ACIT, Circle, Panchkula V. M/s Haryana Vidyut Prasaran Nigam Ltd., Panchkula

ITA 1272/CHANDI/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2024 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 20-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C CHANDRAKANTA CIT DR
• Assessee Lawyers: HARISH NAYYAR
• Keywords: Earning of tax free income; Reassessment proceedings; Rule 8D; Set aside
• Section: 14A; 143(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH A, CHANDIGARH .., !' '# $, % &' BEFORE: SHRI. N.K.SAINI, VP & SHRI , SANJAY GARG, J M ITA NO.1272/CHD/2019 ASSESSMENT YEAR : 2013-14 THE ASSTT. COMMISSIONER OF INCOME TAX, PANCHKULA CIRCLE, PANCHKULA M/S HARYANA VIDYUT PRASARAN NIGAM LTD. SHAKTI BHAWAN, SECTOR-06, PANCHKULA PAN NO: AAACH9216J APPELLANT RESPONDENT !' ASSESSEE BY : SHRI HARISH NAYYAR, C.A #!' REVENUE BY : SMT. C. CHANDRAKANTA, CIT DR $ %! & DATE OF HEARING : 17/03/2020 '()*! & DATE OF PRONOUNCEMENT : 17/03/2020 &(/ ORDER PER N.K. SAINI, VICE PRESIDENT THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DT. 28/06/2019 OF THE LD. CIT(A)-3, LUDHIANA. 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEA L: 1. WHETHER THE LD. CIT(A) IS RIGHT IN LAW IN HOLDING T HAT DISALLOWANCE UNDER SECTION 14A OF THE INCOME TAX ACT, 1961 READ WITH RULE 8D O F THE INCOME TAX RULES, 1962 WAS NOT CALLED FOR AS THE ASSESSEE HAS NOT EARNED ANY EXEMP T INCOME IGNORING THE LEGISLATIVE INTENT OF THE STATUE, FURTHER CLARIFIED VIDE CIRCUL AR NO. 5/2014 DATED 11/02/2014 WHICH PROVIDES FOR DISALLOWANCE OF EXPENDITURE EVEN WHERE THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME IN A PARTICULAR YEAR ? 2. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SE T ASIDE AND THAT OF THE A.O. BE RESTORED. 3. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROU NDS OF APPEAL BEFORE THE APPEAL IS HEARD AND DISPOSED OFF. 3. FROM THE AFORESAID GROUNDS IT IS CLEAR THAT THE GRIEVANCE OF THE DEPARTMENT RELATES TO THE DELETION OF ADDITION MADE BY THE A.O. BY INVOKING 2 THE PROVISIONS OF SECTION 14A OF THE INCOME TAX ACT , 1961 (HEREINAFTER REFERRED TO AS ACT) READ WITH RULE 8D OF THE INCOME TAX RULES , 1962. 4. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE E-FILED ITS RETURN OF INCOME ON 29/09/2013 DECLARING NIL INCOME WHICH WAS REVISE D ON 13/08/2014 AT NIL INCOME, THE SAME WAS PROCESSED UNDER SECTION 143(1) OF THE ACT ON THE INCOME DECLARED. LATER ON, THE CASE WAS SELECTED FOR SCRUT INY. THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE DISALLOWANCE UNDER SECTION 14A OF THE ACT MAY NOT B E MADE. THE A.O. DID NOT EXCEPT THIS CONTENTION OF THE ASSESSEE THAT THERE W AS NO EXEMPT INCOME CLAIMED DURING THE YEAR UNDER CONSIDERATION AND MAD E THE DISALLOWANCE OF RS. 51,60,82,316/- BY INVOKING THE PROVISIONS OF SECTIO N 14A OF THE ACT READ WITH RULE 8D OF THE INCOME TAX RULES 1962. 5. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND FURNISHED THE WRITTEN SUBMISSION WHICH HAS BEEN INC ORPORATED IN PARA 4.1 OF THE IMPUGNED ORDER, FOR THE COST OF REPETITION THE SAME IS NOT REPRODUCED HEREIN. 5.1 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE DELETED THE DISALLOWANCE MADE BY THE A.O. BY OBSERVING IN P ARA 4.2 OF THE IMPUGNED ORDER AS UNDER: 4. 2 I HAVE GONE THROUGH THE FACTS OF THE CASE AN D WRITTEN SUBMISSIONS FILED BY THE APPELLANT. IT IS UNDISPUTED FACT THAT APPELLANT HAS NOT DERIVED ANY EXEMPT INCOME FROM ITS INVESTMENTS WITH UTTAR HARYANA, DAK SHIN HARYANA, BBMB AND IPGCL. SINCE NO EXEMPT INCOME HAS BEEN DERIVED BY T HE APPELLANT, NO DISALLOWANCE UNDER SECTION 14A R.W RULE 8D IS WARRA NTED. THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. LAKHANI MARKETING (201 4(7) TMI 44 PUNJAB AND HARYANA HIGH COURT) HAS HELD THAT NO DISALLOWANCE U NDER SECTION 14A IS WARRANTED IN THE ABSENCE OF EXEMPT INCOME. ALSO, TH E CASE OF THE APPELLANT IS SQUARELY COVERED BY THE ORDER OF JURISDICTIONAL ITA T, CHANDIGARH IN THE CASE OF M/S OASIS MERCHANTS PRIVATE LIMITED VS THE ACIT,CIRCE-7, LUDHIANA 2017(7)TMI 356. IT HAS ALSO BEEN OBSERVED FROM THE ASSESSMENT ORDERS P ASSED BY AO UNDER THE PROVISIONS OF SECTION 147/148 OF THE INCOME TAX ACT FOR THE ASSESSMENT YEARS 2010- 11 AND 2011-12 THAT THE AO HAS ACCEPTED THE CONTENTI ON OF THE APPELLANT THAT PROVISIONS OF SECTION 14A ARE NOT APPLICABLE TO IT DURING THE COURSE OF REASSESSMENT PROCEEDINGS AND AFTER ACCEPTING THE CO NTENTION OF THE APPELLANT REASSESSED THE INCOME OF THE APPELLANT AT NIL. SINC E NO NEW INVESTMENTS HAVE BEEN MADE AND THE FACTS AND CIRCUMSTANCES OF THE CA SE ARE SAME AS WERE FOR 3 THE ASSESSMENT YEARS 2010-11 AND 2011-12, THE ADDIT IONS MADE BY THE AO BY IGNORING PAST PRECEDENCE AND THE DECISIONS OF JURIS DICTIONAL HIGH COURT AND ITAT IS UNWARRANTED. IN VIEW OF ABOVE I HOLD THAT IN THE FACTS AND CIRCU MSTANCES OF THE PRESENT CASE, PAST PRECEDENCE AND THE LEGAL POSITION ON THE ISSUE , THE DISALLOWANCE MADE BY AO UNDER SECTION 14A IS UNWARRANTED. THE ACTION OF T HE AO IS THEREFORE SET ASIDE AND DISALLOWANCE OF RS. 51,60,82,316 MADE BY THE AS SESSING OFFICER IN THIS REGARD IS HEREBY DELETED AND GROUND NO 2 IS ALLOWED. 6. NOW THE DEPARTMENT IS IN APPEAL. 7. THE LD. CIT DR ALTHOUGH SUPPORTED THE ORDER OF T HE A.O. BUT COULD NOT CONTROVERT THIS OBSERVATION OF THE LD. CIT(A) THAT NO DISALLOWANCE UNDER SECTION 14A OF THE ACT IS WARRANTED IN THE ABSENCE OF EXEMP T INCOME AS PER THE RATIO LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. LAKHANI MARKETING (2014) (7) TMI 44 (P&H). 8. THE LD. COUNSEL FOR THE ASSESSEE IN HIS RIVAL SU BMISSIONS REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND S TRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT(A). IT WAS STA TED THAT SINCE THERE WAS NO EXEMPT INCOME CLAIMED BY THE ASSESSEE THEREFORE THE ARBITRARY DISALLOWANCE MADE BY THE A.O. WAS RIGHTLY DELETED BY THE LD. CIT (A) PARTICULARLY WHEN THE A.O. HIMSELF ACCEPTED THE EXPLANATION OF THE ASSESS EE AND DID NOT MAKE ANY DISALLOWANCE ON SIMILAR FACTS IN REASSESSMENT PROCE EDINGS FOR THE PRECEDING ASSESSMENT YEARS 2010-11 AND 2011-12. RELIANCE WAS PLACED ON THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE O F CIT VS. WINSOME TEXTILES INDUSTRIES LTD. REPORTED AT (2009) 319 ITR 204. 9. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CA SE IT IS AN ADMITTED FACT THAT THE LD. CIT(A) BY FOLLOWING THE JUDGMENT OF THE HON 'BLE JURISDICTIONAL HIGH COURT DELETED THE IMPUGNED DISALLOWANCE MADE BY THE A.O. UNDER SECTION 14A OF THE ACT FOR THE REASONS THAT THERE WAS NO EXEMPT INCOME CLAIMED BY THE ASSESSEE, THEREFORE, NO DISALLOWANCE COULD HAVE BEEN MADE FOR THE EXPENSES. 4 10. ON A SIMILAR ISSUE THE HON'BLE JURISDICTIONAL H IGH COURT IN THE CASE OF CIT VS. WINSOME TEXTILE INDUSTRIES LTD. (2009) 319 ITR 204 (P&H) HELD THAT IN THE PRESENT CASE, ADMITTEDLY, THE ASSESSEE DID NOT MAKE ANY CLAIM FOR EXEMPTION, IN SUCH SITUATION SECTION 14A COULD HAVE NO APPLICATIO N. IN THE PRESENT CASE ALSO IT IS AN ADMITTED POSITION THAT THE ASSESSEE HAD NOT CLAIMED ANY EXEMPT INCOME, SO THERE WAS NO QUES TION OF MAKING DISALLOWANCE UNDER SECTION 14A OF THE ACT. THEREFOR E WE DO NOT SEE ANY MERIT IN THIS APPEAL OF THE DEPARTMENT. 11. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISM ISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 17/03/2020) SD/- SD/- '# $ .., (SANJAY GARG ) ( N.K. SAI NI) % &'/ JUDICIAL MEMBER / VICE PRESIDENT AG DATE: 17/03/2020 (+! ,-.- COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. $ / CIT 4. $ / 01 THE CIT(A) 5. -2 45&456789 DR, ITAT, CHANDIGARH 6. 8:% GUARD FILE (+ $ BY ORDER, ; # ASSISTANT REGISTRAR