ITO, New Delhi V. M/s. Creative Intra Ltd., New Delhi

ITA 1769/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4016 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 04-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R SENAPTHY
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : C : NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER ITA NO.1646/DEL/2016 ASSESSMENT YEAR : 2012-13 CREATIVE INTRA LTD., W-106, GREATER KAILASH-II, NEW DELHI. PAN: AAACC3583F VS. ITO, WARD 2(4), NEW DELHI. ITA NO.1769/DEL/2016 ASSESSMENT YEAR : 2012-13 ITO, WARD 6(4), NEW DELHI. VS. CREATIVE INTRA LTD., W-106, GREATER KAILASH-II, NEW DELHI. PAN: AAACC3583F (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SURENDER KUMAR SHARMA, ACCOUNTAN T DEPARTMENT BY : SHRI S.R. SENAPTHY, SR. DR DATE OF HEARING : 24.01.2017 DATE OF PRONOUNCEMENT : 25.01.2017 ITA NOS.1646 & 1769/DEL/2016 2 ORDER PER R.S. SYAL, VP: THESE TWO CROSS APPEALS - ONE FILED BY THE ASSESSE E AND THE OTHER BY THE REVENUE ARISE OUT OF THE ORDER PASSED BY THE CIT( A) ON 29.01.2016 IN RELATION TO THE ASSESSMENT YEAR 2012-13. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE EARNED DIVIDEND INCOME OF RS.576/-. SINCE NO DISALLOWANCE WAS OFFE RED U/S 14A, THE ASSESSING OFFICER COMPUTED THE DISALLOWANCE IN TERMS OF RULE 8D AT RS.93,41,654/-. THE LD. CIT(A) REDUCED THE ADDITION TO RS.8,86,173/-, BEING , % OF THE AVERAGE VALUE OF INVESTMENTS. BOTH THE SIDES ARE IN APPEAL ON THEIR RESPECTIVE STANDS. 3. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE REL EVANT MATERIAL ON RECORD. ADMITTEDLY, THE EXEMPT INCOME IS ONLY TO THE TUNE O F RS.576/-. WITHOUT GOING INTO THE DETAILS OF THE SUSTAINABILITY OR OTHERWISE OF T HE ADDITION AS DECIDED BY THE AUTHORITIES BELOW, WE FIND THAT THE HON'BLE JURISDI CTIONAL HIGH COURT IN THE CASE CHEMINVEST LTD. VS. CIT (2015) 378 ITR 33 (DEL) HAS HELD THAT IF THERE IS NO EXEMPT INCOME, THERE CAN BE NO QUESTION OF MAKING A NY DISALLOWANCE U/S 14A. SIMILAR VIEW HAS BEEN TAKEN BY THE HON'BLE JURISDIC TIONAL HIGH COURT IN CIT VS. HOLCIM INDIA P. LTD. (2014) 90CCH 081-DEL-HC . THE NET EFFECT OF THESE DECISIONS IS THAT THE DISALLOWANCE U/S 14A GETS RES TRICTED TO THE EXTENT OF EXEMPT ITA NOS.1646 & 1769/DEL/2016 3 INCOME, EVEN IF THE PROVISIONS OF THE SECTION ARE A TTRACTED. IN VIEW OF THESE BINDING PRECEDENTS, WHICH ARE SQUARELY APPLICABLE TO THE FA CTS OF THE INSTANT CASE, WE LIMIT THE DISALLOWANCE TO THE EXTENT OF EXEMPT INCOME OF RS.576/-. THE IMUPUGNED ORDER IS MODIFIED PRO TANTO. 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED AND THAT OF THE ASSESSEE IS PARTLY ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 25.01.20 18. SD/- SD/- [BEENA A. PILLAI] [R.S. SYAL] JUDICIAL MEMBER VICE PRESIDENT DATED,25 TH JANUARY, 2018. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.