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Facts
The assessee's appeal for AY 2017-18 arose against the CIT(A)/NFAC's order, which upheld an addition of Rs. 13,55,000/- under Section 68. The appeal also challenged a disallowance of Rs. 28,78,991/- under Section 14A read with Rule 8D.
Held
The Tribunal condoned the delay in filing the appeal. It noted that the addition under Section 68 related to a prior financial year, not the assessment year under appeal, and was therefore deleted. Regarding Section 14A, the Tribunal relied on existing case law stating that disallowance is not attracted if no exempt income was derived.
Key Issues
Whether additions under Section 68 for an incorrect assessment year are valid? Whether disallowance under Section 14A is applicable when no exempt income has been derived?
Sections Cited
68, 144, 14A, 8D
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’ NEW DELHI
Before: SHRI SATBEER SINGH GODARA
2017-18 arises against CIT(A)/ NFAC, Delhi’s order dated 29.11.2023 (DIN & Order No. ITBA/NFAC/S/250/2023-24/1058317335(1), in proceedings u/s 144 of the Income-tax Act, 1961, hereinafter referred to as the ‘Act’. of the assessee’s averments in the condonation application as on account of circumstances beyond its control in light of Collector Land Acquisition v. Mst.
Katiji & another (1987) 167 ITR 471 (SC).
Heard both the parties. Case file perused.
The assessee’s first and foremost substantive ground raised in the instant appeal challenges correctness of both the learned lower authorities’ action, inter alia, making section 68 unexplained cash credits addition of Rs. 13,55,000/- in assessment order dated 04.12.2019 & upheld in the lower appellate discussion.
A perusal of the case records suggests that the impugned entire investment of Rs. 6,77,50,000/-; added @ 2% amounting to Rs. 13,55,000/-, in question, relates to F.Y. 2015-16 relevant to A.Y. 2016-17 than in the assessment year 2017- 18 before the tribunal. Deleted in very terms therefore.
Next comes the second substantive issue between the parties regard section 14A read with Rule 8D disallowance of Rs. 28,78,991/- made by both the learned lower authorities despite the fact that the assessee is stated to have not derived any exempt income in the relevant previous year. Case law Cheminvest Limited Vs.CIT (2015) 378 ITR 33 (Delhi HC) has already settled the issue that the impugned disallowance does not get attracted it’s assence if exempt 141 taxmann.com 289 PCIT v. Era Infrastructure (I) Ltd. has rejected the Revenue’s endeavour to apply section 14A Explanation; inserted vide Finance Act, 2022; w.e.f. 01.04.2022 with retrospective effect. Deleted accordingly.
This assessee’s appeal is allowed.
Order pronounced in open court on 24.12.2025.