MANGLAM WIRES PVT. LTD.,DELHI vs. ITO, NEW DELHI

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ITA 4418/DEL/2014Status: DisposedITAT Delhi19 August 2016AY 2011-122 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition made under Section 14A was unsustainable as the assessee had not earned any exempt income. The Assessing Officer's reliance on a Special Bench decision that was overruled by the Delhi High Court was also noted.

What were the facts?

The assessee challenged an addition made by the Assessing Officer under Section 14A read with Rule 8D, confirmed by the CIT(A). The assessee argued that no disallowance was required as no exempt income was earned.

What were the issues?

Whether disallowance under Section 14A is permissible 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, DELHI BENCH: ‘SMC-3’ NEW DELHI

Before: SMT DIVA SINGH

Hearing: 22.06.2016Pronounced: 19.08.2016

ORDER The present appeal has been filed by the assessee assailing the correctness of the order dated 30.06.2014 of CIT(A)-IX, New Delhi pertaining to 2011 –12 assessment year on the following grounds:-

1. “On the facts and circumstances of the case Ld. Commissioner of Income tax (Appeals) was not justified in confirming the addition of Rs.1,05,878/- to the income of the assessee, by Assessing Officer u/s 14A of the I.T.Act read with Rule 8D of the I.T.Rules.

2.

It is contended that no disallowance is required to be made under the provisions of section 14A read with Rule 8D of I.T.Act in the present case, since there was no income covered u/s 14A and there were no direct or indirect expenses, incurred in that connection. 3. The Appellant craves leave to add, alter, forgo or amend any grounds of appeal

at the time of hearing.”

2. The Ld.AR submitted right at the outset point at issue is covered in assessee’s favour by the decision of the Delhi High Court in the case of ChemInvest Ltd. vs CIT [2015] 378 ITR 33 (Del.). Referring to facts, it was submitted that in the facts of the present case also, no exempt income has been received by the assessee. The specific fact it was submitted is coming out from the assertions made in the assessment order vide letter dated 23.03.2013. The I.T.A .No.-4418/Del/2014 Ld.Sr.DR was required to address whether any exempt income has been earned by the assessee. On perusing the material available on record, it was submitted that it appears that no exempt income was earned by the assessee in the year under consideration. No contrary decision in order to canvass a contrary view was cited by the Ld.Sr DR. In the light of the submissions of the parties before the Bench, I find that the reliance placed by the AO on the decision of the Special Bench in the case of Cheminvest Ltd. [2009] 317 ITR (AT) 86 (Delhi) (SB) which admittedly has been over-ruled by the Hon’ble High Court by its judgement dated 02.09.2015, the addition made in the impugned order qua this issue cannot survive. A perusal of the said decision, it is seen shows that the Hon’ble Court has placed reliance on CIT vs Holcim India Pvt. Ltd. order dated 05.09.2014 in of 2014 as is evident from paras 15 & 16 of the said decision. Accordingly in the absence of any argument on fact or law to canvass a contrary view, the appeal of the assessee is allowed.

3.

In the result, the appeal of the assessee is allowed.

The order is pronounced in the open court on 19th August 2016.

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