M/S SGEPL INFRASTRUCTURE PVT. LTD.,RAIPUR vs. DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-3(1), RAIPUR, RAIPUR

“1. On the facts and in the circumstances of the case, the learned CIT(A) has erred in sustaining the order of the A.O. where in the A.O has erred in making disallowance of Rs.13,30,993/- u/s.14A r.w.r.8D of the Income Tax, 1961. The disallowance made by the A.O and confirmed by the CIT(A) is unjustified, unwarranted and uncalled for.”

Succinctly stated, the assessee company which is engaged in the business of a builder had e-filed its return of income for A.Y.2014-15 on 29.09.2014, declaring a loss of Rs.(-)3,74,87,779/-. The case of the assessee was, thereafter, selected for scrutiny assessment u/s.143(2) of the Act. Assessment was, thereafter, framed by the A.O vide his order passed u/s.143(3) dated 14.12.2016, wherein after making a disallowance u/s.14A of 3 M/s. SGEPL Infrastructure Private Limited Vs. DCIT, Circle-3(1), Raipur Rs.13,30,993/-, the income of the assessee was determined at Rs. Nil.

Aggrieved the assessee assailed the disallowance made by the A.O u/s.14A before the CIT(Appeals) but without success.

The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before me.

I have heard the ld. authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record as well as considered the judicial pronouncements that have been pressed into service by the ld.AR to drive home his contentions.

Controversy involved in the present appeal lies in a narrow compass, i.e., as to whether or not any disallowance u/s.14A of the Act would be called for in a case where the assessee had not earned any exempt income during the year. It is the claim of the Ld. Authorized Representative (for short ‘AR’) for the assessee that the assessee company had not received any exempt income during the year under consideration. The Ld. AR had in order to fortify his aforesaid contentions drawn my attention to the computation of income, Page 13-16 of APB.

Having given a thoughtful consideration to the aforesaid issue, I find substance in the claim of the Ld. AR. As stated by the Ld. AR, and, rightly so, in absence of any exempt income no disallowance u/s.14A of the Act would be called for in the hands of the assessee. My aforesaid view is fortified by the judgment of the Hon’ble High Court of Madras in the case of Commissioner of Income Tax Vs. Chettinad Logistics Pvt. Ltd. (2017) 248 TAXMAN 55 (Mad.). The Special Leave Petition (SLP) (Civil) No.16194 of 2018 filed by the department before the Hon’ble Apex Court against the aforesaid order of the Hon’ble High Court of Madras in the case of Chettinad Logistics Pvt. Ltd. (supra), had thereafter, been dismissed by the Hon’ble Apex Court in CIT Vs. Chettinad Logistics (P) Ltd. (2018) 95 taxmann.com 250 (SC). In fact, I find that the review petition filed by the revenue had also been dismissed by the Hon’ble Apex Court vide its order passed in Commissioner of Income Tax (Central) Vs. M/s. Chettinad Logistics Pvt. Ltd. (2019) 105 CCH 226 (SC). Also, I find that the Hon’ble Apex Court had taken a same view in the case of Principal Commissioner of Income Tax Vs. Oil Industry Development Board (2019) 262 Taxman 102 (SC), wherein the order of the Hon’ble High Court of Delhi in the case of Principal Commissioner of Income Tax Vs. Oil Industries Development Board (2018) 101 CCH 452 (Del. HC) was approved.

Considering the fact that the issue involved in the present appeal is no more res-integra pursuant to the judgment of the Hon’ble Supreme Court, therefore, the claim of the Ld. AR that no disallowance u/s.14A of the Act in absence of any exempt income could have been made in the case of the assessee company, merits acceptance.

In the result, appeal filed by the assessee is allowed in terms of my aforesaid observations.