EBIX CASH LTD.,NOIDA V. ACIT CIRCLE-5(1)(1), GAUTAM BUDH NAGAR

ITA 4453/DEL/2024

AI Insights

The case involves appeals by both the Revenue and the assessee, M/s EBIX Cash Ltd., against the order passed by the National Faceless Appeal Centre (NFAC). The primary issues in the appeals were related to the disallowance of expenses under section 14A of the Income Tax Act, 1961, and the computation of income under section 115JB. The assessee contested the disallowance of Rs. 5,19,33,980 made under section 14A read with Rule 8D, arguing that no exempt income was earned during the year, and the disallowance was excessive. The Revenue's appeal challenged the deletion of the addition of disallowance of interest income exempt under section 10AA. The Tribunal's decision relied on precedents and the absence of exempt income, leading to the allowance of the assessee's appeal and dismissal of the Revenue's appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 775960 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Appeal Filed On: 25-09-2024
• Other Referred Cases: Cheminvest Ltd. vs. CIT, PCIT vs. Oil Industries Development Board, Godrej & Boyce Manufacturing Company Ltd. vs. DCIT, Maxopp Investment Ltd. vs. CIT, PCIT Vs. Moon Star Securities Trading and Finance Co.(P) Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rule of consistency; Earning of tax free income; Rule 8D
• Section: 143(3); 14A; 115JB; 10AA

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH‘B’: NEW DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.4453/Del/2024 ASSESSMENT YEAR-2018-19) M/s EBIX Cash Ltd., Plot No.122 & 123, NSEZ, Phase- II, Noida, Gautambudh Nagar-201305 Uttar Pradesh, India. PAN-AAACE9981H Vs. Asst. CIT, Circle-5(1)(1), GautamBudh Nagar, Noida, UttarParadesh. (Appellant) (Respondent) ITA No.4738/Del/2024 (ASSESSMENT YEAR-2018-19) Asst. CIT, Circle-5(1)(1), GautamBudh Nagar, Noida, Uttar Paradesh. Vs. M/s EBIX Cash Ltd., Plot No.122 & 123, NSEZ, Phase-II, Noida, Gautambudh Nagar-201305 Uttar Pradesh, India. PAN-AAACE9981H (Appellant) (Respondent) Assessee by Shri Lalit Mohan, CA and Shri Ankit Kumar, Adv. Department by ShriRajesh Kumar Dhanesta,Sr.DR Date of Hearing 14/08/2025 Date of Pronouncement 10/09/2025 ORDER PER ANUBHAV SHARMA, JM: These appeals are preferred by the Revenue and the assessee against the order dated 23.08.2025 passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by National Faceless Appeal Centre (NFAC) arising out of order dated 23.04.2021 made by Assessing Officer(hereinafter referred as ‘the AO’) u/s 143(3) read with section 144B of the Act. Printed from counselvise.com 2 ITA Nos.4453 & 4738 /Del/2024 FBIX Cash Ltd. vs. ACIT 2. On hearing, both the sides, we find that the case of the assessee was selected for complete scrutiny assessment. The assessee had filed return of income declaring total income of Rs.13,98,12,000/-. The Assessing Officer had examined the issues with regard to disallowance of gratuity, disallowance of interest income including an exempt income u/s 10AA of the Act. Disallowance of expenses incurred in relation to earning exempt income u/s 14A. In appeal, assessee had succeeded partly for which both assessee and Revenue are in appeal and the grounds in respective appeals are as below. ITA No.4453/Del/2024 of assessee 1. That the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) has erred both in law and on facts in upholding a disallowance of sum of Rs. 5,19,33,980/- by incorrectly invoking section 14A of the Act read with Rule 8D of the Income Tax Rules' 1962. 1.1 That the learned Commissioner of Income (Appeals) has failed to appreciate that in absence of satisfaction of statutory preconditions provided in section 14A(1) of the Act, no disallowance could be validly upheld by mechanically applying Rule 8D of the Income Tax Rules' 1962. 1.2That without prejudice, computation of disallowance under Rule 8D of Income Tax Rules 1962 made by the learned Assessing Officer is not in accordance with law and in any case, excessive. 2. That the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi has also erred both in law and on facts in upholding the income computed u/s 115JB of the Act at Rs. 45,14,61,476/-in an order dated 23.4.2021 u/s 143(3) read with section 144B of the Act. 3That the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi has further erred in upholding an adjustment of Rs. 5,19,33,980/- by invoking section 14A of the Act read with Rule 8D of the Income Tax Rules' 1962, which is patently without jurisdiction. Prayer It is therefore prayed that, disallowances made and upheld by the learned. Commissioner of Income Tax (Appeals) may kindly be deleted and, appeal of the appellant company be allowed.” ITA No.4738/Del/2024 of revenue “That the Ld. Commissioner of Income Tax (Appeals) erred in law and facts of the case in deleting the addition of disallowance of Interest Income exempt u/s 10AA of the Act on account of other income from 4 SEZ units.” 3. On hearing, both the sides, we find that Ground No.1 raised by the Revenue relates to disallowance of interest income of Rs.7,69,84,013/- as income from other sources instead of income sustainable under the head from Printed from counselvise.com 3 ITA Nos.4453 & 4738 /Del/2024 FBIX Cash Ltd. vs. ACIT business and eligible for deduction u/s 10AA of the Act. The Assessee Officer had made impugned disallowance by treating the interest income as income from other sources, however, the issue is no longer res-integra as in assessee’s own case for Assessment Years 2013-14 and 2014-15, this disallowance was disallowed by the CIT(A)’s order dated 30.05.2017. The Revenue came in appeal before the Tribunal and the appeal was dismissed on 30.09.2020 and further Revenue’s appeal before the Hon’ble Allahabad High Court in ITA No.15/2022 is pending for disposal. Thus, on the principle of consistency, the assessee deserves to be benefited. Thus, the finding of Ld. CIT(A) relying this order dated 30.05.2017 of Tribunal requires no interference. The ground raised in the appeal of the Revenue has no substance and same is rejected. 4. Ground No.1 with sub-ground 1.2 of assessee relates to disallowance of a sum of Rs.5,19,33,980/- made by invoking section 14A of the Act read with Rule 8D of the Income Tax Rules’ 1962. The NFAC has upheld the impugned disallowance on the basis of that assessee held investment of Rs.829.14 Cr. as on 31.03.2021 applying Rule 8D, 1% of the annual average investment of monthly average investment of Rs.519.33 Cr. and thus disallowance was computed at Rs.5.19,33,980/-. 5. Now as matter of fact no exempt income was earned during the instant year. Thus, the settled proposition of law to the benefit of assessee is that where there is no exempt income, no disallowance can be made. Reliance can be placed on the judgment of Hon’ble Delhi High Court in the case of Cheminvest Ltd. vs. CIT, 378 ITR 33 and the decision of Hon’ble Supreme Court in the case of PCIT vs. Oil Industries Development Board 103 Taxmann.com 326 (SC). 5.1 Furthermore, Ld. AR has established and demonstrated that share capital andreserves exceeds investment made, so that also does not justified disallowance. In this context, at page 31 of the PB, assessee has provided the Printed from counselvise.com 4 ITA Nos.4453 & 4738 /Del/2024 FBIX Cash Ltd. vs. ACIT details of investment and at page 4 of PB, there is a financial statement showing with the share capital and free reserves exceeds Rs.12,00, Cr/- against investments of Rs.829.14 Crs. The Hon’ble Supreme Court in the case of Godrej & Boyce Manufacturing Company Ltd. vs. DCIT 394 ITR 449 (SC) has held that where the assessee has reserves exceeding investment, no disallowance u/s 14A is permissible. 5.2 At the same time, assessee also deserves to be benefited for the reason that no valid satisfaction for disallowance was recorded by the Tax Authorities. Reliance can be placed on the decision of Hon’ble Supreme Court in the case of Maxopp Investment Ltd. vs. CIT, 402 ITR 640 (SC). In the light of aforesaid, we are inclined to allow the ground of appeal and the impugned disallowance is deleted. 6. Ground No.2 & 3 raised by the assessee arises out of the adjustment of Rs.5,19,33,980/- made by the Ld. Tax Authority by invoking section 14A of the Act read with Rule 8D of the Income Tax Rules, 1962 by computing income under section115JB of the Act However, the settled proposition of law is that while computing the books profit u/s 115JB of the Act no disallowance as warranted u/s 14A of the Act can be made. Reliance is placed on the decision of Co-ordinate Bench in PCIT Vs. Moon Star Securities Trading and Finance Co.(P) Ltd. in ITA No.421/2018 order dated 11.03.2024. 6.1 Even otherwise when assessee has not received any exempt income during the year, there was no question of making any disallowance u/s 14A of the Act even in the normal computation, therefore, the same also cannot be included while computing the books profit u/s 115JB of the Act. This ground is accordingly sustained. Printed from counselvise.com 5 ITA Nos.4453 & 4738 /Del/2024 FBIX Cash Ltd. vs. ACIT 7. In the result, the appeal filed by the Revenue is dismissed and by assessee is allowed. Impugned additions are deleted. Order pronounced in the open court on 10.09.2025. Sd/- Sd/-/- (MANISH AGARWAL) (ANUBHAV SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 10.09.2025 PK/Sr. Ps Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "