BCD TRAVELS INDIA P.LTD,MUMBAI vs. DCIT 9(2)(1) EARLIER ADDL CIT 8(1), MUMBAI

This appeal has been filed by the assessee against order dated 14/11/2014 passed by the Commissioner of Income Tax (Appeals)-16, Mumbai pertaining to assessment year 2009-10, whereby the Ld. CIT (A) dismissed the appeal filed by the assessee against assessment order passed u/s 143 (3) of the Income Tax Act, 1961 (for short ‘the act’).

Still aggrieved, the assessee in appeal before the Tribunal on the following grounds of appeal:-

Before us, the Ld. Counsel for the assessee at the outset submitted that the assessee does not want to press ground No. 2 of the appeal. We therefore dismissed ground No. 2 of the appeal as not pressed. As regards first ground of the appeal the Ld. Counsel for the assessee submitted that the Ld. CIT (A) has wrongly confirmed the disallowance of Rs. 2,06,762/- u/s 14A of the Act read with Rule 8D (2) (iii) rules of the Income Tax. The Ld. Counsel further submitted that the impugned order is contrary to the law laid down by the Mumba Bench of ITAT in Garware Wall Ropes Limited Vs. Addl. CIT (2014) 46 Taxmann.com 18 as in the said case, the Tribunal has held that the provisions of section are not applicable where no income has been claimed as exempt. The Ld. Counsel further relying on the decision of the Hon’ble High Court of Delhi passed in Cheminvest Ltd. Vs. Commissioner of Income Tax submitted that the order passed by the Ld. CIT (A) is liable to be set aside.

On the other hand, the Ld. DR relying on the concurrent findings of the authorities below submitted that the case is relied upon by the assessee are distinguishable on facts. Therefore, there is no scope for further interference in the order passed by the Ld. CIT (A).

We have heard the rival submissions and perused the material placed before us by the parties, in support of their contention, including the decisions relied upon by them. It is not the case of the revenue that the assessee has earned exempt income during the previous year relevant to the Assessment Year. It is also not disputed that the investment was not made out of its own funds and that no interest cost has been incurred by the assessee company for making of such investment. The Ld. Counsel further submitted that in the proceedings year such disallowance u/s 14A was made by the then Assessing Officer in accordance with the provisions of rule 8D. However, the disallowance was deleted by the CIT (A) in appeal. In Cheminvest Ltd. Vs. CIT (supra), the Hon’ble Delhi High court has held that the expression ‘does not from part of the total income’ in section 14A envisages that there should be actual receipt of income, which was not includable in the total income, during the relevant previous year for the purpose of disallowing any expenditure incurred in relation to the said income. Since, during the assessment year under consideration the assessee did not earn any exempt income, the Ld. CIT(A) has wrongly confirmed the addition. We are, therefore, of the considered opinion that the case of the assessee covered by the decision of the Hon’ble High Court (supra) and the decisions of Mumbai Tribunal. We therefore respectfully following the aforesaid decisions decide this ground of appeal in favour of the assessee and allow the solitary ground of appeal.

In the result, appeal filed by the assessee for assessment year 2009-2010 is allowed.