DCIT CIR 3(3), MUMBAI vs. WHITE PEARLS HOTELS & INVESTMENT P. LTD, MUMBAI

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ITA 7519/MUM/2014Status: DisposedITAT Mumbai24 August 2016AY 2011-122 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that Section 14A is applicable only if exempt income is received or receivable. Since no exempt income was earned by the assessee in the relevant assessment year and the genuineness of expenditure was not in doubt, no disallowance could be made under Section 14A.

What were the facts?

The Assessing Officer (AO) appealed against the deletion of disallowance made under Section 14A by the CIT(A). The assessee company, engaged in hospitality, had declared a total income of Rs. 3.24 Crores, which the AO enhanced to Rs. 4.85 Crores.

What were the issues?

Whether disallowance under Section 14A is permissible when no exempt income has been earned by the assessee in the relevant assessment year.

Which sections of the Income-tax Act were involved?

Section 14A,Section 143(3)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा सद�य सद�य राजे�� राजे�� केकेकेके अनुसार अनुसार PER RAJENDRA, AM- लेखा लेखा लेखा सद�य सद�य राजे�� राजे�� अनुसार अनुसार Challenging the order dated 19.09.2014 of CIT(A)-7,Mumbai the Assessing Officer(AO)has filed the present appeal.Assessee-company,engaged in the business of hospitality,filed its return of income,declaring total income of Rs. 3.24Crores.The AO completed the assessment under section 143 (3) of the Act,on 10/12/2013,determining the income of the assessee at Rs.4.85 crores.

2.The effective ground of appeal is about deletion of disallowance made under section 14A of the Act.At the time of hearing before us,it was brought to our notice that in the earlier AY.s. identical issue was decided against the AO by the Tribunal.We find that while deciding the appeals for the AY.s.2009-10 and 2010-11(ITA.s.4313&4314/Mum/2014/dtd.23.11.2015),the Tribunal decided the issue as under: “2. The grievance of the revenue is common in both these appeals and relates to the disallowance made under section 14 A of the Act which has been deleted by the Ld. CIT (A). The revenue has heavily relied on the decision of the Tribunal Special Bench in the case of Cheminvest Ltd..121 ITD 318 as per ground No.2 of grounds of appeal.

3. This issue is now well settled by the Hon’ble High Court of Delhi which has reversed the decision of the Special Bench in the case of Cheminvest Ltd.. 378 ITR

33. The relevant portion and the decision of the Hon’ble High Court reads as under:

7519/M/14 White Pearls Hotels

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