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Income Tax Appellate Tribunal, “L” BENCH, MUMBAI
Before: SHRI SHAMIM YAHYA, AM & SHRI SANDEEP GOSAIN, JM
अपीलाथीकीओरसे/ Appellant by : Sh. Sunil Kumar Ramani /Vinay Sinha प्रत्यथीकीओरसे/Respondentby : Sh. M. V. Rajguru सुनवाईकीतारीख/ : 02/11/2017 Date of Hearing घोषणाकीतारीख/ : 12/01/2018 Date of Pronouncement आदेश / O R D E R
Per Sandeep Gosain, Judicial Member:
The present twoAppeals have been filed by the assesseeagainst the order of Commissioner of Income Tax (Appeals)- 52, Mumbai, dated 29.06.2016& 30.06.16for A.Y. 2012-13 & 2013-14 respectively.
2 & 5676/Mum/2016 M/s Saryu Properties & Hotels Pvt. Ltd. 2. Since the issues raised in these two appeals are identical, therefore, for the sake of convenience, these two appeals are clubbed, heard and disposed of by this consolidated order.
(AY 2012-13) 3. First of all we take up assessee’s appeal in (AY 2012-13) on the grounds mentioned herein below:-
1. The learned CIT (A) erred in not deleting the disallowance of Rs. 92,69J23/- made by the Assessing Officer u/s 14-A of the Income Tax Act.
The learned CIT (A) failed to take into account the following facts. a) Investment in shares of Rs. 17,21,349/- and in capital contribution with the partnership firm of Rs. 13,13,60,934/- was less than funds available in share capital of Rs, 20,522,00/-and reserve and surplus of Rs. 3445,91,200/-. b) During the relevant year appellant had not received any exempted income either as or share of profit from the firm.
The learned CIT(A) erred in not taking into account the following decisions on the point of Jurisdictional High Court: b) CIT vs. Reliance Utilities and Power 313 ITR 340 (BOM) c) HDFC vs. DCIT 383 ITR 529 (BOM)
The learned CIT (A)erred in not taking into account following decisions holding that disallowance u/s 14(a)cannot exceed exempted income i) DAGA Global Chemicals vs ACIT-ITA No. 5592/M/12 dated 02.02.20 13 ii) Sahara India Fin. Corp. vs DCIT (2014)-105 DTR I (DEL) iii) CIT vs GL!jaratNarmade Valley-221 Taxman 479 (GUi)
It is prayed that the disallowance of Rs. 92,69,723/- made by the Assessing Officer u/s 14-A be deleted.
6. The appellant craves liberty to add, amend, alter and /or withdraw any of the abovegrounds of appeal.
4. The brief facts of the case are that the assessee is a private limited company and is engaged in the business of hotel, construction and real estate development. The return of income for AY 2012-13 was filed on 30.09.12 declaring total income of Rs. 93,66,060/-. Subsequently, the case of the assessee was selected for scrutiny and after serving statutory notices and seeking reply of 4 & 5676/Mum/2016 M/s Saryu Properties & Hotels Pvt. Ltd. assessee; the AO passed order of assessment u/s 143(3) on 31.03.15 thereby determining the total income of Rs. 1,90,64,290/- thereby making disallowance of Rs. 92,69,723 under the provisions of section 14A of the Act r.wr. 8D of Income Tax Rules and expenses of Rs. 4,62,799/-. Aggrieved by the order of AO, assessee preferred appeal before Ld. CIT(A) and Ld. CIT(A) after considering the case of both the parties dismissed the appeal of the assessee. Now before us, the assessee has preferred the present appeal by raising the above grounds.
5. Although the assessee has raised many grounds against challenging the order of Ld. CIT(A). However vide ground 2(b), the assessee has challenged the order of Ld. CIT(A) on the ground that the assessee had not received any exempted income either as dividend or share of profit from the firm during the relevant year. Since this ground is a substantial ground and in case the said ground is answered in favour of assessee the other ground being academic. Therefore, we first of all we taken up ground no. 2(b) for deciding of merits.
We have heard the counsels for both the parties and also perused the documents as well as the orders passed by lower authorities. It is seen that the 5 & 5676/Mum/2016 M/s Saryu Properties & Hotels Pvt. Ltd. assessee's main contention is that if there is no exempt income, then the disallowance u/s 14A cannot be triggered off. The assessee has relied upon various judicial findings over the issue. The Assessing office has not disputed the facts that the assessee has not received the exempt income during the year. We find merit in the submission of the assessee that unless and until, there is receipt of exempted income for concerned assessment years, section 14A cannot be invoked. This view has also been held by Hon'ble Delhi High Court in the case of Holeim India Pvt. Ltd. ITA No.486/ 2014 and 299/2014, Hon'ble High Court of Punjab & Haryana in the case of Lakhani Marketing Inc (49 taxmann.com 257 ) and Hon'ble High Court of Allahabad in the case of CIT Vs. M/s Shivam Motors (P) Ltd ( 55 taxmann.com 262). Thus the addition is liable to be deleted.
On the other hand Ld. DR relied upon the order passed by revenue authorities.
Having heard the counsels for both the parties, we are of the considered view that unless and until, there is receipt of exempted income for concerned assessment years, section 14A of the I.T. Act cannot be invoked. Therefore taking into consideration the settled proposition of law as laid down by respective High Courts, we allow this ground of appeal
raised by the assessee.
6. In the net result, the appeal filed by the assessee stands allowed.
6 & 5676/Mum/2016 M/s Saryu Properties & Hotels Pvt. Ltd. I.T.A. No. 5676/Mum/2016 (AY 2013-14) 9. Now we take up assessee’s appeal in I.T.A. No. 5676/Mum/2016 (AY 2013-14). Since, we have already decided the identical grounds raised in this appeal, in the aforementioned appeal filed by the assessee bearing AY 2012-13, therefore, based on our findings on the similar ground in the aforementioned appeal, we allow this appeal as well.
In the net result, both the appeal filed by the assessee are allowed. Order pronounced in the open court on 12th Jan, 2018 Sd/- Sd/- (ShamimYahya) (Sandeep Gosain) लेखासदस्य / Accountant Member न्याययकसदस्य / Judicial Member मुंबईMumbai;यदनांकDated : 12.01.2018 Sr. PS. Dhananjay आदेशकीप्रनिनिनिअग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलाथी/ The Appellant 2. प्रत्यथी/ The Respondent 3. आयकरआयुक्त(अपील) / The CIT(A) 4. आयकरआयुक्त/ CIT- concerned 5. यवभागीयप्रयतयनयध,आयकरअपीलीयअयधकरण, मुंबई/ DR, ITAT, Mumbai 6. गार्डफाईल / Guard File आदेशधिुसधर/BY ORDER,