ITO, New Delhi V. M/s Hero Management Services Ltd., New Delhi

ITA 125/DEL/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4462 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 06-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S N MEENA
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SH. H. S. SIDHU, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER ITA NO. 125/DEL/2017 : ASSTT. YEAR : 20 11-12 INCOME TAX OFFICER, WARD-11 (2) NEW DELHI VS M/S HERO MANAGEMENT SERVICES LTD. E-1, QUTAB HOTEL COMPLEX, SHAHEED JEET SINGH MARG, NEW DELHI (APPELLANTT (RESPONDENT) PAN NO. AABCH4681C ASSESSEE BY : SH. SATISH BANSAL, CA REVENUE BY : SH. S. N. MEENA, SR. DR DATE OF HEARING:25.02.2020 DATE OF PRONOUNCEMENT: 26.02.2020 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE A GAINST THE ORDERS OF THE LD. CIT(A)-44, NEW DELHI DATED 16 .08.2016. 2. ALL THE GROUNDS RELATES TO DELETION OF THE DISAL LOWANCE MADE BY THE ASSESSING OFFICER U/S 14A OF THE INCOME TAX ACT, 1961. 3. THE SHORT ISSUE INVOLVED IN THE CASE IS THAT WHE THER ANY DISALLOWANCE IS ALLOWABLE IN THE ABSENCE OF EARNING OF EXEMPT INCOME? 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IN VESTED RS.75.72 CRORES IN THE EQUITY SHARES AND RECEIVED D IVIDEND INCOME OF RS.NIL DURING THE YEAR UNDER CONSIDERATIO N. THE ITA NO. 125/DEL/2017 HERO MANAGEMENT SERVICES LTD. 2 ASSESSING OFFICER HAS DISALLOWED AN AMOUNT OF RS.2. 87 CRORES U/S 14A OF THE INCOME TAX ACT, 1961. THE LD. CIT (A ) HAS DELETED THE ADDITION BASED ON THE JUDGMENT OF HONB LE JURISDICTIONAL HIGH COURT IN THE CASE OF CHEMINVEST LTD. VS CIT 378 ITR 33. 5. AGGRIEVED THE REVENUE FILED APPEAL BEFORE US. 6. THE ISSUE OF DISALLOWANCE OF EXPENSES U/S 14A RE LATING TO INCOME NOT INCLUDABLE IN THE TOTAL INCOME OF THE AS SESSEE HAS BEEN DEALT IN VARIOUS CASES BY THE TRIBUNAL AND THE HIGH COURTS WHEREIN IT WAS HELD THAT NO DISALLOWANCE IS WARRANT ED IN CASES WHERE NO EXEMPT INCOME HAS BEEN EARNED BY THE ASSES SEE. FOR THE SAKE OF READY REFERENCE, THE RELEVANT PORTION O F THE ORDER OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F CHEMINVEST LTD. VS CIT 378 ITR 33 (DEL.) IS REPRODUCED BELOW: TURNING TO THE CENTRAL QUESTION THAT ARISES FOR CON SIDERATION, THE COURT FINDS THAT THE COMPLETE ANSWER IS PROVIDE D BY THE DECISION OF THIS COURT IN CIT V. HOLCIM INDIA (P.) LTD. [2015] 57 TAXMANN.COM 28. IN THAT CASE A SIMILAR QUESTION ARO SE, VIZ., WHETHER THE ITAT WAS JUSTIFIED IN DELETING THE DISA LLOWANCE UNDER SECTION 14A OF THE ACT WHEN NO DIVIDEND INCOM E HAD BEEN EARNED BY THE ASSESSEE IN THE RELEVANT ASSESSMENT Y EAR? THE COURT REFERRED TO THE DECISION OF THIS COURT IN MAX OPP INVESTMENT LTD.'S CASE (SUPRA) AND TO THE DECISION OF THE SPECIAL BENCH OF THE ITAT IN THIS VERY CASE I.E. CH EMINVEST LTD. V. ITO [2009] 121 ITD 318. THE COURT ALSO REFERRED TO THREE DECISIONS OF DIFFERENT HIGH COURTS WHICH HAVE DECID ED THE ISSUE AGAINST REVENUE. THE FIRST WAS THE DECISION IN CIT V. LAKHANI MARKETING INC. [2014] 226 TAXMAN 45/49 TAXMANN.COM 257 OF ITA NO. 125/DEL/2017 HERO MANAGEMENT SERVICES LTD. 3 THE HIGH COURT OF PUNJAB AND HARYANA WHICH IN TURN REFERRED TO TWO EARLIER DECISIONS OF THE SAME COURT IN CIT V. H ERO CYCLES LTD. [2010] 323 ITR 518/189 TAXMAN 50 AND CIT V. WI NSOME TEXTILE INDUSTRIES LTD. [2009] 319 ITR 204. THE SEC OND WAS OF THE GUJARAT HIGH COURT IN CIT V. CORRTECH ENERGY (P .) LTD. [2014] 223 TAXMAN 130/45 TAXMANN.COM 116 AND THE TH IRD OF THE ALLAHABAD HIGH COURT IN CIT V. SHIVAM MOTORS (P .) LTD. [2015] 230 TAXMAN 63/55 TAXMANN.COM 262. THESE THREE DECISIONS REITERATED THE POSITION THAT WHEN AN ASSE SSEE HAD NOT EARNED ANY TAXABLE INCOME IN THE RELEVANT A Y IN QUESTION 'CORRESPONDING EXPENDITURE COULD NOT BE WO RKED OUT FOR DISALLOWANCE.' 7. HENCE, FOLLOWING THE ESTABLISHED JUDICIAL PRONOU NCEMENT, WE HEREBY DECLINE TO INTERFERE WITH THE ORDER OF TH E LD. CIT (A) IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IN THE ABSENCE OF CLAIM OF ANY EXEMPT INCOME. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/02/2020. SD/- SD/- (H. S. SIDHU) (D R. B. R. R. KUMAR) JUDICIAL MEMBER ACCOUN TANT MEMBER DATED: 26/02/2020 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR