ACIT CORPORATE CIRCLE 5(2), CHENNAI vs. M/S PVP VENTURES LTD, CHENNAI
In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal held that disallowance under Section 14A cannot be made when the assessee has not earned any exempted income. The CIT(Appeals) rightly relied on previous tribunal and high court orders.
What were the facts?
The Revenue appealed against the CIT(Appeals)'s order restricting disallowance under Section 14A to the extent of exempted income. The assessee had earned dividend income, but the disallowance computed by the AO was significantly higher.
What were the issues?
Whether disallowance under Section 14A is permissible when no exempted income is earned by the assessee.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cases cited in this judgment(1)Show listHide list
Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.
- Redington (India) Ltd. v. Addl. CIT370 citing77 Taxmann.com 257 · 2017 · HC
Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN
Heard together (2 matters)
Read from the judgment's own cause title. This page is filed under one of them.
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER: Both the appeals of the Revenue are directed against the respective orders of the Commissioner of Income Tax (Appeals) -3, Chennai, in respect of two independent assessees. Since common issue arises for consideration in both the appeals, we heard both the appeals together and disposing of the same by this common order.
Shri S. Bharath, the Ld. Departmental Representative, submitted that in the case of M/s PVP Ventures Ltd. in , the assessee has earned dividend income of ₹5,53,379/-. According to the Ld. D.R., the Assessing Officer computed the disallowance under Rule 8D(2) of the Income-tax Rules, 1962 to the extent of ₹11,71,79,344/-. The CIT(Appeals), by placing reliance on the order of this Tribunal in M/s Royala Corporation in directed the Assessing Officer to restrict the disallowance to the extent of exempted income. According to the Ld. D.R., an appeal was already filed before the High Court against the order of this Tribunal in M/s Royala Corporation (supra). Moreover, according to the Ld. D.R., Rule 8D(2) of the Income-tax Rules, 1962 does not say that the disallowance has to be restricted to earning of exempted income. According to the Ld. D.R., irrespective of the fact whether the assessee earned dividend income or not, the disallowance has to be computed as provided in Rule 8D(2). Section 14A of the Income-tax Act, 1961 (in short 'the Act') read with Rule 8D(2) does not in anywhere say that it is a pre-condition to earn dividend income or exempted income for making disallowance. Therefore, according to the Ld. D.R., the CIT(Appeals) is not correct in directing the Assessing Officer to restrict the disallowance to the earning of dividend income.
On the contrary, Ms. K. Hemalatha, Ld. representative for the assessee, submitted that the Madras High Court in the case of Redington (India) Ltd. v. Addl. CIT (2017) 77 taxmann.com 257 and in the case of CIT v. Chettinad Logistics Pvt. Ltd. in T.C.A. No.24 of 2017, found that there cannot be any disallowance for expenditure when the assessee has not earned any exempted income. In this case, the assessee has earned only a sum of ₹5,53,379/-. Therefore, the CIT(Appeals) by placing reliance on the order of this Tribunal in M/s Royala Corporation restricted the disallowance to the exempted income.
We have considered the rival submissions on either side and perused the relevant material available on record. The CIT(Appeals) by placing reliance on the order of this Tribunal in M/s Royala Corporation (supra) directed the Assessing Officer to restrict the disallowance to the extent of exempted / dividend income earned by the assessee. As rightly submitted by the Ld. representative for the assessee, the Madras High Court in Redington (India) Ltd. (supra) and Chettinad Logistics Pvt. Ltd. (supra) categorically found that there cannot be any disallowance when the assessee has not earned any exempted income.
Therefore, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly placed his reliance on the order of this Tribunal in Royala Corporation Ltd. (supra).
The only contention of the Ld. D.R. before this Tribunal is that an appeal is pending before the High Court. It is nobody’s case that the High Court has stayed operation of the order of this Tribunal in M/s Royala Corporation Ltd. (supra). Mere pending of appeal before the High Court cannot be a reason to take a different view by this Tribunal. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.
Now coming to in the case of PVP
In this case, admittedly, the assessee has not earned any exempted income. Therefore, the judgments of Madras High Court in Redington (India) Ltd. (supra) and Chettinad Logistics Pvt. Ltd. (supra) are squarely applicable. Moreover, the CIT(Appeals) has placed his reliance on the order of this Tribunal in ACIT v. M.
Bhaskaran in I.T.A. No.1717/Mds/2013. Since the Madras High Court found that there cannot be any disallowance under Section 14A of the Act when there was no exempted income or dividend income earned by the assessee, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.
In the result, both the appeals filed by the Revenue stand dismissed.
Order pronounced on 19th September, 2018 at Chennai.
More judgments on Section 14A
- Blacksoil Capital Private Limited (As… vs DCIT, Circle-1(1), HyderabadITA 2217/HYD/2026[2017-18]Status: Disposed9 Oct 2026AY 2017-18
- Hiral Construction, Mumbai vs ITO Ward 42(1)(2), MumbaiITA 8431/MUM/2025[2017-18]Status: Disposed8 Oct 2026AY 2017-18
- The Dy DIT (It) 1(2), Mumbai vs M/S Citi Bank N.A, MumbaiITA 4981/MUM/2007[2002-2003]Status: Disposed8 Oct 2026AY 2002-2003
- M/S. Citi Bank N.A., Mumbai vs The Addl DIT (It) RG-1, MumbaiITA 4970/MUM/2007[2002-2003]Status: Disposed8 Oct 2026AY 2002-2003
- M/S American Express Bank Ltd., Mumbai vs The Jt DIT (It)1(1), MumbaiITA 9414/MUM/2004[2000-2001]Status: Disposed8 Oct 2026AY 2000-2001
Recent GST High Court judgments
Search GST case law →- Shri Yaras Suresh Babu Prabhu Kumar vs. The Union Of INDIATelangana · 27 Oct 2026
- Santa Singh vs. SuperintendentUttarakhand · 27 Oct 2026
- Azaad Builders vs. Assistant Commissioner SGSTUttarakhand · 27 Oct 2026
- Ganesh Trimbak Saraf And Another vs. The State Of Maharashtra And AnotherBombay · 26 Oct 2026
- M/S Monolith Resorts Private Limited vs. The CommissionerUttarakhand · 26 Oct 2026