TECH TREK RECHNOLOGIES (INDIA) LIMITED ,MUMBAI vs. INCOME TAX OFFICER 1(3)(3), MUMBAI

Inspite of issue of notice none appeared on behalf of the assessee nor any adjournment was sought by the assessee. Notice sent by the Registry through Registered post was returned unserved when the matter

Briefly stated the facts are that, assessee is a company, filed its return of income on 29.11.2013 declaring total income of ₹.9,28,370/-. The case was taken for scrutiny under CASS and notice u/s. 143(2) was issued by the Assessing Officer to furnish the various expenses and work out of 14A disallowance. Assessee submitted its reply stating that it has not received any dividend income to the investments made during the year under consideration. Not convinced with the reply of the assessee, Assessing Officer completed the assessment u/s. 143(3) on 17.03.2016 declaring total income of ₹.15,87,700/- and while completing the assessment Assessing Officer disallowed the disallowance u/s. 14A at ₹.6,59,328/-. On appeal Ld.CIT(A) upheld the order of the Assessing Officer.

Ld. DR vehemently supported the orders of the authorities below.

We have heard the submissions of the Ld. DR and perused the orders of the authorities below. We observe from the order of the Ld.CIT(A) that, Ld.CIT(A) after considering the submissions made by the (A.Y: 2013-14) Tech Trek Technologies (India) Ltd., assessee upheld the order of the Assessing Officer observing that disallowance made by the Assessing Officer and suo-moto disallowance made by the assessee more or less the same. Further we also observe from the Assessment Order that the assessee furnished working of disallowance u/s. 14A r.w. Rule 8D as called for by the Assessing Officer and there is no finding by the Assessing Officer that the assessee had made suomoto disallowance u/s. 14A of the Act. We also observe that the assessee before the Ld.CIT(A) contended that assessee has not received any dividend income and therefore no disallowance is required to be made. However, the Ld.CIT(A) observing that the assessee has made suomotu disallowance of ₹.6,59,165/- and the computation of disallowance u/s. 14A worked out by the Assessing Officer stood at ₹.6,59,328/-, he held that there was no much difference and thus sustained the disallowance made by the Assessing Officer.

On a reading of both these orders i.e. Assessment Order and the order of the Ld.CIT(A), we find that at the request of the Assessing Officer to furnish the working of disallowance u/s. 14A, the assessee furnished such working of disallowance but the assessee appears to have not disallowed suomotu in its return of income nor agreed for such disallowance. Therefore, the observation of the Ld.CIT(A) that the (A.Y: 2013-14) Tech Trek Technologies (India) Ltd., assessee has disallowed ₹.6,59,165/- suomotu u/s. 14A appears to be not born out from record. The contention of the assessee that there should not be any disallowance u/s. 14A in the absence of any exempt income during the Assessment Year is supported by the Hon'ble Jurisdictional High Court in the case of CIT v. Delite Enterprises in ITA.No. 110 of 2003 dated 26.02.2009. Similar view has been taken by the Hon'ble Delhi High Court in the case of Cheminvest Ltd v. CIT [378 ITR 33] and the Hon'ble Allahabad High Court in the case of CIT v. Sivam Motors (P) Ltd. [230 Taxman 63]. In the circumstances we hold that if there is no exempt income earned by the assessee during the Assessment Year there should not any disallowance u/s. 14A of the Act. However, if the assessee itself in the return of income made any disallowance u/s. 14A r.w. Rule 8D the disallowance should be restricted to that extant and no further disallowance is required to be made. The Assessing Officer may verify this fact from the return of income filed by the assessee and restrict the disallowance to the extant disallowed by the assessee if any, in the return of income. If no such disallowance was made by the assessee in the return of income there cannot be any disallowance u/s. 14A in the absence of any exempt income earned by the assessee. With these observations the assessee appeal is allowed in terms of our above observations.