POSITIVE COMSOL PVT. LTD.,NEW DELHI vs. ITO, NEW DELHI

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ITA 6597/DEL/2013Status: DisposedITAT Delhi26 May 2016AY 2009-103 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the assessee had not earned any income exempt from tax during the year, no disallowance under Section 14A could be made. The disallowance was accordingly deleted.

What were the facts?

The assessee claimed expenses, and the AO made an estimated disallowance under Section 14A read with Rule 8D. The CIT(A) confirmed this disallowance. The assessee argued that no expenses were incurred in relation to exempt income.

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

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, DELHI BENCH ‘D’, NEW DELHI

Before: SHRI H.S.SIDHU & SHRI J. SUDHAKAR REDDY

ORDER PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER

This is an appeal filed by the assessee against the order of the Ld.Commissioner of Income Tax (Appeals)-XVII, New Delhi dated 24.10.2013 pertaining to the Assessment Year (hereinafter referred to as the A.Y.) 2009-10 on the following grounds.

“1. On the facts and in the circumstances of the appellant’s case the Ld.CIT(A) erred both in fact and in law in confirming estimated disallowance of expenses of Rs.29,68,654/- u/s 14A of the Act r.w. Rule 8D made by the A.O. without appreciating the facts that the expenses claimed by the appellant was incurred in relation to income which was includible in total income and no expenses were incurred by the appellant in relation to income which does not form part of the total income.

ITA 6597/Del/2013 A.Y. 2009-10 M/s Positive Comsol Pvt.Ltd., New Delhi 2. On the facts and in the circumstances of the appellant’s case the Ld.CIT(A) erred both in fact and in law in holding that premium paid on shares over and above paid up value of shares should be treated as ‘investment’ for the purpose of determining estimated disallowance of expenses u/s 14A by invoking Rule 8D without appreciating the fact that premium paid on shares is not an eligible amount on which exempted dividend income will accrue/arise.

3. The appellant may be allowed to modify or add any other ground which may be relevant to the appeal.”

2.

We have heard ShriAkshat Jain, the Ld.Counsel for the assessee and Shri T. James Singson, Ld.Sr.D.R. on behalf of the Revenue. On a careful consideration of the facts and circumstances of the case, perusal of material on record, orders of lower authorities, case laws cited, we hold as follows.

3.

The undisputed fact is that the assessee has not earned any income during the year which is exempt from tax. Hence no disallowance u/s 14A of the Income Tax Act, 1961 (the Act) can be made in view of the following decisions of the Jurisdictional High Court. - Cheminvest Ltd. vs. CIT (2015) 61 Taxman.com 118 Delhi - Jt.Investments (P) Ltd. vs. CIT (2005) 59 Taxman.com 295 Del 3.1. Therefore, we delete the disallowance and allow the appeal of the assessee. 4. In the result the appeal of the assessee is allowed. Order pronounced in the Open Court on 26th May, 2016.

Sd/- Sd/- (H.S. SIDHU) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: the 26th May, 2016 *manga

ITA 6597/Del/2013 A.Y. 2009-10 M/s Positive Comsol Pvt.Ltd., New Delhi

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