M/S. REGENT AUTOMOBILES LTD.,NEW DELHI vs. ADDL. CIT, NEW DELHI
What did the Tribunal hold?
The Tribunal held that if there is no exempt income, no disallowance under Section 14A can be made. Following jurisdictional High Court decisions, the disallowance was deleted.
What were the facts?
The assessee's appeal was against the disallowance of expenses under Section 14A. No dividend income was earned by the assessee during the relevant assessment year.
What were the issues?
Whether disallowance under Section 14A is permissible when the assessee has no exempt income.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL
Before: SHRI G.D. AGRAWALG.D. AGRAWAL & AND BEFORE SHRI G.D. AGRAWALG.D. AGRAWAL & AND SHRI SUDHANSHU SRIVASTAVA SHRI SUDHANSHU SRIVASTAVASHRI SUDHANSHU SRIVASTAVA SHRI SUDHANSHU SRIVASTAVA
ORDER ORDER ORDER ORDER PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP :- PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP This appeal by the assessee for the assessment year 2010-11 is directed against the order of learned CIT(A)-XVIII, New Delhi dated 1st November, 2013.
At the time of hearing before us, nobody appeared on behalf of the assessee-appellant. This appeal of the assessee is, therefore, being decided ex-parte qua the assessee-appellant on merits after hearing the arguments of learned Senior DR.
The only ground raised by the assessee in this appeal reads as under:-
“That the disallowance of Rs.41,40,240/- u/s 14A of the Income Tax Act, 1961 read with Rule 8D of the Income-tax Rules, 1962 as made by the Assessing Officer and sustained by the CIT(Appeals) is arbitrary, unjust and at any rate very excessive.”
2 ITA-685/Del/2014
We have heard the arguments of learned DR and perused the material placed before us. From a perusal of the assessment order, it is clear that no dividend income was earned by the assessee during the previous year. We find this issue to be covered in favour of the assessee by the decision of Hon'ble Jurisdictional High Court in the case of Cheminvest Limited Vs. CIT-VI in order dated 2nd September, 2015 and CIT-IV Vs. Holcim India P.Ltd. in ITA No.486/2014 & 299/2014, order dated 5th September, 2014, wherein Hon'ble Jurisdictional High Court has held that if there is no exempt income, then no disallowance u/s 14A of the Act can be made. Admittedly, in the case of the assessee, there is no exempt income. Therefore, respectfully following the above decisions of Hon'ble Jurisdictional High Court, we delete the disallowance of `41,40,240/- made by the Assessing Officer and sustained by learned CIT(A) u/s 14A of the Act. The ground raised by the assessee is thus allowed.
In the result, the appeal of the assessee is allowed. Decision pronounced in the open Court on 26.05.2016.
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