The Deputy Commissioner of Income Tax Circle-1(1)(2), Bangalore V. M/s BPL Limited , Bangalore

ITA 132/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3613 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 11-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P V PRADEEP KUMAR
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI. SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO. 132 /BANG/201 8 ASSESSMENT YEAR : 20 1 3 - 1 4 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(1)(2), ROOM NO. 242, 2 ND FLOOR, BMTC BUILDING, 80 FT. ROAD, KORAMANGALA, BENGALURU 560095. VS. M/S. BPL LIMITED, NO. 64, CHURCH STREET, BENGALURU 560001. PAN : AAACB 9461 B APPELLANT RESPONDENT REVENUE BY : DR. P. V. PRADEEP KUMAR, ADDL. CIT ASSESSEE BY : SMT. SHEETAL BORKAR, ADVOCATE DATE OF HEARING : 1 7 . 0 7 .201 8 DATE OF PRONOUNCEMENT : 21 . 0 8 .201 8 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A), INTER ALIA, ON THE FOLLOWING GROUNDS: 1 THE ORDER OF THE LEARNED CIT (APPEALS), IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE, IS OPPOSED TO LAW AND THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LD. CIT (A) ERRED IN ALLOWING THE ASSESSEE'S APPEAL ON THE ISSUE OF DISALLOWANCE ITA NO. 132/BANG/2018 PAGE 2 OF 4 MADE U/S 14A RULE 8D AS THE SAID MATTER HAS NOT REACHED FINALITY DUE TO PENDENCY OF REVENUE'S APPEAL BEFORE THE HON'BLE HIGH COURT OF KARNATAKA AGAINST THE DECISION OF JURISDICTIONAL ITAT IN THE CASE OF M/S AMBUTHIRTHA POWER PVT. LTD IN ITA NO.243/2016, DATED: 07.07.2017 AND AN SLP BEFORE THE HON'BLE APEX COURT AGAINST THE DECISION OF HON'BLE HIGH COURT OF DELHI IN THE CASE OF M/S CHERNVEST LTD (378 ITR .33(I)EL)). 3. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS HUMBLY PRAYED THAT THE ORDER OF THE LD. CIT (A) BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, TO AMEND OR DELETE ANY OF THE GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF APPEAL. 2. DURING THE COURSE OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE ASSESSEE DID NOT EARN ANY EXEMPTED INCOME, THEREFORE, PROVISIONS OF SECTION 14A CANNOT BE INVOKED IN VIEW OF JUDGEMENT OF THE APEX COURT. THE LEARNED DR PLACED RELIANCE UPON THE ASSESSMENT ORDER. 3. HAVING CAREFULLY EXAMINED THE ORDERS OF AUTHORITIES BELOW, WE FIND THAT UNDISPUTEDLY THE ASSESSEE HAS NOT EARNED ANY EXEMPTED INCOME. NOW IT IS SETTLED POSITION OF LAW THAT WHENEVER ASSESSEE DID NOT EARN ANY EXEMPT INCOME, NO DISALLOWANCE COULD BE MADE U/S. 14A OF THE ACT. THE HON'BLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD. V. CIT, 378 ITR 33 (DEL) HAS CATEGORICALLY HELD THAT SECTION 14A ENVISAGES THAT THERE SHOULD BE ACTUAL RECEIPT OF INCOME WHICH WAS NOT INCLUDIBLE IN THE TOTAL INCOME DURING THE RELEVANT PREVIOUS YEAR FOR THE PURPOSE OF DISALLOWING ANY EXPENDITURE IN RELATION TO THE SAID INCOME. WHEREVER THERE IS NO EXEMPT INCOME INCLUDIBLE IN THE TOTAL INCOME OF THE ASSESSEE, THE PROVISIONS OF SECTION 14A CANNOT BE INVOKED. THE RELEVANT OBSERVATIONS OF THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT ARE EXTRACTED HEREUNDER:- '15. TURNING TO THE CENTRAL QUESTION THAT ARISES FOR CONSIDERATION, THE COURT FINDS THAT THE COMPLETE ANSWER IS PROVIDED BY THE DECISION OF THIS COURT IN CIT V. HOLCIM INDIA (P) LTD. (DECISION DATED 5TH SEPTEMBER ITA NO. 132/BANG/2018 PAGE 3 OF 4 2014, IN I. T. A. NO. 486 OF 2014). IN THAT CASE, A SIMILAR QUESTION AROSE, VIZ., WHETHER THE INCOME-TAX APPELLATE TRIBUNAL WAS JUSTIFIED IN DELETING THE DISALLOWANCE UNDER SECTION 14A OF THE ACT WHEN NO DIVIDEND INCOME HAD BEEN EARNED BY THE ASSESSEE IN THE RELEVANT ASSESSMENT YEAR ? THE COURT REFERRED TO THE DECISION OF THIS COURT IN MAXOPP INVESTMENT LTD. (SUPRA) AND TO THE DECISION OF THE SPECIAL BENCH OF THE INCOME-TAX APPELLATE TRIBUNAL IN THIS VERY CASE, I.E., CHEMINVEST LTD. V. CIT [2009] 317 ITR (AT) 86 (DELHI) [SB]. THE COURT ALSO REFERRED TO THREE DECISIONS OF DIFFERENT HIGH COURTS WHICH HAVE DECIDED THE ISSUE AGAINST REVENUE. THE FIRST WAS THE DECISION IN CIT V. LAKHANI MARKETING INCL. (DECISION DATED APRIL 2, 2014, OF THE HIGH COURT OF PUNJAB AND HARYANA IN I. T. A. NO. 970 OF 2008)--SINCE REPORTED IN [2015] 4 ITR-OL 246 (P&H)-- WHICH IN TURN REFERRED TO TWO EARLIER DECISIONS OF THE SAME COURT IN CIT V. HERO CYCLES LTD. [2010] 323 ITR 518 (P&H) AND CIT V. WINSOME TEXTILE INDUSTRIES LTD. [2009] 319 ITR 204 (P&H). THE SECOND WAS OF THE GUJARAT HIGH COURT IN CIT V. CORRTECH ENERGY (P.) LTD. [2014] 223 TAXMANN 130 (GUJ) ; [2015] 372 ITR 97 (GUJ) AND THE THIRD OF THE ALLAHABAD HIGH COURT IN CIT V. SHIVAM MOTORS (P) LTD. (DECISION DATED 5TH MAY, 2014, IN I. T. A. NO. 88 OF ITA NO.1107/BANG/2016 2014). THESE THREE DECISIONS REITERATED THE POSITION THAT WHEN AN ASSESSEE HAD NOT EARNED ANY TAXABLE INCOME IN THE RELEVANT ASSESSMENT YEAR IN QUESTION 'CORRESPONDING EXPENDITURE COULD NOT BE WORKED OUT FOR DISALLOWANCE.' 4. IN THE LIGHT OF THE AFORESAID JUDGMENT, THE PROVISIONS OF SECTION 14A CANNOT BE INVOKED AS THERE IS NO EXEMPT INCOME IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(APPEALS) WHO HAS RIGHTLY DELETED THE ADDITION. 5. IN THE RESULT, APPEAL OF THE REVENUE STANDS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 21 ST AUGUST, 2018. SD/- SD/- BANGALORE. DATED: 21 ST AUGUST, 2018. /NS/* ( A. K. GARODIA ) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER ITA NO. 132/BANG/2018 PAGE 4 OF 4 COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. GUARD FILE BY ORDER SR. PRIVATE SECRETARY, ITAT, BANGALORE.