MESERS RAWMATE SOLUATIONS, RAIPUR V. INCOME TAX OFFICER, WARD -3(3), RAIPUR

ITA 113/RPR/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 3189 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 27-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Rule 8D
• Section: 143(3); 14A

Judgement Text

आयकर अपीलȣय अͬधकरण Ûयायपीठ रायप ु र मɅ। IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI RATHOD KAMLESH JAYANTBHAI, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No. 113/RPR/2019 Ǔनधा[रण वष[ / Assessment Year : 2015-16 M/s. Rawmate Solutions Shraddha Complex, Above Rainbow TVS, G.E Road, Raipur (C.G.) PAN : AANFR7214C .......अपीलाथȸ / Appellant बनाम / V/s. The Income Tax Officer-3(3), Raipur (C.G.) ......Ĥ×यथȸ / Respondent Assessee by : Shri Abhishek Mahawar, CA Revenue by : Shri G.N Singh, Sr. DR स ु नवाई कȧ तारȣख / Date of Hearing : 10.06.2022 घोषणा कȧ तारȣख / Date of Pronouncement : 26.07.2022 2 M/s. Rawmate Solutions Vs. ITO-3(3) ITA No. 113/RPR/2019 आदेश / ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the CIT (Appeals)-I, Raipur (C.G.), dated 04.02.2019, which in turn arises from the order passed by the A.O under Sec. 143(3) of the Income Tax Act, 1961 (for short ‘the Act’) dated 18.12.2017 for assessment year 2015-16. Before us the assessee has assailed the impugned order on the following effective ground of appeal: “2. The Ld. CIT(A) erred in confirming the addition of Rs.11,21,143/- u/s.14A r/w. Rule 8D of the Income Tax Act, 1961 without considering the submissions made by the appellant and order of honourable Supreme Court in the case of CIT(Central)-1 Vs. Chettinad Logistics (P) Ltd. (2018) 257 Taxman 2.” 2. Succinctly stated, the assessee firm which is engaged in the business of trading in manganese ore, granite blocks and material for solar products, had filed its return of income for the assessment year 2015-16 on 14.10.2015, declaring a loss of Rs.(-)2,49,77,816/-. Subsequently, the case of the assessee was selected for scrutiny assessment u/s.143(2) of the Act. Assessment was, thereafter, framed by the A.O vide his order passed u/s.143(3) dated 18.12.2017 after, inter alia, making a disallowance of Rs.11,21,143/- u/s.14A r.w.r. 8D of the Income Tax Rules, 1962. 3 M/s. Rawmate Solutions Vs. ITO-3(3) ITA No. 113/RPR/2019 3. Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals) but without any success in so far the aforesaid disallowance u/s.14A r.w. Rule 8D was concerned. 4. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 5. We have heard the ld. authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the ld. AR in order to drive home his contentions. 6. At the very outset of hearing of appeal, it was submitted by the Ld. Authorized Representative (for short ‘AR’) for the assessee, that the A.O had worked out the disallowance u/s.14A by triggering the mechanism contemplated in Rule 8D amounting to Rs.11,21,143/-, viz. (i) U/r 8D(2)(ii) i.e. disallowance out of interest expenditure : Rs.10,05,393/- and (ii) U/r. 8D(2)(iii) i.e. disallowance out of administrative expenses : Rs.1,15,750/-. Contesting the aforesaid disallowance made by the A.O u/s.14A r.w.r.8D, it was submitted by the Ld. AR that as the assesee firm during the year under consideration had not received any exempt income, therefore, no part of its claim for deduction of expenses could have been disallowed u/s. 14A of the Act. In support of his aforesaid contention the Ld. AR 4 M/s. Rawmate Solutions Vs. ITO-3(3) ITA No. 113/RPR/2019 had relied on the judgment of the Hon’ble Supreme Court in the case of CIT Vs. Chettinad Logistics (P.) Ltd. (2018) 257 Taxman 2 (SC). Relying on the aforesaid judicial pronouncement, it was averred by the Ld. AR that now when the assesee firm had not received any exempt income during the year under consideration, therefore, both the lower authorities had erred in making/sustaining the disallowance u/s.14A of the Act. 7. Per contra, the Ld. Departmental Representative (for short ‘DR’) relied on the orders of the lower authorities. 8. As stated by the Ld. AR, and rightly so, now when the assessee firm during the year under consideration had not received any exempt income, therefore, no disallowance of its claim for deduction of any part of expenditure was warranted u/s.14A of the Act. Our aforesaid view is fortified by the judgment of Hon’ble High Court of Madras in the case of CIT, Circle-1 Chennai Vs. Chettinad Logistics (P) Ltd. (2017) 248 taxmann.com 56 (Mad), wherein it was concluded that where no exempt dividend income was earned by the assessee in the relevant assessment year, then no disallowance by invoking Sec. 14A was called for in its hands. The aforesaid order of the High Court had, thereafter, recently been upheld by the Hon’ble Supreme Court while dismissing the “Special Leave Petition‟ (for short “SLP”) of the revenue in the case of CIT (Civil-1) Vs. Chettinad Logistics Pvt. Ltd. (2018) 95 taxmann.com 250. Also, a similar view had been taken by the Hon’ble 5 M/s. Rawmate Solutions Vs. ITO-3(3) ITA No. 113/RPR/2019 Apex Court while dismissing the SLP of the revenue in the case of PCIT-18 Vs. M/s Oil Industry Development Board. [SLP (Civil) Diary No. 2755/2019] (arising out of impugned final judgment and order dated 16.02.2018 in ITA No. 197/2018 passed by the High Court of Delhi), dated 08.02.2019. As the issue that no disallowance under Sec.14A can be made in case the assessee had not earned any exempt income during the year is no more res integra pursuant to the aforesaid judgments of the Hon’ble Apex Court, therefore, we are persuaded to subscribe to the contention advanced by the ld. A.R that as the assessee had not earned any exempt dividend income during the year under consideration, no disallowance under Sec.14A could have been made in its hands. We, thus, in terms of our aforesaid observations delete the disallowance of Rs.11,21,143/- made by the A.O under Sec.14A of the I.T Act. Before parting, we may herein observe that as the disallowance made by the A.O u/s.14A had been vacated by us, therefore, we refrain from adverting to the other contentions that were advanced by the Ld. AR on the basis of which the disallowance u/s.14A was assailed by him before us, which, thus, are left open. Thus, the effective ground of appeal raised by the assessee is allowed in terms of our aforesaid observations. 6 M/s. Rawmate Solutions Vs. ITO-3(3) ITA No. 113/RPR/2019 9. In the result, appeal of the assessee is allowed in terms of our aforesaid observations. Order pronounced under rule 34(4) of the Appellate Tribunal Rules, 1963, by placing the details on the notice board. Sd/- Sd/- RATHOD KAMLESH JAYANTBHAI RAVISH SOOD (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायप ु र/ RAIPUR ; Ǒदनांक / Dated : 26 th July, 2022 SB आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals)-I, Raipur (C.G) 4. The Pr. CIT-1, Raipur (C.G) 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण,रायप ु र बɅच, रायप ु र / DR, ITAT, Raipur Bench, Raipur. 6. गाड[ फ़ाइल / Guard File. आदेशान ु सार / BY ORDER, // True Copy // Ǔनजी सͬचव / Private Secretary आयकर अपीलȣय अͬधकरण, रायप ु र / ITAT, Raipur. 7 M/s. Rawmate Solutions Vs. ITO-3(3) ITA No. 113/RPR/2019 Date 1 Draft dictated on 10.06.2022 Sr.PS/PS 2 Draft placed before author 20.06.2022 Sr.PS/PS 3 Draft proposed and placed before the second Member JM/AM 4 Draft discussed/approved by second Member AM/JM 5 Approved draft comes to the Sr. PS/PS Sr.PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order