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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SHRI D. KARUNAKARA RAOShri Sarang R. Wadhawan,
सुनवाई की तायीख / Date of Hearing : 13.04.2017 घोषणा की तायीख /Date of Pronouncement : 19.04.2017 आदेश / O R D E R PER D. KARUNAKARA RAO, AM: There are three appeals under consideration involving three different assessees. All these appeals are filed by the Revenue for the AY 2012-13. Since, the issues involved in these appeals are identical, therefore, for the sake of convenience, they are clubbed, heard combinedly and disposed of in this consolidated order. Appeal wise adjudication is given in the following paras of this order.
Since, the issues raised in all the three appeals are identical, therefore, for the reference sake and adjudication purpose, grounds raised by the Revenue in its appeal for the AY 2012-13 in the case of Shri Sarang R. Wadhawan are extracted as under:-
1. 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 Act by ignoring the fact that the provisions of section 14A apply even if no exempt income is actually earned or received during the year in any form whatsoever? 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/s u/s 14A of the Act by ignoring the provisions of CBDT Circular No.5/2014 dated 11.02.2014 whereby it has 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.
At the outset, Ld Counsel for the assessee brought my attention to the fact that all the three assessees never earned exempt income for invoking the provisions of section 14A read with Rule 8D of the IT Rules, 1962. Bringing our attention to the facts of the case, Ld Counsel for the assessee submitted that considering the above fact with regard to non-earning of the exempt income during the year under consideration, CIT (A) granted relief to the assessee as per the discussion given in para 5 and it sub-paras. In the said paras in general and in para 5.3.2 in particular, CIT (A) relied heavily on the judgment of the Hon‟ble Delhi High Court in the case of M/s. Cheminvest Ltd vs. CIT (ITA No.749/2014) and held that the provisions of section 14A read with Rule 8D(2)(iii) cannot be invoked when there is no exempt income earned by the assessee in the year under consideration. For the sake of completeness of this order, relevant lines from the said para are extracted as under:- “5.3.2. However, I am inclined to accept the alternative plea of the appellant based on the judgement of the Hon‟ble Delhi High Court dated 2.9.2015 in the case of M/s. Cheminvest Ltd vs. CIT (ITA No.749/2014) where in it has been held that section 14A will not apply if no exempt income is received or receivable during the relevant previous year. While setting aside the decision of the Hon‟ble Special Bench in that case, it has been held that the expression „does not form part of the total income‟ in section 14A of the Act envisages that there should be an actual receipt of income‟ which is not includible in the total income during the relevant previous year for the purpose of disallowing any expenditure in relation to the said income. It is a matter of record that the appellant has not received any exempt income during the relevant