLKATA
Before: Shri P.M. Jagtap & Shri A. T. Varkey, JM]
ORDER
Per Shri A.T.Varkey, JM
This is an appeal preferred by the revenue against the order of Ld. CIT(A)-4, Kolkata dated 15.01.2018 for AY 2014-15.
The sole ground of appeal of revenue is against the action of the Ld. CIT(A) in deleting the addition made by the AO applying sec. 14A of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) read with Rule 8D of the Income-tax Rules, 1962 (hereinafter referred to as the “Rules”).
3. At the outset itself, the Ld. AR drew our attention to the fact that the assessee company did not earn any exempt income which fact has been acknowledged by the AO in para 2 of the assessment order wherein the AO in his own words has stated that there was no exempt income earned during the financial year relevant to AY 2014-15. According to the Ld. Counsel, the fact that the assessee has not earned any exempt income has been taken note by the Ld. CIT(A) at para 3 wherein the Ld. CIT(A) in his own words has held as under: “All the grounds are related to the above disallowance. During the course of appellate proceedings, the Ld. AR has stated that the assessee has not earned any exempt income, therefore, no disallowance u/s. 14A could have been made. I agree with the contention of the Ld. AR. Following the decision of the Hon’ble Kolkata Tribunal in the case of CIT Vs. REI
M/s. Visa Infrastructure Ltd., AY- 2014-15 Agro Ltd. which has been affirmed by Calcutta High Court, no disallowance could be made under Rule 8D where no exempt income has been earned.”
We note that the aforesaid finding of fact of the Ld. CIT(A) that the assessee was not in receipt of any exempt income has not been neither challenged by the Department nor the Ld. DR was able to point out from the records that the assessee had in fact earned any exempt income in the year under consideration. Since the assessee has not earned any exempt income applying the law as laid by the Hon’ble Delhi High Court in CIT Vs. Cheminvest Ltd. (2015) 378 ITR 33 (Del.) wherein it was held that when there being no exempt income earned by the assessee, no disallowance u/s.14A read with Rule 8D can be applied mechanically to disallow expenditure incurred to earn exempt income. The Hon’ble jurisdictional High Court in CIT Vs. M/s. Ashika Global Securities Ltd. in ITAT 100 of 2014, GA 2122 of 2014 dated 11.06.2018 has approved the aforesaid proposition of law. In such a scenario, we are not inclined to interfere with the action of the Ld. CIT(A) and the same is hereby confirmed. Therefore, the appeal of the revenue is dismissed.
In the result, appeal of revenue is dismissed.