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Facts
This appeal for A.Y. 2014-15 was filed by the Revenue (Dy. C.I.T) against the NFAC's order which deleted two disallowances against the Oil Industry Development Board (assessee). The disallowances were Rs. 11,16,73,000/- under Section 14A and Rs. 23,68,00,000/- as capital expenditure under Section 36(1)(xii). The assessee, a statutory body providing financial assistance to the oil and gas industry, did not appear during the tribunal proceedings.
Held
The Tribunal dismissed both grounds raised by the Revenue, thereby confirming the CIT(A)'s findings. For Section 14A, it was held that no disallowance was attracted as the assessee had no exempt income, relying on consistent decisions in the assessee's own case up to the Supreme Court. For Section 36(1)(xii), the Tribunal followed previous ITAT and Delhi High Court decisions in the assessee's own case for earlier assessment years, finding identical facts.
Key Issues
Whether disallowance under Section 14A is applicable when the assessee has no exempt income, and whether deduction for capital expenditure under Section 36(1)(xii) is allowable.
Sections Cited
14A, 36(1)(xii), 8D(2)(iii)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI ‘E’ BENCH,
Before: SHRI VIKAS AWASTHY & SHRI NAVEEN CHANDRA
PER NAVEEN CHANDRA, ACCOUNTANT MEMBER:-
This appeal by the assessee is preferred against the order of the
NFAC, Delhi dated 24.04.2023 pertaining to A.Y. 2014-15.
The Revenue has raised the following grounds of appeal:
“1. Whether on the facts and circumstances of the case the ld. CIT(A)/NFAC has erred in deleting the disallowance of Rs. 11,16,73,000/- u/r 8D(2)(iii) of the I.T. Rule and provision of section 14A of the Act without considering the basic facts of the case.
Whether on the facts and circumstances of the case the ld. CIT(A)/NFAC has erred in deleting the disallowance of capital expenditure u/s 36(1)(xii) of the Act amounting to Rs. 23,68,00,000/- without considering the basic facts of the case.”
None appeared on behalf of the assessee in spite of notice.
Therefore, we decided to proceed exparte.
The ld. DR was heard at length. Case records carefully perused.
The facts of the case are that the assessee is a resident
and a statutory body established by an Act of Parliament for
the purpose of providing financial assistance for the
development of oil and gas industry in India. It functions
under the administrative control of Ministry of Petroleum and
Natural Gas.
Briefly, there are two issued involved – One is regarding
disallowance u/s 14A and the other regarding deduction u/s
36(1)(xii) of the Act. With respect to the issue of
disallowance u/s 14A of the Act, the ld. CIT(A), at paras 6.9
to 6.17 of his order has directed the Assessing Officer to
delete the addition of Rs. 11,16,73,000/- by following the
decision of the Hon'ble High Court of Delhi passed in
assessee’s own case for Assessment year 2010-11 reported in
103 Taxmann.com 325 [Delhi] wherein addition made u/s 14A
of the Act was deleted on the ground that the assessee had
no exempt income. The SLP filed by the Revenue was
dismissed vide PCIT Vs. Oil Industry Development Board [2019]
103 Taxmann.com 326 [SC].
With respect to disallowance of expenditure u/s
36(1)(xii) of the Act, the ld. CIT(A) at Paras 6.18 to 6.25 of
his order, has directed the Assessing Officer to allow
deduction u/s 36(1)(xii) of the Act and delete the addition of
Rs. 23,68,00,000/-. The CIT(A) followed the decision of the
co-ordinate ITAT bench in assessee’s own case for A.Ys 2005-
06 to 2007-08 vide order dated 23.11.2012 in ITA Nos. 1128 to
1130/DEL/2012 wherein the issue of applicability of
provisions of section 36(1)(xii) of the Act in respect of
expenses claimed by the assessee towards grant released to
the institutions and royalty paid has been quite extensively
deliberated by placing reliance on its own earlier decision in
assessee’s own case for A.Ys 2003-04 and 2004-05 vide order
in ITA No. 952 & 953/DEL/2007. Accordingly, the appeal of
the Revenue on this issue was also dismissed.
We have heard the ld DR who was fair to place on record
the recent order dated 25.04.2024 in ITA No. 1305/DEL/2023,
in assessee’s own case for A.Y 2013-14, where the co-
ordinate bench of ITAT Delhi has also followed the earlier
decision of Hon’ble Delhi High Court and ITAT and had
dismissed the appeal of the Revenue.
We have carefully perused the orders of the authorities
below and the relevant material on record. We find that in the
instant year also the assessee has not earned any exempt income. The
ld. DR has also not pointed out any change in the facts. Since the
factual matrix remains same, no addition u/s 14A of the Act is
attracted in the assessee’s case for the instant year. Similarly, with
regards to the issue of disallowance u/s 36(1)(xii) of the Act, the facts
and circumstances are identical to the facts for A.Y 2013-14. The co-
ordinate bench decision for A.Y 2005-06 to 2007-08 [supra] and A.Y
2013-14 applies mutatis mutandis to the nature and purpose of
expense of the instant year also. We, therefore, hold that the AO
was in error in disallowing the expenses u/s 36(1)(xii).
We are, therefore, of the considered opinion that there
is no error in the finding of the ld. CIT(A). We find that the
ld. CIT(A) has followed the order of the Hon'ble High Court of
Delhi and Delhi Tribunal’s order in assessee’s own case and
has allowed its appeals. Since there is no change in the facts
and circumstances, by respectfully following the Hon'ble High
Court of Delhi and Tribunal orders, as discussed above, we
dismiss both the grounds raised by the Revenue before us and
we confirm the finding of the ld. CIT(A). Accordingly, both
the grounds raised in this appeal stand dismissed.
In the result, the appeal of the assessee in ITA No.
1847/DEL/2023 stands dismissed.
The order is pronounced in the open court on 13.06.2024.
Sd/- Sd-
[VIKAS AWASTHY] [NAVEEN CHANDRA] JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 13th JUNE, 2024.
VL/