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Income Tax Appellate Tribunal, ‘D’ (SMC
Before: SHRI ABRAHAM P. GEORGE]
आदेश / O R D E R
This appeal of the assessee is directed against an order dated 28.10.2016 of the Commissioner of Income-tax (Appeals)-3, Chennai.
Assessee has taken altogether six grounds. There are only 2. two issues arising out of these six grounds. First is on a disallowance made u/s.14A r.w. Rule 8D and second is with regard to treatment of interest income. Ld. Counsel for the assessee submitted that with regard to second issue viz treatment of interest income, ld. Assessing
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Officer had treated the interest under the head ‘’income from other sources’’ though assessee had considered it as ‘’business income’’. As
per ld. Authorised Representative assessee was in investment management business and hence interest income could only be considered as business income. Nevertheless according to him, interest income whether considered under the head ‘’business income’’ or ‘’income from other sources’’, will have the same tax effect for the assessee. Ld. Departmental Representative fairly agreed that irrespective of the head under which interest income treated, tax on the assessee would be very same, since total income remained unchanged. Thus the tax effect being very same, the question of treatment of interest income becomes academic and relevant grounds are therefore dismissed as infructuous.
This leaves us with the disallowance u/s.14A of the Act. Ld. Counsel for the assessee submitted that assessee was not having any exempt income during the relevant previous year. According to him, when there was no exempt income, Sec. 14A could not be applied.
Reliance was placed on the judgment of Hon’ble Jurisdictional High Court in the case of Redington (India) Ltd vs. Addl. CIT (2017) 77 taxmann.com 257.
Per contra, ld. Departmental Representative strongly 4.
supported the orders of the authorities below.
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I have considered the rival contentions and perused the orders of the authorities below. Hon’ble Jurisdictional High Court in the case of Redington (India) Ltd (supra) has upheld the view taken by the Tribunal that there can be no disallowance u/s.14A r.w.r. 8D when there was no exempt income claimed by an assessee. Their Lordship also observed that for Sec. 14A of the Act could not be applied on notional or anticipatory income. In the case before me, ld. Assessing Officer himself has noted that assessee was not having exempt income. Therefore, in my opinion disallowance u/s.14A of the Act could not have been made. Disallowance of �9,48,778/- stands dismissed. Related grounds of the assessee are allowed.