DCIT, C-1, Ludhiana V. M/s BBF Industries Limited , Ludhiana

ITA 1263/CHANDI/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0818 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 04-10-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, A, CHANDIGARH . . , , BEFORE SHRI N.K. SAINI, VICE PRESIDENT & SHRI SANJAY GARG, JUDICIAL MEMBER ./ ITA NO. 1263/CHD/2018 ! / ASSESSMENT YEAR : 2011-12 THE DCIT, CIRCLE-1, LUDHIANA VS. '# M/S BBF INDUSTRIES LTD., 181, BEANTPURA,TAJPUR ROAD, CHANDIGARH ROAD, LUDHIANA $ % ./ PAN NO: AAACB9276E $&/ APPELLANT ()$& / RESPONDENT *+ , - / ASSESSEE BY : SH. SUDHIR SEHGAL, ADVOCATE , - / REVENUE BY : SMT. MEENAKSHI VOHRA, SR DR . / , +0% / DATE OF HEARING : 06.03.2019 12! , +0% / DATE OF PRONOUNCEMENT : 03.06.2019 / ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVENU E AGAINST THE ORDER DATED 31/07/2018 OF THE COMMISSIONER OF INC OME TAX (APPEALS)- I, LUDHIANA [HEREINAFTER REFERRED TO AS CIT(A)] AG ITATING THE ACTION OF THE LD. CIT(A) IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF 2,14,68,549/- U/S 14A OF THE INCOME TAX ACT READ WITH RULE 8D OF THE INCOME TAX RULES IN RE SPECT OF THE EXPENDITURE INCURRED FOR EARING OF TAX EXEMPT INCO ME. ITA NO. 1263-C-18 M./S B.B.F. INDUSTRIES LTD., LUDHIANA 2 2. AT THE OUTSET, IT WAS THE PLEA OF THE LD. COUNSE L FOR THE ASSESSEE THAT ALL THE INVESTMENTS IN THE SUBSIDIARY COMPANIE S WERE MADE IN THE EARLIER YEARS OUT OF OWN FUNDS AND THAT THE ASSESSE E HAD NOT EARNED ANY EXEMPT INCOME FROM SUCH INVESTMENTS AS IS EVIDENT F ROM THE PROFIT AND LOSS ACCOUNT. THAT IT IS ALSO A MATTER OF RECORD T HAT NO DIVIDEND INCOME WAS RECEIVED BY THE ASSESSEE COMPANY DURING THE YEA R UNDER CONSIDERATION. THE LD. COUNSEL FOR THE ASSESSEE HAS RELIED UPON CERTAIN CASE LAWS AND THE DECISION OF THE HON'BLE JURISDICT IONAL HIGH COURT IN CIT, FARIDABAD VS. LAKHANI MARKETING INC. [2014] 49 TAXMANN.COM 257 WHEREIN THE HON'BLE COURT BY MAKING REFERENCE TO THE EARLIER DECISIONS OF THE OF CIT VS. HERO CYCLES LTD. [201 0] 323 ITR 518 AND CIT VS. WINSOME INDUSTRIES LTD. [2009] 319 ITR 20 3, CATEGORICALLY HELD THAT UNLESS AND UNTIL THERE IS A RECEIPT OF EX EMPT INCOME FOR THE CONCERNED ASSESSMENT YEAR, PROVISIONS OF SECTION 14 A CANNOT BE INVOKED. 3. THE LD. DR, THOUGH SUPPORTED THE ORDER OF THE AS SESSING OFFICER BUT COULD NOT REBUT THE FACTUAL FINDINGS GIVEN BY T HE LD. CIT(A). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FROM THE RECORD IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS NOT EAR NED TAX EXEMPT INCOME DURING THE YEAR. WE FIND THAT THE ISSUE IS NOW SQU ARELY COVERED BY THE VARIOUS DECISIONS OF THE HON'BLE HIGH COURTS. EVEN THE DIFFERENT HON'BLE HIGH COURTS OF THE COUNTRY HAVE BEEN UNANIM OUS TO HOLD THAT NO ITA NO. 1263-C-18 M./S B.B.F. INDUSTRIES LTD., LUDHIANA 3 DISALLOWANCE IS ATTRACTED U/S 14A IN CASE THE ASSES SEE HAS NOT EARNED ANY INCOME NOT FORMING PART OF THE TOTAL INCOME. RELIA NCE IN THIS RESPECT CAN BE PLACED ON VARIOUS DECISIONS OF THE HON'BLE HIGH COURTS INCLUDING THAT OF THE HON'BLE JURISDICTIONAL HIGH COURT OF PUNJAB AND HARYANA IN THE CASE OF CIT VS. WINSOME TEXTILES (2009) 319 ITR 204 (P&H) AND IN THE CASE OF CIT FARIDABAD V. LAKHANI M ARKETING INC 226 TAXMANN 45 (P&H); HON'BLE DELHI HIGH COURT IN THE C ASE OF CHEMINVEST LTD VS. ITO (2015) 378 ITR 33 (DELHI) AND OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CORRTE CH ENERGY P. LTD. (2014) 45 TAXMAN.COM 116 AND FURTHER OF THE HON'BL E ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. M/S SHIVAM MOTORS (P ) LTD (2014) 272 CTR (ALL) 277. 5. SINCE THE ASSESSEE DID NOT EARN ANY TAX EXEMPT I NCOME, HENCE, NO DISALLOWANCE U/S 14A IS ATTRACTED. IN VIEW OF THIS , WE DO NOT FIND REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A ) AND THE SAME IS ACCORDINGLY UPHELD. THE APPEAL OF THE REVENUE IS HEREBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03.06.2019. SD/- SD/- ( . . / N.K. SAINI) ( ! / SANJAY GARG) '#$ / VICE PRESIDENT % & / JUDICIAL MEMBER DATED : 03.06. 2019 .. ITA NO. 1263-C-18 M./S B.B.F. INDUSTRIES LTD., LUDHIANA 4 3 , (+45 65!+ / COPY OF THE ORDER FORWARDED TO : 1. $& / THE APPELLANT 2. ()$& / THE RESPONDENT 3. . 7+ / CIT 4. . 7+ ( )/ THE CIT(A) 5. 58 (+9 , 0 9 , :;<= / DR, ITAT, CHANDIGARH 6. < >/ / GUARD FILE 3 . / BY ORDER, ? / ASSISTANT REGISTRAR