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Income Tax Appellate Tribunal, MUMBAI BENCHES “G”, MUMBAI
Before: Shri Joginder Singh & Shri Rajendra
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.
The next ground pertains to addition of the same amount computed u/s 14A r.w.r. 8D while calculating the book profit u/s 115JB of the Act. The crux of argument is that this ground is consequential to the aforementioned ground. The ld. DR did not controvert the contention of the assessee. In the aforesaid ground, we have held that since,
M/s Glance Investments (India) Pvt. Ltd. there was no dividend income, therefore, there is no question of disallowance. In ACIT vs Spray Engineering Devices Ltd. (2012) 23 taxman.com 267 (Chandigarh), Reliance Industrial Infrastructure Ltd. vs Addl. CIT (69 & 70/Mum/2009), it was held that disallowance u/s 14A made under normal provisions of the Act cannot be added back, while computing book profit u/s 115JB of the Act. Identical ratio was laid down in M/s Essar Teleholding Ltd. vs DCIT (ITA No.3850/Mum/2010). Thus, it is consequential in nature.
Finally, appeal of the assessee is allowed.
This order was pronounced in the open in the presence of ld. representatives from both sides at the conclusion of the hearing 06/04/2016.
Sd/- Sd/- (Rajendra) (Joginder Singh) लेखा सद�य / ACCOUNTANT MEMBER �या�यक सद�य / JUDICIAL MEMBER मुंबई Mumbai; �दनांक Dated : 07/04/2016 f{x~{tÜ? P.S/.�न.स. आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to :
अपीलाथ� / The Appellant (Respective assessee) 2. ��यथ� / The Respondent. 3. आयकर आयु�त(अपील) / The CIT, Mumbai. 4. आयकर आयु�त / CIT(A)- , Mumbai, 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR,
M/s Glance Investments (India) Pvt. Ltd.