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Income Tax Appellate Tribunal, MUMBAI BENCH “H”, MUMBAI
Before: SHRI G.S.PANNU & SHRI PAWAN SINGH
ORDER PER G.S.PANNU,A.M:
The captioned appeal filed by the assessee pertaining to assessment year 2012-13 is directed against an order passed by CIT(A)- 17, Mumbai dated 02/03/2017, which in turn arises out of an order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 (in short ‘the Act’) dated 20/03/2015.
In this appeal the solitary issue revolves around a disallowance of Rs.9,61,795/- made by the income tax authorities under section 14A of the Act by applying Rule 8D(2)(iii) of the Rules.
At the time of hearing, the Ld. Representative for the assessee made a singular argument to the effect that since assessee has not received any exempt income during the year under consideration, no disallowance under section 14A of the Act was called for in view of the judgment of the Hon’ble Delhi High Court in the case of Cheminvest Ltd. vs. CIT, 378 ITR 33 (Del). It has been pointed out that the only investment made by the assessee was in the shares of its subsidiary company and during the year no dividend income was received. In order to complete the factual matrix, it has also been pointed out that w.e.f. 01/04/2012 the assessee company as well as its subsidiary investee company have merged with one Karamtara Engg. Pvt. Ltd. and, therefore, in this view of the matter the investment in question would never generate any income. Be that as it may, it clearly emerges from the discussion in para 5.7 of the assessment order that during the year under consideration no exempt income has been received and, therefore, the ratio of the judgment of the Hon’ble Delhi High Court in the case of Cheminvest Ltd.(supra) is clearly attracted.
The Ld. Departmental Representative has not controverted the factual matrix and has merely relied upon the orders of the authorities below.
We have carefully considered the rival submissions. Following the ratio of the Hon’ble Delhi High Court in the case of Cheminvest Ltd.(supra) and in the absence of any actual receipt of exempt income during the year under consideration, no expenditure is liable to be disallowed under section 14A of the Act. In view of the above, the order of the CIT(A) is set aside and the Assessing Officer is directed to delete the addition of Rs. Rs.9,61,795/- made under section 14A of the Act.
In the result, the appeal of the assessee is allowed as above.