DCIT, CIRCLE - 8(2), KOLKATA, KOLKATA vs. M/S. UNISYS SOFTWARE AND HOLDING INDUSTRIES LTD., KOLKATA

The assessee in the present case is a Company, which is engaged in the business of making investment in shares and securities, giving loans and advances and dealing in Software & Hardware. The return of income for the year under consideration was filed by it on 10.09.2013 declaring total income of Rs.88,46,060/-. In the assessment completed under M/s. Unisys Software And Holding Industries Limited section 143(3) vide an order dated 31.03.2016, the total income of the assessee was determined by the Assessing Officer at Rs.1,59,16,449/- after making an addition of Rs.70,70,394/- on account of disallowance under section 14A read with Rule 8D of the Income Tax Rules, 1962.

Against the order passed by the Assessing Officer under section 143(3), an appeal was preferred by the assessee before the ld. CIT(Appeals) and after considering the submissions made by the assessee as well as material available on record, the ld. CIT(Appeals) deleted the disallowance made by the Assessing Officer under section 14A read with Rule 8D for the following reasons given in paragraph no. 3 of his impugned order:- “3. The main ground of the appeal is regarding the disallowance made by the Assessing Officer of Rs.70,70,394/- u/s 14A. The Authorized Representative of the appellant in his written submissions has argued that no exempted income has been earned by the appellant during the previous year and therefore no disallowance u/s 14A should be made. The Authorized Representative of the appellant has relied on the decision of Hon’ble Allahabad High Court in the case of Shivam Motors Pvt. Ltd. in ITA 88 of 2014, vide order dated 05.05.2014 for the proposition that disallowance u/s.14A should not be made if no exempted income has been earned. Moreover, the Hon’ble Delhi High Court in the case of Cheminvest Limited has also held that no disallowance u/s. 14A can be made if no exempted income has been earned. Respectfully following the above decision, the addition made by the Assessing Officer is hereby deleted”.

Aggrieved by the order of the ld. CIT(Appeals), the Revenue has preferred this appeal before the Tribunal.

At the time of hearing fixed this case today, none has appeared on behalf of the assessee. The ld. D.R, however, has fairly and frankly conceded that the solitary issue involved in this appeal of the Revenue relating to disallowance under section 14A is squarely covered, inter alia, by the decision of the Hon’ble Delhi High Court in the case of Cheminvest M/s. Unisys Software And Holding Industries Limited Limited (78 ITR 033), wherein it was held that if there is no exempt income actually earned by the assesese during the relevant year, no disallowance under section 14A on account of expenses incurred in relation to such exempt income can be made under section 14A. Respectfully following the said decision of Hon’ble Delhi High Court in the case of Cheminvest Limited (supra) as well as the decision of the Hon’ble Calcutta High Court in the case of CIT –vs. - REI Agro Limited in G.A. No. 3581 of 2013 dated 09.04.2014 (ITAT No. 220 of 2013), we uphold the impugned order of the ld. CIT(Appeals) deleting the disallowance made by the Assessing Officer under section 14A and dismiss this appeal of the Revenue.

In the result, the appeal of the Revenue is dismissed. Order pronounced in the open Court on January 01, 2019.