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Income Tax Appellate Tribunal, ‘C’ BENCH : BENGALURU
Before: SHRI VIJAY PAL RAO & SHRI INTURI RAMA RAO
O R D E R
Per INTURI RAM A RAO, AM :
This is an appeal filed by the assessee directed against the order of the CIT(A)-7, Bengaluru, dated 27/05/2016 for the assessment year 2012-13.
The assessee raised the following grounds of appeal:
The order of the learned Commissioner of Income Tax 1. (Appeals) is opposed to the facts of the case and law applicable to it. 2. The learned Commissioner of Income Tax (Appeals) erred in confirming disallowance to the extent of Rs.16,81,208/- under the provisions of section 14A r.w. Rule 8D(2)(iii) of the Rules ignoring the fact that, for the facts of the appellant case the provisions of section 14A of the act, does not apply.
Page 2 of 3 3. The learned Commissioner of Income Tax (Appeals) erred in not appreciating the fact that the appellant has not earned any exempt income during the previous year and hence no disallowance could have been made under the provisions of section 14A of the Act.
The learned Commissioner of Income Tax (Appeals) erred in not appreciating the fact that, in the absence of any proof that, any expenditure has been incurred by the appellant in connection with investments allegedly held for earning income exempt under the provisions of the Act, no disallowance could have been made under the said provisions.
5. The appellant craves permission to add, delete or alter any of the grounds at the time of hearing. Prayer The appellant prays that the Honourable Tribunal to kindly delete the disallowance of Rs.16,81,208/- under Rule 8D(2)(iii) r.w.s 14A of the Act.
2. During the course of hearing, the learned AR of the assessee has contended that the assessee has not received any exempt income therefore no disallowance under section 14A can be made. In support of his contention, he has invited our attention to computation of income and Balance Sheet. He also placed reliance upon the judgment of jurisdictional High Court in the case of M/s. CCI Limited Vs. JCIT, Udupi Range in wherein it has been held that in the absence of any exempt income under the provisions of the Act, no disallowance can be made under the provisions of section 14A of the Act. Besides, he also placed reliance upon series of judgments as mentioned in the written submissions. Copy of the order of the Tribunal in the case of M/s.Tanglin Retail Reality Developments Pvt. Ltd. vs. DCIT in ITA No.265/Bang/2016 dated 31/03/2017 wherein identical view is taken by the co-ordinate bench (in which one of us viz., the Hon’ble Accountant Member is a party), is placed on record.
The learned DR relied on the orders of the lower authorities. Page 3 of 3 4. We heard rival submissions and perused the material on record. We find that the assessee had not received any exempt income therefore, no disallowance under section 14A is to be made. We have also carefully examined the computation of income and the Balance Sheet and find that the assessee had not earned any exempt income. We have also examined the judgments referred to by the assessee in which proposition has been laid down that in the absence of exempt income, no disallowance u/s 14A can be made. Therefore, we are of the view that when the assessee had not received any exempt income, no disallowance under section 14A can be made. We accordingly set aside the order of the CIT(A) and delete the additions made invoking the provisions of section 14A of the Act.
In the result, the appeal filed by the assessee is allowed.