DCIT - 8(1)(1), MUMBAI vs. RELIANCE INFRATEL LTD., NAVI MUMBAI

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ITA 6467/MUM/2016Status: DisposedITAT Mumbai22 November 2017AY 2012-133 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision to delete the disallowance under Section 14A. It reasoned that no disallowance is warranted when the assessee has not earned any exempt income, following precedents from the Delhi High Court and a coordinate ITAT bench.

What were the facts?

The assessee, engaged in telecommunication tower business, held significant investments but reported no dividend income or investment activity in the relevant assessment years. The Assessing Officer disallowed expenses under Section 14A based on Rule 8D(2)(iii).

What were the issues?

Whether disallowance under Section 14A is leviable when no exempt income has been earned by the assessee.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “L” Bench, Mumbai

For Appellant: Shri Jitendra Sanghavi
For Respondent: Shri M.V. Rajguru
Hearing: 7.11.2017Pronounced: 22.11.2017

Heard together (2 matters)

I.T.A. No. 6467/Mum/2016
I.T.A. No. 6468/Mum/2016

Read from the judgment's own cause title. This page is filed under one of them.

O R D E R Per B.R. Baskaran (AM) :-

Both the appeals filed by the Revenue are directed against the orders passed by the learned CIT(A)-14, Mumbai and they relate to A.Ys. 2011-12 & 2012-13. The Revenue is aggrieved by the decision of the learned CIT(A) in deleting the disallowance made by the Assessing Officer u/s. 14A of the Act in both the years.

2.

We heard the parties and perused the record. The assessee is engaged in the business of building and operating telecommunication towers and related assets. The assessee did not make any disallowance u/s. 14A of the Act while computing total income, even though it held investments to the tune of ` 50007.50 lakhs. The assessee submitted that it has received major portion of investments under a Scheme of amalgamation from other companies and remaining investments were brought forward from earlier years. Accordingly it was submitted that there was no investment activities during these two years

2 M/s. Reliance Infratel Ltd. under consideration. It was also submitted that it did not make any fresh investment nor it received any dividend income during the years under consideration. Accordingly, it was submitted that no disallowance is called for u/s. 14A of the Act in both the years.

3.

The Assessing Officer was not satisfied with the contentions of the assessee. Accordingly, he made disallowance under Rule 8D(2)(iii) of the Act to the tune of ` 250.03 lakhs and ` 250.01 lakhs for A.Ys. 2011-12 & 2012-13 respectively, which were computed at 0.5% of average value of investments. The learned CIT(A) deleted the same on the reasoning that the disallowance is not required to be made u/s. 14A of the Act, if the assessee did not earn any exempt income. The learned CIT(A) placed reliance for this proposition on the decision rendered by Hon'ble Delhi High Court in the case of CIT Vs. Holcim India Pvt. Ltd. (ITA No. 486/2014 & dated 5.9.2014). The Learned CIT(A) also placed reliance on the decision rendered by the Coordinate Bench of the ITAT in the case of Krishna Knitwear Technologies Ltd. Vs. DCIT (ITA No. 2565/Mum/2012 dated 15.2.2016), wherein the decision rendered by Hon'ble Delhi High Court in the case of Cheminvest Ltd. Vs. CIT (378 ITR 33) was followed. The Revenue is aggrieved by the decisions rendered by the learned CIT(A) on this issue in both the years under consideration.

4.

Having heard the rival submission, we are of the view that the orders passed by the learned CIT(A) does not call for any interference for the reasons that the assessee did not earn any dividend income during the year under consideration and further assessee did not carry on any type of investment activity during the years under consideration. We noticed that that the learned CIT(A) has followed decision rendered by Hon'ble Delhi High Court in the case of Cheminvest Ltd. (supra) and Holcim India Pvt. Ltd. (supra) in coming to the conclusion that disallowance u/s. 14A of the Act is not called for when the assessee did not receive any exempt income. Accordingly, we find no reason to interfere with the orders passed by the learned CIT(A) in both the years under consideration.

3 M/s. Reliance Infratel Ltd.

5.

In the result, both the appeals filed by the Revenue are dismissed. Order has been pronounced in the Court on 22.11.2017.

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