Appeal details
Counselvise Citation
[2018] 123 COUNSELVISE.COM (IT) 3461 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
10 month(s) 17 day(s)
Appellant
Respondent
Appeal Type
Cross Objection
Pronouncement Date
03-01-2018
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
E
Assessment Year
2013-2014
Appeal Filed On
15-02-2017
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : E : NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.6385/DEL/2016 ASSESSMENT YEAR : 2013-14 ITO, WARD-17(1), CR BUILDING, NEW DELHI. VS. MOONROCK HOSPITALITY (P) LTD., C-561, DEFENCE COLONY, NEW DELHI. PAN: AAFCM7112H CO NO.32/DEL/2017 (ITA NO.6385/DEL/2016) ASSESSMENT YEAR : 2013-14 MOONROCK HOSPITALITY (P) LTD., C-561, DEFENCE COLONY, NEW DELHI. PAN: AAFCM7112H VS. ITO, WARD-17(1), CR BUILDING, NEW DELHI. (APPELLANTS) (RESPONDENTS) ASSESSEE BY : SHRI RAJESH JHALANI, CA DEPARTMENT BY : MS ALKA GAUTAM, SR. DR DATE OF HEARING : 02.01.2018 DATE OF PRONOUNCEMENT : 03.01.2018 ITA NO.6385/DEL/2016 CO NO.32/DEL/2017 2 ORDER PER R.S. SYAL, VP: THIS APPEAL FILED BY THE REVENUE AND THE CROSS OBJ ECTION BY THE ASSESSEE ARISE OUT OF THE ORDER PASSED BY THE CIT(A ) ON 24.10.2016 IN RELATION TO THE ASSESSMENT YEAR 2013-14. 2. THE ONLY ISSUE RAISED BY THE REVENUE IN ITS APPE AL IS AGAINST DELETION OF THE DISALLOWANCE OF RS.1,08,61,430/- MADE BY THE ASSESSING OFFICER U/S 14A OF THE ACT. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS DOING HOSPITALITY BUSINESS. HOWEVER, NO BUSINESS ACTIVITY WAS CARRIED OUT DURING THE YEAR. THE ASSESSEE OBTAINED A LOAN OF RS.7.02 CRORE FROM M/S MONEYWISE FINANCIAL SERVICES (P) LTD. A PART OF THE SAME WAS PAID DURING THE YEAR WHICH WAS FINANCED BY TAKING A FRESH LOAN FROM M/S FUZONE SYSTEM (P) LTD. THIS LOAN OBTAINED WAS NON-INTEREST BEARING. THE LOAN WAS TAKEN FOR INVESTING IN THE PURCHASE OF SHARES OF TW O SUBSIDIARY COMPANIES, NAMELY, M/S TSM POLYMERS (P) LTD. AND M/S NATIONAL CAPITAL REGION ELECTRONICS (P) LTD. AT A HIGH RATE OF INTEREST. T HE ASSESSING OFFICER OPINED THAT THE INVESTMENT WAS MADE WITH A VIEW TO EARN EXEMPT INCOME. ITA NO.6385/DEL/2016 CO NO.32/DEL/2017 3 APPLYING THE PROVISION OF SECTION 14A READ WITH RUL E 8D, HE COMPUTED DISALLOWANCE AT RS.1,08,67,661/-. HERE IT IS PERTI NENT TO MENTION THAT THE ASSESSEE HAD INCURRED ONLY AN EXPENDITURE OF RS.6,2 30/- DURING THE YEAR, BEING PAYMENT OF AUDIT FEES ETC., WHICH WAS SHOWN A S LOSS. THE DISALLOWANCE OF RS.1.08 CRORE WAS ADDED TO THE DECL ARED LOSS OF RS.6,230/- . THE LD. CIT(A) DELETED THE DISALLOWANCE BY OBSER VING THAT THE ASSESSEE HAD NOT EARNED ANY EXEMPT INCOME DURING THE YEAR. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED FROM THE ASSESSE ES PROFIT & LOSS ACCOUNT THAT THERE IS ONLY ONE ITEM OF EXPENDITURE OF RS.6,230/- WHICH HAS BEEN BOOKED IN THE ACCOUNTS AND THERE IS NO EXEMPT INCOME EARNED BY THE ASSESSEE. WE FIND THAT THE QUESTION OF DISALLOWANC E U/S 14A WHEN THERE IS NO EXEMPT INCOME IS NO MORE RES INTEGRA IN VIEW OF THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE CHEMINVEST LTD. VS. CIT (2015) 378 ITR 33 (DEL) , WHEREIN IT HAS BEEN HELD THAT IF THERE IS NO EXEMPT INCOME, THERE CAN BE NO QUESTION OF MAKING A NY DISALLOWANCE U/S 14A. SIMILAR VIEW HAS BEEN TAKEN BY THE HON'BLE JU RISDICTIONAL HIGH COURT IN CIT VS. HOLCIM INDIA P. LTD. (2014) 90CCH 081-DEL- HC . IN ITA NO.6385/DEL/2016 CO NO.32/DEL/2017 4 VIEW OF THESE BINDING PRECEDENTS PROVIDING FOR NOT MAKING ANY DISALLOWANCE U/S 14A IN THE ABSENCE OF ANY EXEMPT I NCOME, WHICH ARE SQUARELY APPLICABLE TO THE FACTS OF THE INSTANT CAS E, WE UPHOLD THE VIEW TAKEN BY THE LD. CIT(A) ON THIS ISSUE. 5. THE ASSESSEES CROSS OBJECTION ASSAILS THE VIEW POINT OF THE LD. CIT(A) ON CERTAIN ASPECTS OF THE DISALLOWANCE U/S 1 4A. SINCE SUCH DISALLOWANCE HAS BEEN DELETED IN ENTIRETY ON THE AB OVE LEGAL ASPECT, THERE IS NO NEED TO LOOK INTO THE ASPECTS CONCERNING THE COMPUTATION OF DISALLOWANCE. THUS, THE CROSS OBJECTION HAS BEEN R ENDERED INFRUCTUOUS. 6. IN THE RESULT, THE APPEAL AS WELL AS THE CROSS O BJECTION STAND DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 03.01.20 18. SD/- SD/- [SUDHANSHU SRIVASTAVA] [R.S. SYAL] JUDICIAL MEMBER VICE PRESIDENT DATED, 03 RD JANUARY, 2018. DK ITA NO.6385/DEL/2016 CO NO.32/DEL/2017 5 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.
