Glance Investments India P.Ltd… vs ITO | ITAT Mumbai 2016

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Income Tax Appellate Tribunal, MUMBAI BENCHES “G”, MUMBAI

Before: Shri Joginder Singh & Shri Rajendra

For Appellant: Shri Manish V. Shah

Hearing: 06/04/2016

आदेश / O R D E R Per Joginder Singh (Judicial Member) The assessee is aggrieved by the impugned order dated 24/07/2014 of the ld. First Appellate Authority, Mumbai. The first ground raised in this appeal pertains to confirming the addition of Rs.41,68,433/- made u/s 14A of the Income Tax Act, 1961 (hereinafter the Act) read with rule-8D of the Income Tax Rules, 1962 (hereinafter the rules).

During hearing, the ld. counsel for the assessee, Shri Manish V. Shah, contended that no dividend income was earned during the current year, therefore, there should be no disallowance. He relied upon the decision of the Tribunal in the case of M/s Weizmann Ltd. vs ACIT (ITA No.7551/Mum/2012) order dated 22/04/2015. This factual matrix was not controverted by the ld. DR, Mrs. Neelima V. Nadkarni.

2.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee company, at the relevant time, was engaged in financing and investment activities, declared income of Rs.32,70,396/- and the assessment u/s 143(3) of the Act was determined at Rs.74,38,800/- on 30/03/2013. While coming to this conclusion, the ld. Assessing Officer disallowed a sum of Rs.41,68,433/- u/s 14A of the Act

M/s Glance Investments (India) Pvt. Ltd. r.w.r. 8D of the Rules. We find that even before the ld. Assessing Officer as well as before the Commissioner of Income Tax (Appeal) , the claim of the assessee was that no exempt income was earned by the assessee. Identical plea was raised before us. Since, no exempt income was earned by the assessee, therefore, there is no question of disallowance. In CIT vs Gujarat Narmada Valley Fertilizers Company Ltd. (ITA No.1151 of 2013), CIT vs Sridev Enterprises 192 ITR 165 (Karnataka) and the Bombay Bench of the Tribunal in Godery Philip India Ltd. vs ACIT (ITA No.7682/Mum/2010) held that no disallowance u/s 14A should be made on opening balance of investment. The Hon’ble Punjab & Haryana High Court in CIT vs Hero Cycles Ltd. 323 ITR 518, Gujarat High Court in CIT vs UTI Bank Ltd. (215 taxman 8)(Guj.) and the Tribunal in CIT vs M/s Jayshree Petro Chemicals Ltd. (ITA No.7292/Mum/ 2011) held that, where no expenditure has been incurred, there is no question of disallowance as per Rule-8D(2)(iii). In the present/current year, since, no dividend income was earned by the assessee, therefore, there is no question of disallowance. We hold so.

GLANCE INVESTMENTS INDIA P.LTD,MUMBAI vs. ITO WD 2(1)(4), MUMBAI

Cases cited in this judgment