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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI RAVISH SOOD & DR. DIPAK P. RIPOTE
आदेश / ORDER
PER RAVISH SOOD, JM:
The present appeal filed by the assessee is directed against the order passed by the CIT(Appeal), Bilaspur, dated 28.04.2018, which in turn arises from the order passed by the A.O. u/s. 143(3) of the Income- tax Act, 1961 (for short ‘Act’), dated 03.09.2015 for A.Y. 2013-14. The assessee has assailed the impugned order on the following solitary ground of appeal before us:
“1. That under the facts and the law, the learned Commissioner of Income Tax (Appeals) erred in sustaining the disallowance of Rs.2,20,190/- made by the learned Assessing Officer u/s.14A though the provisions of Sec.14A as well as Rule 8D were not applicable. The disallowance of Rs.2,20,190/- is not according to law and be deleted.”
Succinctly stated, the assessee company which is engaged in the business of supply & trading of coal had e-filed its return of income for A.Y.2013-14 on 27.09.2013, declaring an income of Rs.3,32,30,890/-. Subsequently, the case of the assessee was selected for scrutiny assessment u/s. 143(2) of the Act.
During the course of the assessment proceedings, it was, inter alia, observed by the A.O that though the assessee company had made investment in exempt income yielding shares, but had not offered for 3 M/s. Omax Minerals Pvt. Ltd. Vs. DCIT-1(1)
disallowance any part of expenditure attributable towards earning of exempt income. Observing that the assessee company had utilized its interest-bearing funds for making investment in exempt income yielding shares, the A.O worked out a disallowance of Rs.2,10,190/- u/s.14A of the Act by triggering the mechanism contemplated under Rule 8D(2)(ii) of the Income Tax Rules, 1962. Also, the A.O disallowed administrative expenses of Rs.10,000/- under section 14A r.w. Rule 8D(2)(iii). Accordingly, the A.O vide his order passed u/s.143(3) of the Act dated 03.09.2015 after, inter alia, making a disallowance of Rs.2,20,190/- u/s.14A of the Act assessed the income of the assessee company at Rs.3,37,51,080/-.
Aggrieved, the assessee carried the matter in appeal before the CIT(Appeal) but without any success in so far the disallowance of the expenses made by the A.O u/s.14A of the Act was concerned.
The assessee being aggrieved with the order of the CIT(Appeal) has carried the matter in appeal before us.
At the time of hearing of appeal, it was submitted by the Ld. Authorized Representative (for short ‘AR’) that now when the assessee company had not received any exempt dividend income during the year under consideration, therefore, no disallowance u/s.14A of the Act could have been validly made in its hands. Accordingly, on the basis of his aforesaid contentions, it was submitted by the Ld. AR that the 4 M/s. Omax Minerals Pvt. Ltd. Vs. DCIT-1(1)
disallowance u/s.14A r.w.r.8D made by the A.O could not be sustained and was liable to be vacated.
Per contra, the Ld. Departmental Representative (for short ‘DR’) relied on the orders of the lower authorities.
We 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 in order to drive home his contentions. Admittedly, as is discernible from the assessment order, the assessee company during the year under consideration had though made investment in exempt income yielding shares but had not received any exempt dividend income during the year under consideration. Considering the aforesaid facts, we find substantial force in the claim of the Ld. AR that now when the assessee company had admittedly not received any exempt income during the year under consideration, therefore, no disallowance u/s.14A of the Act was called for in its hand. Our aforesaid view is fortified by the judgment of the Hon’ble Supreme Court in the case of CIT Vs. Chettinad Logistics Pvt. Ltd. (2018) 257 Taxmann 2 (SC) and also that of the Hon’ble High Court of Delhi in the case of Cheminvest Limited Vs. CIT, (2015) 378 ITR 33 (Delhi). In the backdrop of the facts involved in the case before us r/w. the aforesaid settled position of law, we find substance in 5 M/s. Omax Minerals Pvt. Ltd. Vs. DCIT-1(1)
the claim of the Ld. AR that now when the assessee company had not received any exempt dividend income during the year under consideration, therefore, no disallowance u/s.14A of the Act was warranted in its case. We, thus, in terms of our aforesaid observations vacate the disallowance of Rs.2,20,190/- made by the A.O.