ACIT, CIRCLE- 3.3.1, MUMBAI, MUMBAI V. WALUJ COMPONENTS PRIVATE LIMITED, MUMBAI

ITA 2765/MUM/2025

AI Insights

The case involves an appeal by the revenue against the order of the CIT(A) which pertained to the assessment year 2018-19. The primary contention was regarding the disallowance made under Section 14A of the Income Tax Act, which was to be determined according to Rule 8D of the Income Tax Rules, 1962. The revenue argued that the CIT(A) erred in deleting the disallowance without appreciating the applicability of the CBDT Circular No.5/2014 and the correct application of Rule 8D. However, the CIT(A)'s decision was based on the fact that the assessee did not earn any exempt income during the year, a fact that was undisputed and led to the non-application of Section 14A r.w.r 8D as per judicial precedents.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 652984 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2018-2019
• Other Referred Cases: CIT vs. Chettinad Logistics Pvt. Ltd., Era Infrastructure
• Laws Referred To: Income Tax Act, Income Tax Rules 1962
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN KANTI DATTA; DR
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A; 115JB

Judgement Text

" | आयकर अपीलीय अिधकरण ा यपीठ, मुंबई | IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, HON’BLE VICE PRESIDENT & SHRI NARENDRA KUMAR BILLAIYA, HON’BLE ACCOUNTANT MEMBER I.T.A. No. 2765/Mum/2025 Assessment Year: 2018-19 ACIT-3(3)(1), Mumbai Vs M/s. Waluj Components Private Limited 171, 17th Floor Mittal Court C Wing, Nariman Point Mumbai - 400021 [PAN: AABCP0027G] अपीला थ\u0016/ (Appellant) \u0017\u0018 यथ\u0016/ (Respondent) Assessee by : None Revenue by : Shri Arun Kanti Datta, CIT, D/R सुनवाई की तारीख/Date of Hearing : 18/06/2025 घोषणा की तारीख /Date of Pronouncement: 18/06/2025 आदेश/O R D E R PER NARENDRA KUMAR BILLAIYA, AM: This appeal by the revenue is preferred against the order dt. 04/03/2025 by NFAC, Delhi [hereinafter “the ld. CIT(A)”] pertaining to AY 2018-19. 2. The grievance of the assessee reads as under:- “1. Whether on the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeal) was justified in deleting the disallowance made u/s.14A without appreciating that the disallowance u/s. 14A was required to be determined according to Rule 8D of Income Tax Rules 1962 as had been done by the Assessing officer? 2. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) was correct in not noticing CBDT Circular No.5/2014 when it is judicially acknowledged that CBDT Circulars constitute important clarifications of legislature intent? 3. The Appellant craves leave to add, amend and/or vary grounds of Appeal before or during the course of hearing. I.T.A. No. 2765/Mum/2025 2 4. Whether on the facts and in the circumstances of the case and in law, the Learned Commissioner of Income tax Appeal) was justified in deleting the addition u/s 14A Book Profit u/s 115JB without appreciating that the same has been done after determining disallowance u/s 14A according to Rule 8D of Income Tax Rules, 1962.” 3. Having heard the rival contentions, we have carefully perused the orders of the authorities below. The undisputed fact is that the assessee did not earn any exempt income during the year under consideration. Therefore, provisions of Section 14A r.w.r 8D, do not apply as held by the Hon’ble Madras High Court in the case of CIT vs. Chettinad Logistics Pvt. Ltd. [2017] 248 Taxman 55, wherein the Hon’ble High Court has held that Section 14A of the Act cannot be invoked where no exempt income was earned by the assessee in the relevant assessment year. SLP was dismissed by the Hon’ble Supreme Court preferred against this order of the Hon’ble High Court in [2018] 257 Taxman 2 (SC). Further, the insertion to the explanation in Section 14A of the Act, is prospective as held by the Hon’ble Delhi High Court in the case of Era Infrastructure 141 taxmann.com 289. 4. Respectfully following the judicial decisions discussed hereinabove, we do not find any reason to interfere with the findings of the ld. CIT(A). 5. In the result, appeal of the revenue is dismissed. Order pronounced in the Court on 18th June, 2025 at Mumbai. Sd/- Sd/- (SAKTIJIT DEY) (NARENDRA KUMAR BILLAIYA) VICE PRESIDENT ACCOUNTANT MEMBER Mumbai, Dated 18/06/2025 *SC SrPs *SC SrPs *SC SrPs *SC SrPs I.T.A. No. 2765/Mum/2025 3 आदेश की \u0014ितिलिप अ\u0019ेिषत /Copy of the Order forwarded to : 1. अपीलाथ\u001b / The Appellant 2. \u0014 थ\u001b / The Respondent 3. संबंिधत आयकर आयु! / Concerned Pr. CIT 4. आयकर आयु! ) अपील ( / The CIT(A)- 5. िवभागीय \u0014ितिनिध ,आयकर अपीलीय अिधकरण, मुंबई /DR,ITAT, Mumbai, 6. गाड% फाई/ Guard file. आदेशानुसार/ BY ORDER TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Mumbai "