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Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: SHRI R.C. SHARMA & SHRI SANDEEP GOSAIN
The present appeal has been filed by the assessee against the order of Commissioner of Income Tax (Appeals)-10, Mumbai (in short ‘CIT(A)’) dated 14.8.2015 for A.Y 2011-12 on the following ground of appeal :
1. The learned Commissioner of Income Tax (Appeals) – 9, Mumbai has erred in confirming the addition of Rs.6,01,718/- to the Business Income of the appellant u/s 14A of the Income Tax Act, 1961 made by the Addl. Commissioner of Income Tax 5(1).
The brief facts of the case are that the return of income was filed on 28.9.2011 under e-filing declaring total income at Rs.11,41,27,559/-.
The case was selected for scrutiny under CASS and after serving statutory notices and seeking reply of the assessee, order of assessment was passed by the Assessing Officer thereby making disallowance u/s 14A of the Income Tax Act, 1961 (in short ‘the Act’). Aggrieved by the order of the Assessing Officer, assessee preferred an appeal before the CIT(A) and CIT(A) after considering the case of the assessee disallowed the appeal. Aggrieved by the order, assessee preferred the present appeal on the ground mentioned above. The sole issue raised before us by the assessee is that CIT(A) has erred in confirming the addition of Rs.6,01,718/- to the business income of the appellant u/s 14A of the Act.
At the very outset, the Ld. AR submitted before us that in both orders, i.e., order of assessment as well as order passed by CIT(A), it has been mentioned that assessee has made investment of Rs.1,16,32,000/- in equity shares of (i) Bombay Mercantile Co-operative Bank Ltd., (ii) Green Vision Technologies Pvt. Ltd. and (iii) Adit Ecommerce Pvt. Ltd. and considering the investment made by the assessee in the aforementioned companies, the Assessing Officer made disallowance u/s 14A of the Act. Secondly, the CIT(A) has also ignored the basic ingredient that there was no exempt income earned by the assessee in the year under consideration.
On the other hand, Ld. DR relied upon the order passed by the lower authorities.
We have heard both the parties and perused the material on record. After perusal of the impugned order we find that, as submitted by the Ld. AR, no exempt income has been earned by the assessee during the year under consideration and only making investment in the aforementioned companies does not attract disallowance u/s 14A. Therefore, taking into consideration the judgment of Hon'ble Delhi High Court in Cheminvest Ltd. v. CIT [2015] 61 taxmann.com 118 (Delhi) wherein it has been categorically held that where no exempt income has been earned by the assessee, then, in that eventuality, no disallowance u/s 14A read with Rule 8D can be made. Since the facts of the present case are identical and in the present case also there is no averment that the assessee has earned any exempt income, therefore, considering the proposition laid down in the Cheminvest Ltd. (supra), we delete the disallowance made u/s 14A of the Act.
In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 12th August, 2016.