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Income Tax Appellate Tribunal, DELHI BENCHES “G”, DELHI
Before: Shri N.K. Saini & Shri Joginder Singh,
Per Joginder Singh (Judicial Member) Both these appeals are by the Revenue against the impugned orders dated 18/05/2016 and 19/05/2016 of the Ld. First Appellate Authority, New Delhi, for Assessment Year 2008-09 and 2009-10, deleting the addition made by the Assessing Officer to the extent of Rs.1,61,10,664/- (A. Y.
2008-09) and Rs.1,50,43,898/- (A.Y.2009-10) made u/s 14A of the Income Tax Act, 1961 (hereinafter the Act) read with Rule-8D of the Income Tax Rules, 1962 (hereinafter the Rules) following the decision in the case of Maxopp Investment Ltd., which is pending disposal.
During hearing, the ld. CIT-DR, Shri S.S.Rana, defended the addition made by the Assessing Officer by advancing arguments, which is identical to the ground raised. The Ld. DR also relied certain decisions in the form of filing written submissions, which are kept on record. On the other hand, none was present for the assessee, in spite of issuance of registered AD notice on 03/11/2017. The assessee neither presented itself nor moved any adjournment therefore, we have no option but to proceed ex-parte, qua the assessee and tend to dispose of these appeals on the basis of material available on record.
2.1. We have considered the submissions of Ld. DR and perused the material available on record. The facts, in brief, are that the assessee is engaged in the business of manufacturing of Mono-chrome Cathode Ray Tubes of various sizes and Machine manufacturing business, declared income of Rs.1,62,17,948/- (AY 2008-09) and Rs.2,36,15,448/- (A.Y. 2009-10). The assessment was completed u/s 143(3) of the Act vide order dated 26/12/2011 (AY 2008-09) at an income of Rs.1,69,74,003/- . The Ld. CIT(A) enhanced the income of the assessee by making disallowance u/s 14A of the Act r.w.r 8D. It is noted that the Ld. CIT(A) considered the decision from Hon’ble Apex Court Ltd. and also the decision of Punjab and Haryana High Court in the Windsome Textiles Industries Ltd. to the effect that when there is no exempt income, there is no application of there is observation made by the Ld. CIT(A) that the assessee company has not earned any dividend income during the year under consideration. Admittedly, there are various decisions from Hon’ble High Courts and also from Hon’ble Apex Court that if no exempt income is received/receivable or earned by the assessee then there can be no disallowance. It is also noted that Hon’ble jurisdictional High Court in the case of CIT vs Holcim India Pvt. Ltd. (ITA No.486 & 299 of 2014), similarly, decided the issue against the Revenue, referring to the decision Punjab & Haryana High Court in the case of CIT vs Lakhani Marketing (ITA No.970/2008) order dated 02/04/2014. Identically, Hon’ble Gujarat High Court in CIT vs Corrtech Energy Pvt. Ltd. (2014) 223 taxman 130 (Guj.) and Allahabad High Court in CIT vs Shivam Motors Pvt. Ltd. (ITA No.88 of 2014) held that in the absence of any tax free income in the hands of the assessee, no disallowance can be made u/s 14A of the Act. Identically was held in Chem Invest. Ltd. vs CIT (2015) 61 taxman.com 118 (Del.).
India Bulls Financial Services Ltd. vs DCIT (2016) 76 taxman.com 268 (Del.), Godrej & Boyce Mfg. Co. Ltd. vs DCIT (2017) 394 ITR 449 (SC), Nahar Spinning Mills Ltd. vs CIT (2017) 82 taxman.com 154 (P & H), DCIT vs Viraj Profiles Ltd. 156 ITD 72 (Mum. Trib.), etc. are concerned, we note that these decision were taken to the peculiar facts and circumstances involved in those cases. The aforementioned cited cases are good laws but the facts in the present appeals are different. Much water has flown on the issue and now it is settled by Hon’ble jurisdictional High Court and also by Hon’ble Apex Court that if no exempt income is earned/received by the assessee during the year under consideration then no disallowance u/s 14A of the Act can be made. The Hon’ble Delhi High Court in Maxopp Investment Ltd. vs CIT (347 ITR 272) (Del.) has extensively dealt with the issue, considering various judicial pronouncements and under the facts and circumstances of that case clearly held that section 14A will not apply, if no exempt income is received or receivable or earned during the relevant previous year. Respectfully following the aforesaid decisions and more infirmity in the order of the Ld. CIT(A) as no contrary facts were brought to our notice by the Revenue, therefore, the ground raised by the Revenue are having no merit. So far as, the contention of the Ld. CIT-DR that the issue is pending before Hon’ble Apex Court, is concerned, we are of the view that the outcome from Hon’ble Apex Court will be binding on each party and as on date, the decision of the Hon’ble jurisdictional High Court favours the case of the assessee, resultantly, the appeals of the Revenue are dismissed.
Finally, the appeals of the Revenue are dismissed.
This order was pronounced in the open court in the presence of the ld. CIT-DR at the conclusion of the hearing on 07/11/2017.