DCIT, CC-I, LUDHIANA vs. M/S VARDHMAN INDUSTRIES LTD., NEW DELHI
In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal upheld the deletion of the addition, stating that disallowance under Section 14A cannot be made in the absence of earning any exempt income. The CBDT circular cited by the Revenue was deemed not applicable.
What were the facts?
The Revenue appealed the deletion of an addition made under Section 14A for disallowance of expenditure. The assessee argued that no disallowance was warranted as no exempt income was earned during the year.
What were the issues?
Whether disallowance under Section 14A is permissible when no exempt income is earned by the assessee during the assessment year.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DIVISION BENCH’B’, CHANDIGARH
Before: SHRI SANJAY GARG & DR. B.R.R. KUMAR
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH’B’, CHANDIGARH
BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER
ITA No.1697/Chd/2017 Assessment Year: 2013-14
The DCIT, Vs. M/s Vardhman Inds. Ltd. CC-1, Ludhiana 2nd Floor, Jeevandeep Building Parliament Street, New Delhi
PAN No. AAACV3229R
(Appellant) (Respondent)
Assessee By : None Revenue By : Shri. Ashish Gupta
Date of hearing : 08/05/2018 Date of Pronouncement : 16/05/2018
ORDER PER DR. B.R.R. KUMAR A.M.
The present appeal has been filed by the Revenue against the order of Ld.CIT(A)-5, Ludhiana dt. 03/10/2017.
In the present appeal the Revenue has raised only one effective ground which reads as under:
Whether on facts and in circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 50,31,972/- made on account of disallowance under section 14A r.w.r 8D of the Act ignoring the fact that Circular no. 5/2014 dt. 11.02.2014 issued by the CBDT, provides for disallowance of expenditure even where tax payer in particular year has not earned any exempt income. 3. The assessee is argued that the action of the Ld. Assessing Officer in making disallowance of Rs. 50,31,972/- by resorting to provisions of Section 14A, more so, when during the year under appeal the assessee did not earn any exempt income.
Similar disallowance was effected in the A.Y. 2007-08 in the appellant's own case. The Hon'ble Income Tax Appellate Tribunal, Division Bench,
Chandigarh vide its order dated 05.05.2016 bearing ITA No. 734/CHD/ 2012 has also deleted the disallowance made U/s 14A.
The assessee argued that no disallowance was warranted under section 14A. For the proposition, reliance is placed on the following judgments: - > 111 DTR page 149 (P&H) CIT Vs. Lakhani Marketing Co. > 111 DTR page 146 (Gujarat) CIT Vs. Corrtech Energy (P.) Ltd. > 111 DTR page 153 (Allahabad) CIT Vs. Shivam Motors (P.) Ltd. > 111 DTR page 158 (Delhi) CIT Vs. Holcim India (P.) Ltd.
The Ld. DR fairly submitted that the assessee has not earned any exempt income during the year .
Hence keeping in view the established position of law that no disallowance under section 14A can be effected in the absence of earning of any exempt income, we decline to interfere in the order of the Ld. CIT(A). And the Circular of the Board has no bearing on this case.
As a result, the appeal of the Revenue is dismissed.
Order pronounced in the open court.
Sd/- Sd/- (SANJAY GARG) (DR. B.R.R.KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 16/05/2018 AG Copy to: The Appellant, The Respondent, The CIT, The CIT(A), The DR
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