Deputy Commissioner Of Income Tax Circle-1(1)(1) , Bengaluru V. M/s Aditya Auto Products & Engineering India Pvt Ltd , Bangalore

ITA 163/BANG/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4749 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 16-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R RAMESH JT BENGALURU
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO. 163/BANG/2018 ASSESSMENT YEAR : 2009 - 10 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1(1)(1), BANGALORE. VS. M/S. ADITYA AUTO PRODUCTS & ENGINEERING INDIA PVT. LTD., PLOT NO.13E, KIADB INDUSTRIAL AREA, DODDABALLAPURA, BANGALORE 562 103. PAN: AABCA 7045H APP ELLANT RESPONDENT A PPELLANT BY : SHRI B.R. RAMESH, JT. CIT(DR)(ITAT), BEN GALURU. RE SPONDENT BY : MS. TANMAYEE RAJKUMAR, ADVOCATE DATE OF HEARING : 14. 0 5 .201 8 DATE OF PRONOUNCEMENT : 01.06. 201 8 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER OF THE CIT(APPEALS)-1, BENGALURU DATED 31.08.2017 RELATING TO ASSESSMENT YEAR 2009-10. ITA NO.163/BANG/2018 PAGE 2 OF 5 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE READ S THUS: 1. THE ORDER OF THE LEARNED CIT (APPEALS), IN SO F AR 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 DELETING THE ADDITIONS MADE U/S 14A BY THE AO BY RELYING ON THE DELHI HIGH COURT'S JUDGMENT IN THE CASE OF CHEMINVEST LIMITED VS CIT 2015, 378 ITR 33(DELHI), EVEN THOUGH THE ISSUE HAS NOT REACHED FI NALITY AS THE REVENUE'S SLPS ARE PENDING BEFORE THE HON'BLE APEX COURT ON THE SAID ISSUE. 3. THE LD. CIT (A) ERRED IN DELETING THE ADDITION M ADE ON ACCOUNT OF BELATED REMITTANCE OF PF/ESI BY THE ASSE SSEE ON THE BASIS OF JURISDICTIONAL HIGH COURT'S JUDGMENT IN TH E CASE CIT VS SABRI ENTERPRISES, EVEN THOUGH THE ISSUE HAS NOT RE ACHED FINALITY AS THE REVENUE'S SLPS ARE PENDING BEFORE THE HON'BL E APEX COURT ON THE SAID ISSUE. 4. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URG ED 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 B E RESTORED. 3. AS FAR AS GR.NO.3 IS CONCERNED, IT WAS BROUGHT T O OUR NOTICE THAT IN AY 2009-10 NO SUCH ISSUE WAS DECIDED BY THE CIT(A) AND THEREFORE GR.NO.3 DOES NOT ARISE OUT OF THE ORDER OF THE CIT( A) AND HENCE DISMISSED. 4. THE ONLY OTHER GROUND OF APPEAL IS WITH REGARD T O DISALLOWANCE U/S.14A OF THE INCOME TAX ACT, 1961 ( THE ACT). AT THE TIME OF HEARING OF THIS APPEAL, IT WAS BROUGHT TO OUR NOTICE BY THE LD . COUNSEL FOR THE ASSESSEE THAT THE ADMITTED FACTUAL POSITION IN THE PRESENT C ASE IS THAT THERE WAS NO DIVIDEND INCOME OR OTHER EXEMPT INCOME EARNED BY TH E ASSESSEE DURING ITA NO.163/BANG/2018 PAGE 3 OF 5 THE RELEVANT PREVIOUS YEAR. THE LD. COUNSEL FOR TH E ASSESSEE DREW OUR ATTENTION TO THE DECISION OF THE BANGALORE BENCH OF ITAT IN THE CASE OF M/S UB INFRASTRUCTURE PROJECTS LTD., VS. DCIT, ITA NO. 2098/BANG/2016 (ASST. YEAR 2012-13) ORDER DATED 22/12/2017, WHEREIN THIS TRIBUNAL TOOK THE VIEW THAT THERE CAN BE NO DISALLOWANCE OF EXPENSES U/S 1 4A OF THE ACT, IF THERE IS NO EXEMPT INCOME EARNED DURING THE RELEVANT PREVIOU S YEAR. THE FOLLOWING ARE THE RELEVANT OBSERVATIONS OF THE TRIBUNAL IN TH IS REGARD. 3. HAVING CAREFULLY EXAMINED THE ORDERS OF AUTHOR ITIES BELOW, WE FIND THAT UNDISPUTEDLY THE ASSESSEE HAS NOT EARN ED ANY EXEMPTED INCOME. NOW IT IS SETTLED POSITION OF LAW THAT WHEN EVER ASSESSEE DID NOT EARN ANY EXEMPT INCOME, NO DISALLOWANCE COULD B E MADE U/S. 14A OF THE ACT. THE HONBLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD. V. CIT, 378 ITR 33 (DEL) HAS CATEGO RICALLY HELD THAT SECTION 14A ENVISAGES THAT THERE SHOULD BE ACT UAL RECEIPT OF INCOME WHICH WAS NOT INCLUDIBLE IN THE TOTAL INCOME DURING THE RELEVANT PREVIOUS YEAR FOR THE PURPOSE OF DISALLOWI NG ANY EXPENDITURE IN RELATION TO THE SAID INCOME. WHEREVE R THERE IS NO EXEMPT INCOME INCLUDIBLE IN THE TOTAL INCOME OF THE ASSESSEE, THE PROVISIONS OF SECTION 14A CANNOT BE INVOKED. THE RE LEVANT OBSERVATIONS OF THE JUDGMENT OF THE HONBLE DELHI H IGH COURT ARE EXTRACTED HEREUNDER:- 15. TURNING TO THE CENTRAL QUESTION THAT ARISES FO R CONSIDERATION, THE COURT FINDS THAT THE COMPLETE AN SWER IS PROVIDED BY THE DECISION OF THIS COURT IN CIT V. HO LOLCIM INDIA (P) LTD. (DECISION DATED 5TH SEPTEMBER 2014, IN I.T. A. NO. 486 OF 2014). IN THAT CASE, A SIMILAR QUESTIO N AROSE, VIZ., WHETHER THE INCOME-TAX APPELLATE TRIBUNAL WAS JUSTIFIED IN DELETING THE DISALLOWANCE UNDER SECTIO N 14A OF THE ACT WHEN NO DIVIDEND INCOME HAD BEEN EARNED BY T HE ASSESSEE IN THE RELEVANT ASSESSMENT YEAR ? THE COUR T 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 V ERY CASE, I.E., CHEMINVEST LTD. V. CIT [2009] 317 !TR ( AT) 86 (DELHI) [SB]. THE COURT ALSO REFERRED TO THREE DECI SIONS OF ITA NO.163/BANG/2018 PAGE 4 OF 5 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, 201 4, 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. [20 09] 319 ITR 204 (P&H). THE SECOND WAS OF THE GUJARAT HIG H COURT IN CIT V. CORRTECH ENERGY (P.) LTD. [2014] 22 3 TAXMANN 130 (GUJ) ; [2015] 372 1TR 97 (GUJ) AND THE THIRD OF THE ALLAHABAD HIGH COURT IN CIT V. SHIVAM MOTORS (P) LTD. (DECISION DATED 5TH MAY, 2014, IN T .A. NO. 88 OF ITA NO.1 1071BANG12016 2014). THESE THREE DECISIONS REITERATED THE POSITION THAT WHEN AN ASSE SSEE HAD NOT EARNED ANY TAXABLE INCOME IN THE RELEVANT ASSESSMENT YEAR IN QUESTION 'CORRESPONDING EXPENDIT URE COULD NOT BE WORKED OUT FOR DISALLOWANCE.' 4. THIS WAS ALSO EXAMINED BY THE TRIBUNAL IN THE AS SESSEE'S OWN CASE FOR ASSESSMENT YEAR 2010-11 AND HELD THAT WHEN THERE IS NO EXEMPT INCOME, PROVISION OF SECTION 14 OF THE AC T CANNOT BE APPLIED. 5. IN THE LIGHT OF THE AFORESAID JUDGMENT, THE PROV ISIONS 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 DELET ED THE ADDITION. 5. IN VIEW OF THE AFORESAID DECISION OF THE TRIBUNA L, WE ARE OF THE VIEW THAT THE DISALLOWANCE OF EXPENDITURE U/S 14A OF THE ACT WAS RIGHTLY DELETED BY THE CIT(A). WE FIND NO GROUNDS TO INTERFERE WIT H THE ORDER OF THE CIT(A). CONSEQUENTLY, GR.NO.2 RAISED BY THE REVENUE IS DISM ISSED. THE OTHER GROUNDS OF APPEAL ARE GENERAL AND ACADEMIC CALLING FOR NO SPECIFIC ADJUDICATION. ITA NO.163/BANG/2018 PAGE 5 OF 5 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON THIS 1 ST DAY OF JUNE, 2018. SD/- SD/- ( INTURI RAMA RAO ) ( N.V. VASUDEVAN ) ACCOUNTANT MEMBER JUDIC IAL MEMBER BANGALORE, DATED, THE 1 ST JUNE, 2018. / D ESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.