DCIT CC 5(3), MUMBAI vs. SHREE KRISHNA SILK INDUSTRIES P. LTD, MUMBAI

O R D E R This appeal by the Revenue is directed against order of learned CIT(A) dated 27.07.2016 and pertains to assessment year 2012-2013. 2. Grounds of appeal

2. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition u/s 14A of the Income-tax Act, 1961 by ignoring the provisions of CBDT Circular No.5/2014 dated 11.02.2014 whereby it has 2 ITA No.6337/Mum/2016. M/s.Shree Krishna Silk Industries Pvt.Ltd. been clarified that Rule 8D r.w.s. 14A provides for the disallowance of expenditure even where the assessee in particular has not earned exempt income?”

3. I have heard the learned Departmental Representative. None appeared on behalf of the assessee. However, in my considered opinion the issue can be disposed of by hearing the learned DR and perusing the records.

4. I find that in this case disallowance under section 14A has been done. However, it was assessee’s plea that no disallowance can be done as assessee had not received any exempt income during the concerned year. Learned Commissioner of Income-tax has accepted this submission of the assessee. He has placed reliance upon the decision of Hon’ble Delhi High Court in the case of M/s.Cheminvest Limited in vide order dated 02.09.2015. In the said decision of Cheminvest Limited, Hon’ble Delhi High Court has reversed the decision of the Special Bench of the ITAT and held that when no exempt income has been earned, no disallowance u/s 14A can be done. I find that no contrary decision of the jurisdictional High Court has been produced before me. In such circumstances, I do not find any infirmity in the order of learned CIT(A). Accordingly, I uphold the same.