DCIT, CC-I, Chandigarh V. M/s D.D. Global Capital Pvt. Ltd., New Delhi

ITA 1610/CHANDI/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7500 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 27-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KULTEJ SINGH BAINS
• Assessee Lawyers: KAMAL KISHORE
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCHA, CHANDIGARH BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO.1610/CHD/2017 ASSESSMENT YEAR: 2012-13 THE DCIT, VS. M/S D.D. GLOBAL CAPITAL PVT.LTD. CC-I, CHANDIGARH NEW DELHI PAN NO. AEHPG3169F (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI. KAMAL KISHORE REVENUE BY : SHRI. KULTEJ SINGH BAINS DATE OF HEARING : 10/07/2018 DATE OF PRONOUNCEMENT : 11/07/2018 ORDER PER DR. B.R.R. KUMAR, A.M: THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AG AINST THE ORDER OF THE LD. CIT(A) DT. 29/09/2017. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE IN THE PRESENT APPEAL READS AS UNDER: WHETHER ON THE FACT AND CIRCUMSTANCES OF THE CASE T HE LD. CIT(A) HAD ERRED IN DELETING THE ADDITION OF RS. 40,31,271/- ON ACCOUNT OF DISALLOWANCE MADE UNDER SECTION 14A OF THE INCOME TAX ACT, 1961 DESPITE THE FACT THAT RULE 8D READ WITH SECTION 14A OF THE ACT PROVIDES FOR DISALLOWANCE OF EXPENDITURE EVEN WHERE TAXPAYER IN A PARTICULAR YEAR HAS NOT EARNED ANY EX EMPT INCOME. 3. THE ASSESSING OFFICER HAS DISALLOWED AN AMOUNT O F RS. 40,31,271/- ON ACCOUNT OF DISALLOWANCE UNDER SECTION 14A AS THE AS SESSEE HAS INVESTED RS. 29,96,34,120/- AS PER THE BALANCE SHEET. ON PERUSAL OF THE RECORD, WE FIND THAT THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME. THE ASSESSING OFFICER HAS RESORTED TO THE MATCHING PRINCIPLES AS ENUNCIATED I N THE CASE OF TAPARIA TOOLS LTD. VS. JCIT 260 ITR 102 WHEREIN IT WAS HELD AS UN DER: UNDER THIS MATCHING CONCEPT, REVENUE AND INCOME EA RNED DURING AN ACCOUNTING PERIOD IRRESPECTIVE OF ACTUAL CASH IN-FL OW, IS REQUIRED TO BE COMPARED WITH EXPENSES INCURRED DURING THE SAME PERIOD, IRRE SPECTIVE OF ACTUAL OUT-FLOW OF CASH. IN THIS CASE, THE ASSESSEE IS FOLLOWING THE M ERCANTILE SYSTEM OF ACCOUNTING. THIS MATCHING CONCEPT IS VERY RELEVANT TO COMPUTE T AXABLE INCOME. 2 4. BEFORE US, THE LD. DR HAS NOT GIVEN ANY REASON T O RE-COMPUTE THE DISALLOWANCE EXCEPT RELYING ON THE CIRCULAR NO. 5 O F CBDT 2014 WHEREIN IT WAS DIRECTED TO THE FIELD OFFICERS TO DISALLOW AMOUNT U NDER SECTION 14A EVEN IF THE ASSESSEE HAS DERIVED NO EXEMPT INCOME. THE APPLICAB ILITY OF CIRCULAR HAS BEEN NULLIFIED BY THE HONBLE PUNJAB & HARYANA HIGH COU RT IN THE CASE OF CIT VS. LAKHANI MARKETING (P&H HIGH COURT) AND THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF MAXOPP INVESTMENT LTD. VS. CIT DT. 16/03/2018 HELD THAT NO DISALLOWANCE CAN BE MADE IN THE ABSENCE OF EARNING OF ANY EXEMPT INCOME. HENCE KEEPING IN VIEW THE JUDGMENTS CITED ABOVE, WE HEREBY DELETE THE ADDITION MADE UNDER SECTION 14A. 5. AS A RESULT THE APPEAL OF THE REVENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (DIVA SINGH) (DR. B.R.R. KUM AR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 11/07/2018 AG COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR