ACIT, Circle-6(1), New Delhi V. Clix Finance India Unlimited (Earlier known asGE Capital Services India), New Delhi

ITA 1075/DEL/2018

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 8104 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 13-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: B NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER [THROUGH VIDEO CONFERENCING] ITA NO.1075/DEL./2018 ASSESSMENT YEAR: 2012-13 ACIT, CIRCEL-6(1), NEW DELHI VS. M/S. CLIX FINANCE INDIA UNLIMITED (EARLIER KNOWN ASGE CAPITAL SERVICES INDIA), E-20, 1 ST FLOOR, HAUZ KHAS, NEW DELHI PAN :AAACG0239L (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST ORDE R DATED 08/11/2017 PASSED BY THE LEARNED COMMISSIONER OF IN COME-TAX (APPEALS)-35, NEW DELHI [IN SHORT THE LD. CIT(A)] FOR ASSESSMENT YEAR 2012-13 RAISING FOLLOWING GROUNDS: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS.5,57,54,022/- MADE ON ACCOUNT OF DISALLOWANCE U/S 14A R.W.R. 8D OF THE ACT BY IGNORING THE FACT THAT THE ASSESSEE HAS INCURRED HU GE APPELLANT BY SHRI S.S. NEGI, SR.DR RESPONDENT BY SHRI SACHIT JOLLY, ADV. DATE OF HEARING 14.01.2021 DATE OF PRONOUNCEMENT 14.01.2021 2 ITA NO.1075/DEL./2018 EXPENSES IN RELATION TO LARGE INVESTMENTS IN SHARES AND MUTUAL FUNDS. 2. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIG HT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GOUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 2. BOTH THE PARTIES APPEARED BEFORE US THROUGH VIDEO CONFERENCING FACILITY. WE HAVE HEARD RIVAL SUBMISSI ON OF THE PARTIES ON THE ISSUE IN DISPUTE AND PERUSED THE REL EVANT MATERIAL ON RECORD. THE ISSUE IN DISPUTE INVOLVED IS DISALLO WANCE IN TERMS OF SECTION 14A OF THE INCOME-TAX ACT, 1961 (IN SHOR T THE ACT) READ WITH RULE 8D OF THE INCOME-TAX RULES, 1962 (IN SHOR T THE RULES). 3. WE FIND THAT THE LD. CIT(A) HAS ADJUDICATED THE IS SUE IN DISPUTE FOLLOWING THE BINDING PRECEDENT OF DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CHEMINVEST LTD. VS. CIT- IV, 61 TAXMANN.COM 118 (DELHI). THE RELEVANT FINDIN G OF THE LD. CIT(A) IS REPRODUCED AS UNDER: 4.3.3 THE SUBMISSION OF THE APPELLANT AND THE CAS E LAWS CITED AND THE RELEVANT ORDERS HAVE BEEN CONSIDERED. IN THE PR ESENT CASE, THE APPELLANT HAS NOT EARNED ANY EXEMPT INCOME U/S. 14A , BUT HAS SUO MOTU DISALLOWED RS.64,30,120/- IN TERMS OF PROVISIO NS OF SECTION 14A. IT IS OBSERVED THAT THE DECISION BY THE HON'BL E ITAT DELHI HAS BEEN REVERSED BY THE HON'BLE DELHI HIGH COURT IN TH E SAME CASE I.E. CHEMNIVEST LTD. VS. CIT-IV 61 TAXMANN.COM 118 (DELH I) VIDE ORDER DATED 02.09.2015 HOLDING THAT 'THE THE EXPRESSION ' DOES NOT FORM PART OF THE TOTAL INCOME' IN SECTION 14A ENVISAGES THAT THERE SHOULD BE AN ACTUAL RECEIPT OF INCOME, WHICH IS NOT INCLUD IBLE IN THE TOTAL INCOME, DURING THE RELEVANT PREVIOUS YEAR FOR THE P URPOSE OF DISALLOWING ANY EXPENDITURE INCURRED IN RELATION TO THE SAID INCOME. IN OTHER WORDS, SECTION 14A WILL NOT APPLY IF NO EX EMPT INCOME IS RECEIVED OR RECEIVABLE DURING THE RELEVANT PREVIOUS YEAR. [PARA 23].' IN THE SAID JUDGMENT THE HON'BLE DELHI HIGH COURT F OLLOWED THE CASE OF CIT VS. HOLCIM INDIA P. LTD. 57 TAXMANN.COM 28 ( 2015) DELHI AND DISTINGUISHED THE DECISION OF MAXOPP INVESTMENT LTD . 347 ITR 272. HOWEVER, THE APPELLANT HAS SUO-MOTO DISALLOWED AN A MOUNT OF RS.64,30,120/- U/S. 14A OF THE I.T. ACT. , THEREBY IN PRINCIPLE THE APPELLANT HAS ADMITTED THAT CONSIDERING THE FACTS O F THE CASE THERE 3 ITA NO.1075/DEL./2018 ARE EXPENSES ATTRIBUTABLE TO EARNING OF EXEMPT INCO ME. NOW THE ONLY QUESTION WHICH REMAINS, WAS QUANTUM OF SUCH EXPENSE . THE AO HAS APPLIED SEC. 14A R.W. RULE 8D OF THE I.T. ACT, 1961 FOR ARRIVING AT THE QUANTUM OF EXPENSES ATTRIBUTABLE TO THE EARNING OF EXEMPT INCOME. IN VIEW OF THE DECISION CHEMNIVEST LTD. VS. CIT-IV 61 TAXMANN.COM 118 (DELHI), IT IS HELD THAT SECTION 14A R.W. RULE 8D WILL NOT APPLY IN THE INSTANT CASE. HOWEVER, THE AMOUNT OF RS.64,30,1 20/- WHICH HAS BEEN DISALLOWED SUO-MOTO BY THE APPELLANT IS CONSID ERED TO BE SUFFICIENT IN TERMS OF THE PROVISION OF SECTION 14A . HENCE, GROUND NO. 3, 3.1 TO 3.5 ARE ALLOWED. 4. BEFORE US, THE LEARNED DR HAS NOT CONTROVERTED THE FACT THAT NO EXEMPTED INCOME IS EARNED IN THE YEAR UNDER CONS IDERATION AND, THEREFORE, THE DECISION OF THE LD. CIT(A) FOLL OWING THE BINDING PRECEDENT IS WELL REASONED AND WE DO NOT FIND INFIR MITY IN THE SAME, ACCORDINGLY, WE UPHOLD THE SAME. THE GROUND O F THE APPEAL OF THE REVENUE IS DISMISSED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ( BHAVNESH SAINI ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 14 TH JANUARY, 2021. RK/- (D.T.D.S.) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI