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Income Tax Appellate Tribunal, MUMBAI BENCH “E”, MUMBAI
Before: SHRI C.N. PRASAD & SHRI RAJESH KUMAR
Per Rajesh Kumar, Accountant Member:
The present appeal has been preferred by the Revenue against the order dated 15.11.2016 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2012-13.
The Revenue has raised the following grounds of appeal: “(I) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred on facts and in law in not upholding the action taken by the AO in treating the rental income from Operating Family Entertainment Center cum Mall and Maintenance Charges under the head "Income from House Property " against the assessee's claim of "Profit and Gains from Business or Profession?
ii) Whether on the facts and in the circumstances of the case and in 2 M/s. E-City Real Estates Pvt. Ltd. law. The Ld. CIT(A) has erred on facts and in law in completely ignoring the decision of the Hon'ble Supreme Court in the case of Shambhu Investment (P) Ltd 129 Taxman 17 (SC) wherein it is held that income derived by an assessee by letting out the property is assessable as income from property and not business income?
(iii) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance u/s 14A as the assessee has not earned exempt income when disallowance u/s 14A can be made even when there is no exempt income as per the Circular of CBDT 05/2014 dated 11.02.2014 and Rule 8D(2)(iii) can be applied even if own funds are utilized?"
The issue raised in ground No.1 & 2 by the Revenue is against the decision of Ld. CIT(A) holding that income from Operating Family Entertainment center cum Mall and Maintenance Charges are business income as against the finding of AO treating the same as income from house property.
At the outset, the Ld. A.R. brought to our notice that the similar issue cropped up in the earlier year also before the co- ordinate benches of the Tribunal and was decided in favour of the assessee. The Ld. A.R. submitted that the first appellate authority decided the issue in favour of the assessee by following the decisions of the co-ordinate benches of the Tribunal.
The Ld. D.R., on the other hand, appeared to be fairly agreed to the contention of the Ld. A.R.
After hearing the rival contentions of both the parties and perusing the material on record, we find that the first appellate authority has decided the issue in favour of the assessee after following the decision of the co-ordinate bench
3 M/s. E-City Real Estates Pvt. Ltd. of the Tribunal in ITA No.1435 & 1436/M/2012 in AY 2009-10 & 2010-11. We also observe that the co- ordinate bench has decided the issue in ITA No.5503/M/2016 in A.Y. 2011-12 in favour of the assessee following earlier year order.
Thus, it is clear from the perusal of the order that the issue is settled in favour of the assessee in & 1436/M/2012 for A.Y. 2009-10 & 2010-11, and also in other years. We, therefore, following the decisions of the co- ordinate benches of the Tribunal, uphold the order of the Ld. CIT(A). Resultantly, grounds No.1 & 2 are dismissed.
The third ground of appeal is against the deletion of disallowance under section 14A by Ld. CIT(A) as the made by the AO towards the earning of exempt income during the year.
9. The brief facts of the case are that the assessee earned Rs.29,061/- by way of dividend which was offered to tax in the computation of total income and therefore there is no exempt income during the year. According to the AO, the assessee has not made any disallowance under section 14A of the Act and therefore the provisions of section 14A read with Rule 8D has to be invoked and thereafter, after recording satisfaction disallowed a sum of Rs.15,01,887/- by holding that disallowance under section 14A read with rule 8D(2)(iii) has to be made even when the assessee has not made any exempt income from the investments.
4 M/s. E-City Real Estates Pvt. Ltd. 10. The Ld. CIT(A) has allowed the appeal of the assessee by following the decision of Hon’ble Delhi High Court in the case of Cheminvest Ltd. vs. CIT in ITA No.749 of 2014 and the various other decisions of the Jurisdictional High Court.
The Ld. D.R. relied on the order of the AO and prayed for the reversal of the order of the Ld. CIT(A) and restoration of the order of AO.
The Ld. A.R. submitted that since the assessee has not claimed any exempt income, no disallowance under section 14A read with rule 8D is called for which is settled legal position as of now and therefore the order of Ld. CIT(A) on this issue needs to be affirmed.
Considering the rival submissions of both the parties and perusing the material on record, we find that the issue is whether disallowance under section 14A read with rule 8D, is to be made when there is no deduction claimed towards exempt income. In our opinion, no disallowance under section 14A is called for when the assessee did not claim deduction towards exempt income during the year. Accordingly, we find no infirmity in the order of Ld. CIT(A) which has been passed after following the decision of the Hon’ble Delhi High Court in the case of Cheminvest Ltd. vs. CIT (supra). Besides, the issue has been settled in the case of ACIT vs. Vireet Investments 165 ITD 27 (Special Bench) wherein it has been held that only those investments in shares and securities should be considered for the purpose of average investment
5 M/s. E-City Real Estates Pvt. Ltd. tabulated to work out the disallowance under section 14A read with rule 8D(2)(iii). We therefore affirm the order of Ld. CIT(A) on this issue by dismissing the ground raised by the Revenue.
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 24.07.2018.