The Dy. CIT, Anand Circle, Anand V. M/s. Anupam Industries Ltd., Anand

ITA 1504/AHD/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9369 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 07-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S A T I S O L A N K I
• Assessee Lawyers: M K PATEL
• Keywords: Earning of tax free income; Rule 8D
• Section: 143(3); 14A; 250

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO. 1504/AHD/2018 ( ASSESSMENT YEAR : 2015-16) DEPUTY COMMISSIONER OF INCOME-TAX ANAND CIRCLE, 204, 3 RD FLOOR, S. P. PATEL COMPLEX, NEAR OLD C. K. HALL, MAYFAIR ROAD, ANAND - 388001 / VS. M/S. ANUPAM INDUSTRIES LIMITED 138, GIDC ESTATE, VITHAL UDYOGNAGAR, ANAND- 388121 ./ ./ PAN/GIR NO. : AABCA9602Q ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI SATISH SOLANKI, SR.D.R. / RESPONDENT BY : SHRI M. K. PATEL, A.R. DATE OF HEARING 19/09/2019 !'# / DATE OF PRONOUNCEMENT 19/09/2019 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF IN COME TAX (APPEALS)-4, VADODARA (CIT(A) IN SHORT), DATED 09 .03.2018 ARISING IN THE PENALTY ORDER DATED 18.12.2017 PASSED BY THE ASSESSING OFFICER ITA NO. 1504/AHD/18 [M/S. ANUPAM INDUSTRIES LTD. VS. DCIT] A.Y. 2015-16 - 2 - (AO) UNDER S. 143(3) OF THE INCOME TAX ACT, 1961 (T HE ACT); CONCERNING A.Y. 2015-16. 2. AS PER ITS GROUNDS OF APPEAL, THE REVENUE HAS CH ALLENGED THE ACTION OF THE CIT(A) FOR GRANTING RELIEF OUT OF DIS ALLOWANCE OF EXPENSES UNDER S.14A READ WITH RULE 8D OF THE INCOM E TAX RULES. 3. WE HAVE HEARD THE RIVAL SUBMISSION ON THE ISSUE. IT WAS POINTED OUT ON BEHALF OF THE ASSESSEE THAT THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME DURING THE YEAR UNDER REVIEW. IT IS T HE CASE OF THE ASSESSEE THAT IN THE ABSENCE OF ANY EXEMPT INCOME T HE PROVISIONS OF SECTION 14A OF THE ACT COULD NOT BE INVOKED. WE FI ND MERIT IN THE AFORESAID PLEA OF THE ASSESSEE. VARIOUS COURTS HAV E HELD THAT SECTION 14A OF THE ACT DISALLOWANCE CANNOT BE KICKED WHEN T HERE WAS NO EXEMPT INCOME EARNED BY THE ASSESSEE AS IS THE CASE IN THE PRESENT APPEALS. HONBLE DELHI HIGH COURT IN PCIT VS IL&FS ENERGY DEVELOPMENT COMPANY LTD. (2017) 84 TAXMAN.COM 186(D ELHI) AND THE HONBLE MADRAS HIGH COURT IN CIT V. CHETTINAD L OGISTICS (P.) LIMITED (2017) 80 TAXMANN.COM 221(MADRAS) HAVE EXPR ESSED A CLEAR DISAGREEMENT WITH CBDT CIRCULAR AND HELD THAT WHERE THERE IS NO EXEMPT INCOME IN RELEVANT YEAR THERE CANNOT BE A DI SALLOWANCE OF EXPENDITURE UNDER S.14A OF THE ACT. SIMILAR PROPOS ITION HAS BEEN LAID DOWN BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CORRTECH ENERGY (P.) LTD (2014) 45 TAXMANN.COM. 116 (GUJ) AN D PR.CIT VS. INDIA GELATINE AND CHEMICALS LTD. (2016) 66 TAXMANN .COM 356 (GUJ). THE AFORESAID JUDICIAL FIAT WAS REITERATED BY THE H ONBLE DELHI HIGH COURT IN THE CASE OF JOINT INVESTMENTS PVT. LTD. VS . CIT REPORTED IN 372 ITR 692 (DELHI) WHEREIN HONBLE DELHI HIGH COUR T HAS CATEGORICALLY RULED THAT DISALLOWANCE UNDER S.14A O F THE ACT CANNOT EXCEED THE AMOUNT OF TAX EXEMPT INCOME. NOTABLY, T HE SLP FILED AGAINST THE DECISION OF HONBLE MADRAS HIGH COURT I N CHETTINAD ITA NO. 1504/AHD/18 [M/S. ANUPAM INDUSTRIES LTD. VS. DCIT] A.Y. 2015-16 - 3 - LOGISTICS (SUPRA) HAS BEEN DISMISSED BY HONBLE SUP REME COURT IN CIT VS. CHETTINAD LOGISTICS (P.) LTD. (2018) 95 TAX MANN.COM 250 (SC). HENCE, IN CONFORMITY WITH THE JUDICIAL PRECE DENTS, WE FIND SUBSTANTIAL MERIT IN THE CONCLUSION DRAWN BY THE CI T(A) WHICH ESSENTIALLY HOLDS THAT SECTION 14A OF THE ACT CAN B E TRIGGERED ONLY IF ASSESSEE SEEKS TO SQUARE OFF EXPENDITURE AGAINST TH E INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME UNDER THE ACT AN D SECTION 14A OF THE ACT CANNOT BE INVOKED WHERE NO EXEMPT INCOME WA S EARNED IN THE RELEVANT ASSESSMENT YEARS. THUS, WITHOUT GOING INT O OTHER ASPECT OF CONTENTIONS, IN CONSONANCE WITH THE JUDICIAL PRECED ENTS, WE DO NOT SEE ANY INFIRMITY IN THE CONCLUSION DRAWN BY THE CIT(A) FOR NON- APPLICABILITY OF SECTION 14A OF THE ACT IN THE FACT S OF THE CASE. 4. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. SD/- SD/- (KUL BHARAT) ( PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCO UNTANT MEMBER AHMEDABAD: DATED 19/09/2019 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 19/09/2019