DCIT, Chandigarh V. M/s A.B. Grain Spirits Pvt. Ltd., Chandigarh

ITA 113/CHANDI/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6938 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 12-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A; 250

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH A , CHANDIGARH , !' #! $ % , &' BEFORE: SHRI SANJAY GARG, JM & SMT. ANNAPURNA GUPTA , AM ./ ITA NO.1234/CHD/2016 / ASSESSMENT YEAR : 2011-12 M/S A.B. GRAINS SPIRIT (P) LTD., FIRST FLOOR, SECTOR 32-C, CHANDIGARH THE INCOME TAX OFFICER, WARD 1(4), CHANDIGARH. ./PAN NO: AAFCA4588D /APPELLANT /RESPONDENT & ./ ITA NO.113/CHD/2017 / ASSESSMENT YEAR : 2011-12 THE D.C.I.T., CIRCLE-1(1), CHANDIGARH. M/S A.B. GRAINS SPIRIT (P) LTD., FIRST FLOOR, SECTOR 32-C, CHANDIGARH ./PAN NO: AAFCA4588D /APPELLANT /RESPONDENT /ASSESSEE BY : SHRI T.N. SINGLA, CA ! / REVENUE BY : SMT.CHANDERKANTA, SR.DR '# $ /DATE OF HEARING : 05.11.2018 %&'(# /DATE OF PRONOUNCEMENT: 08.01.2019 &( /ORDER PER ANNAPURNA GUPTA, AM : THE IMPUGNED CROSS APPEALS BY THE ASSESSEE AND THE REVENUE HAVE BEEN FILED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2, AMRITSAR, C AMP AT CHANDIGARH (IN SHORT CIT(A) DATED 25.10.2016 PASSED U/S 250 (6) OF THE INCOME TAX ACT, 1961 (IN SHORT REFER RED TO AS ACT). ITA NO.1234/CHD/2017 & ITA NO.113/CHD/2017 A.Y.2011-12 2 2. THE LEARNED COUNSEL FOR ASSESSEE FILED AN APPLIC ATION OF EVEN DATE I.E. 5.11.2018 FOR SEEKING PERMISSION TO WITHDRAW HIS APPEAL. THE LEARNED D.R. DID NOT HAVE OBJECTION AGAINST THE SAME. THE APPEAL OF THE ASSESSEE IS THEREFORE D ISMISSED AS WITHDRAWN. 3. WE SHALL NOW BE TAKING UP THE APPEAL OF THE REVE NUE IN ITA NO.113/CHD/2017. 4. THE SOLE ISSUE RELATES TO DELETION OF DISALLOWAN CE OF EXPENSES MADE U/S 14A OF THE ACT, READ WITH RULE 8D OF THE INCOME TAX RULES, 1962 AND THE ONLY EFFECTIVE GROUN D RAISED BY THE REVENUE READS AS UNDER: 2. THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION ON DISALLOWANCE OF RS.49,90,041/- U/S 14A R.W.S. 8D ON ACCOUNT OF INVESTMENT IN UNQUOTED SHARES AMOUNTING TO RS.19,16,82,500/- THE INCOME EARNED (IF ANY) FROM WHICH IS EXEMPT FROM TAX, WITHOUT TAKING COGNIZANCE OF CIRCULAR NO. 5 OF 2014 OF CBDT ON THIS ISSUE? 5. BRIEFLY STATED, THE ASSESSING OFFICER HAD OBSERV ED THAT THE ASSESSEE HAD MADE INVESTMENT IN UNQUOTED SHARES OF RS.19,16,82,500/-, DIVIDEND INCOME FROM WHICH WAS E XEMPT FROM TAX. HE, THEREFORE, DISALLOWED EXPENSES AMOUNT ING TO RS.49,90,041/-UNDER SECTION 14A OF THE ACT COMPUTE D AS PER RULE 8D OF THE INCOME TAX RULES, 1961. 6. THE LD.CIT (A) DELETED THE DISALLOWANCE SO MADE ON NOTING THAT NO EXEMPT INCOME WAS EARNED BY THE ASSE SSEE AND FOLLOWING THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF HERO CYCLES LIMITED IN IT A NO. 331 OF 2009 DATED 4.11.2009 AND THE DECISION OF THE I.T .A.T., ITA NO.1234/CHD/2017 & ITA NO.113/CHD/2017 A.Y.2011-12 3 CHANDIGARH BENCH IN THE CASE OF ETE ELECTROGEARS PV T. LTD. IN ITA NO.314/CHD/2016 DATED 11.8.2016 HOLDING THA T NO DISALLOWANCE UNDER SECTION 14A IS WARRANTED WHERE N O EXEMPT INCOME HAS BEEN EARNED. 7. BEFORE US THE LD. D.R. RELIED UPON THE ORDER OF THE ASSESSING OFFICER WHILE THE LD. COUNSEL FOR THE ASS ESSEE RELIED UPON THE ORDER OF THE CIT (A) AND FURTHER PO INTED OUT THAT THE HON'BLE JURISDICTIONAL HIGH COURT IN THE C ASE OF CIT FARIDABAD VS. LAKHANI MARKETING INC. (1970) 208 (O& M) DECIDED ON 2.4.2014 HAS CATEGORICALLY HELD THAT UNL ESS AND UNTIL THERE IS RECEIPT OF EXEMPT INCOME IN THE CONC ERNED ASSESSMENT YEAR, SECTION 14A OF THE ACT CANNOT BE I NVOKED. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF AUTHORITIES BELOW. WE DO NOT FIND ANY MER IT IN THE PRESENT APPEAL THE ISSUE REGARDING DISALLOWANCE OF EXPENSES TO BE MADE IN THE ABSENCE OF ANY EXEMPT IN COME EARNED HAS BEEN SETTLED IN FAVOUR OF THE ASSESSEE B Y THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF LA KHANI MARKETING INC. (SUPRA). 9. THE LD. D.R. HAS NOT BROUGHT TO OUR NOTICE ANY C ONTRARY DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT O R OF THE HON'BLE APEX COURT IN THIS REGARD. IN VIEW OF THE S AME, WE SEE NO REASON TO INTERFERE IN THE ORDER OF THE CIT (A) IN DELETING THE DISALLOWANCE MADE U/ 14A IN THE PRESEN T CASE ON FINDING THAT NO EXEMPT INCOME WAS EARNED BY THE ASSESSEE DURING THE YEAR WHICH FACT HAS ALSO REMAIN ED ITA NO.1234/CHD/2017 & ITA NO.113/CHD/2017 A.Y.2011-12 4 UNCONTROVERTED BEFORE US. IN VIEW OF THE SAME, GROU ND NO.2 OF THE APPEAL RAISED BY THE REVENUE IS DISMISSED. 10. IN EFFECT, THE APPEAL OF THE REVENUE IS DISMISS ED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED AS WITHDRAWN AND THE APPEAL OF THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ' #! $ % (SANJAY GARG ) (ANNAPURNA GUPTA) / JUDICIAL MEMBER &' / ACCOUNTANT MEMBER )' /DATED: 8 TH JANUARY, 2019 * ! * &) *+,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. - $ / CIT 4. - $ ( )/ THE CIT(A) 5. +./ 0 , #0 , 123/4 / DR, ITAT, CHANDIGARH 6. /35' / GUARD FILE &) $ / BY ORDER, 6 ! / ASSISTANT REGISTRAR