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Income Tax Appellate Tribunal, DELHI BENCH: ‘A’ NEW DELHI
Before: SHRI N. K. SAINI & MS SUCHITRA KAMBLE
PER SUCHITRA KAMBLE, JM
The appeal is filed by the Revenue against the order dated 17/3/2016 passed by CIT(A)-30, New Delhi.
The grounds of appeal are as under:- “ (a) On the fact and in the circumstances of the case, the Ld.CIT(A) has erred in law and on facts in deleting the disallowance u/s 14A read with Rule 8D of the Income Tax Rules ignoring the fact that the provisions of Section 14A are mandatory.
(b) On the fact and in the circumstances of the case, the Ld.CIT(A) has erred in law and on facts is not appreciating the content of CBDT Circular No. 05/2014 dated 11/2/2014 which clarifies that Rule 8D read with Section 14A of he Act provides for disallowance of he expenditure even where tax payer in particular year, has not earned any exempt income
(c) That the order of the CIT(A) is erroneous and is not tenable on facts and in law. (d) That the grounds of appeal are without prejudice to each other.”
During the year under consideration, search and seizure action u/s 132 took place on 30/3/2012. The return of income was filed on 30/9/2012 declaring loss of Rs.1,82,291/-. Consequently, the case of appellant for the Assessment Year under consideration i.e. Assessment Year 2012-13 was selected or scrutiny and notices u/s 143(2) and 142(1) dated 5/8/2013, 9/9/2013 and 10/9/2013 were issued. In response to these notices, the AR of the appellant appeared before the A.O time to time and filed the relevant details. Assessment u/s 143(3) was completed vide order dated 30/3/2015 at total income of Rs.2,69,37,430/- after making following addition:- (a) On account of disallowance u/s 14A
Being aggrieved the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee by relying on the Jurisdictional High Court decision in case of CIT Vs. Holcim India Pvt. Ltd.
The Ld. DR relied upon the order of the Assessing Officer and submitted that the addition was rightly made.
The Ld. AR submitted that there was no exempt income earned by the assessee during the year. Therefore, Rule 8D will not be applicable in the present case. The Ld. AR relied upon the order of the Hon’ble Delhi High Court in case of Cheminvest Investment Ltd. reported at 371 ITR 23.
We have heard both the parties and perused the material available on record. It is clear from the records that that there was no exempt income attributable in the hands of the assessee. Therefore, applying Section 14A read with Rule 8D is not appropriate on part of Assessing Officer. The CIT(A) rightly held that no expenditure can be disallowed against Nil exempt income and this view is also supported by the decision of the Jurisdictional High Court of Delhi in case of CIT Vs. Holcim India Pvt. Ltd. (Supra) and Chemnvest Investment Ltd. reported at 371 ITR 23.
In result, appeal of the Revenue is dismissed.
Order pronounced in the Open Court on 07th November, 2017.