DCIT, TUTICORIN vs. T.JOHNSON, TUTICORIN

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ITA 969/CHNY/2017Status: DisposedITAT Chennai06 September 2017AY 2013-143 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 held that disallowance under Section 14A cannot be made when there is no exempt income earned by the assessee in that year, following the matching concept and jurisdictional High Court's judgment.

What were the facts?

The Revenue appealed against the deletion of disallowance made under Section 14A by the Assessing Officer. The CIT(A) deleted the disallowance finding that the assessee had not derived any dividend income exempt under Section 10(34).

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,Section 10(34)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, ‘A’ BENCH : CHENNAI

Before: SHRI N.R.S. GANESAN & SHRI ABRAHAM P. GEORGE]

आदेश / O R D E R

PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER

1.

In this appeal filed by the Revenue, it is aggrieved that ld. Commissioner of Income Tax (Appeals) deleted disallowance u/s. 14A of the Income Tax Act, 1961 (in short ‘’the Act’’) made by the ld. Assessing Officer.

ITA No969/Mds/2017 :- 2 -:

2.

Ld. Commissioner of Income Tax (Appeals) deleted the disallowance finding that assessee had not derived any dividend income claimed as exempt u/s. 10(34) of the Act.

3.

Now before us, ld. Departmental Representative submitted that even when there was no income which was exempt under the Act a disallowance u/s. 14A of the Act could be made.

Per contra, ld. Authorised Representative strongly 4.

supported the orders of the authorities below.

5.

We have considered the rival contentions and perused the orders of the authorities below. The question whether disallowance u/s. 14A of the Act could be made when there was no exempt income claimed by the assessee stands answered by the judgment of Jurisdictional High Court in the case of Redington India Ltd vs. Addl.

CIT (2016) 97 CCH 0219, what was held by the Jurisdictional High Court at para 15 is reproduced hereunder:-

‘’15. The exemption extended to dividend income would relate only to the previous year when the income was earned and none other and consequently the expenditure incurred in connection therewith should also be dealt with in the same previous year. Thus, by application of the matching concept, in a year where there is no exempt income

ITA No969/Mds/2017 :- 3 -: there cannot be a disallowance of expenditure in relation to such assumed income. (Madras Industrial Investment Corporation Ltd vs. CIT (225 ITR 802)). The language of Sec. 14A(10 should be read in that context and such that it advances the scheme f the Act rather than distort it’’.

In the circumstances, we do not find any infirmity in the order of the ld. Commissioner of Income Tax (Appeals).

In the result, the appeal of the Revenue stands dismissed. 6.

Order pronounced on Wednesday, the 6th day of September, 2017, at Chennai.

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