M/S ANRIYA PROJECT MANAGEMENT SERVICES P. LTD. vs. DCIT,

This is an appeal filed by the assessee against the order of the CIT(A)-I, Bangalore, dated 30/09/2013 for the assessment year 2009-10.

M/s.Anriya Project Management Services (P) Ltd. Page 2 of 7 3. Ground Nos.2 to 6 relate to the assessee’s claim of deduction u/s 80-IB(10) of the Income-tax Act, 1961 [hereinafter referred to as 'the Act' for short] while ground Nos.7 to 9 are against the disallowance made by the Assessing Officer (AO) u/s 14A of the Act.

3.1 Brief facts of the case are that the assessee which is carrying on the business of developing and building of residential flats and colonies, filed its return of income declaring total income of Rs.1,95,84,996/- after claiming deduction u/s 80-IB(10) of the Act. The return of income was filed on 9/3/2010 u/s 139(4) of the Act. During the assessment proceedings, the AO observed that the assessee is not eligible for deduction u/s 80-IB(10) of the Act since the return is not filed within due date as specified u/s 139(1) of the Act i.e. on or before 30/9/2009. Therefore, applying the provisions of sec.80AC of the Act, the AO disallowed the claim u/s 80-IB(10) of the Act.

3.2 Being aggrieved, the assessee preferred an appeal before the CIT(A) who confirmed the disallowance made by the AO after considering the issue in the light of various judicial precedents on the issue. Aggrieved by the order of the CIT(A), the assessee is in appeal before us.

3.3 At the time of hearing, learned counsel for the assessee, Shri Narendra Sharma, fairly admitted that this issue

M/s.Anriya Project Management Services (P) Ltd. Page 3 of 7 is now covered against the assessee by the decision of the Special Bench of the Tribunal at Rajkot in the case of Saffire Garments vs. ITO, Ward 2 reported in (2012) 28 Taxman.com 27 (Raj)(SB) wherein it was held that the requirement of filing of return within the due date prescribed u/s 139(1) of the act for claiming deduction is mandatory and if the said condition is not complied with, then the deduction u/s 10A of the Act is not allowable.

3.4 The learned Departmental Representative also relied on the judgment of the Special Bench.

3.5 Having regard to the rival contentions as well as the decision of the Special Bench of the Tribunal in the case of Saffire Garments (cited supra), we confirm the order of the CIT(A). Therefore, the grounds No.2 to 6 are rejected.

M/s.Anriya Project Management Services (P) Ltd. Page 4 of 7 funds were utilized in investments earning exempt income. Therefore, he held that proportionate interest on investments earning exempt income is disallowable. He relied upon the various decisions of ITAT to confirm the disallowance made by the AO. Aggrieved, the assessee is in appeal before us.

4.1 The learned counsel for the assessee, while reiterating the submissions made by the assessee before the authorities below, filed a copy of the profit and loss account before us to demonstrate that there was no claim of any exempt income in its return of income for the relevant assessment year. He placed reliance upon the decision of the ‘B’ Bench of the Tribunal in the case of Bhuwalka Steel Industries Ltd. in dated 4/7/2014 wherein, after considering various judicial pronouncements of the Hon’ble High Court, it was held that when there is no exempt income during the previous year, then the provisions of sec.14A cannot be invoked. A copy of the said order is filed before us.

4.2 The learned Departmental Representative, however, relied upon the orders of the authorities below and the judicial precedents relied upon by the CIT(A) while confirming the disallowance.

4.3 Having regard to the rival contentions and the material on record, we find that the assessee has not made any claim of exempt income during the relevant assessment year. The co-

M/s.Anriya Project Management Services (P) Ltd. Page 5 of 7 ordinate bench of this Tribunal in the case of Bhuwalka Steel Industries Ltd. (cited supra) had relied upon the decisions of the various High Courts in coming to the conclusion that in the absence of exempt income earned by the assessee, the provisions of sec.14A cannot be invoked. The relevant portion of the Tribunal order is reproduced hereunder for the sake of convenience.

“17. The learned counsel for the assessee relied on the following judicial pronouncements of the Hon’ble High Courts to the proposition that if there is no exempt income during the previous year, then the provisions of section 14A of the Act cannot be invoked: • CIT v. Winsom Textile Industries Ltd.(2009) 319 ITR 204 (P&H); • CIT v Corrtech Energy P. Ltd. (Tax Appeal No.239 of 2014, dt.24.03.2014)(Guj); • JCIT v. Shivam Motors (P) Ltd. (ITA.17/Lkw/2012, dated 12.11.2013)(ITAT- Lucknow); and • CIT v. M/s Shivam Motors (P)Ltd. (ITA.88 of 2014, dated 5.5.14) Alalhabad High Court

M/s.Anriya Project Management Services (P) Ltd. Page 6 of 7 19. We have given a careful consideration to the rival submissions. On the basis of the documents to which our attention was drawn it is clear that the assessee did not earn any exempt income during the previous year. In such circumstances as laid down in the decisions relied upon by the learned counsel for the assessee, provisions of section 14A could not be invoked. The Board circular which is contrary to the Hon’ble High Court’s decisions cannot therefore be the basis to sustain the disallowance made by the Revenue authorities. We, therefore, hold that the disallowance made u/s 14A of the Act should be deleted. Accordingly, the appeal of the assessee is allowed.” Respectfully following the decision of the co-ordinate bench on similar set of facts, we hold that the disallowance made u/s 14A of the Act is to be deleted. Thus grounds No.7 to 9 are allowed.