DCIT, New Delhi V. M/s Punj Lloyd Aviation Pvt. Ltd., New Delhi

ITA 185/DEL/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9767 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2013-2014
• Appeal Filed On: 11-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL SENIOR
• Assessee Lawyers: RAJAT JAIN CA SHRI AKSHAT JAIN
• Keywords: Earning of tax free income; Rule 8D; Set aside
• Section: 14A; 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F : NEW DELHI) BEFORE HONBLE VICE PRESIDENT, SHRI G.D. AGRAWAL AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.185/DEL./2017 (ASSESSMENT YEAR : 2013-14) DCIT, CIRCLE 20 (1), VS. M/S. PUNJ LLOYD AVIATION P RIVATE LTD., NEW DELHI. 17 18, PUNJ LLOYD HOUSE, NEHRU PLACE, NEW DELHI 110 019. (PAN : AAECP2851M) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAJAT JAIN, CA SHRI AKSHAT JAIN, CA REVENUE BY : SHRI SURENDER PAL, SENIOR DR DATE OF HEARING : 10.06.2019 DATE OF ORDER : 02.07.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, DCIT, CIRCLE 20 (1), NEW DELHI (HEREINA FTER REFERRED TO AS THE REVENUE) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 21.10.2016 PASSE D BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-12, NEW DELHI QUA THE ASSESSMENT YEAR 2013-14 ON THE GROUNDS INTER ALIA T HAT :- 1. 'ON THE FACTS AND UNDER THE CIRCUMSTANCES OF T HE CASE, THE LD.CIT(A) HAS ERRED IN LAW IN DELETING THE ADDI TION OF RS.1,00,63,722/- MADE BY THE AO U/S 14A OF THE INCO ME TAX ACT, ITA NO.185/DEL./2017 2 1961 WITHOUT APPRECIATING THE FACT THAT THE AO AFTE R RECORDING HIS SATISFACTION UNDER THE PROVISIONS OF SECTION 14 A, HAD CORRECTLY COMPUTED THE DISALLOWANCE UNDER THE RULE 8D OF THE INCOME TAX RULES.' 2. 'ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN LAW IN DELETING THE ADDI TION OF RS.1,00,63,722/- MADE BY THE AO U/S 14A WITHOUT APP RECIATING THAT THE ASSESSEE'S OWN FUNDS WERE LESS THAN THE AM OUNT INVESTED IN THE SHARES OF THE GROUP COMPANY AND THAT THE INT EREST EXPENDITURE INCURRED WAS OF A MIXED NATURE AND NOT ATTRIBUTABLE TO ANY PARTICULAR INCOME OR RECEIPT.' 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ASSESSEE IS INTO THE BUSI NESS OF AIRLINES AND HELICOPTER OPERATORS FOR TRANSPORTING PASSENGER S, MAIL, CARGO, FREIGHT TO INDIAN AND INTERNATIONAL TOURISTS AND IS ALSO PROVIDING CHARTER SERVICES AND CONSULTANCY SERVICES IN THE FI ELD OF AIRCRAFT/ HELICOPTER PROCUREMENT. DURING THE YEAR UNDER ASSE SSMENT, ASSESSEE FILED RETURN OF INCOME DECLARING LOSS OF R S.10,24,88,425/- AND AO NOTICED THAT THE ASSESSEE HAD SHOWN INVESTME NT OF RS.52,99,87,500/- IN SHARES TO EARN DIVIDEND INCOME WHICH IS EXEMPT UNDER THE INCOME-TAX ACT, 1961 (FOR SHORT T HE ACT). AO, AFTER INVOKING THE PROVISIONS CONTAINED U/S 14A REA D WITH RULE 8D, MADE DISALLOWANCE OF RS.1,00,63,722/- ON THE GROUND THAT THE ASSESSEE HAS NOT MADE ANY DISALLOWANCE U/S 14A TO E ARN EXEMPT INCOME AND THEREBY ASSESSED THE TOTAL LOSS OF RS.9, 24,24,700/-. 3. ASSESSEE CARRIED THE MATTER BY WAY OF AN APPEAL BEFORE THE LD. CIT (A) WHO HAS DELETED THE ADDITION BY ALLOWIN G THE APPEAL. ITA NO.185/DEL./2017 3 FEELING AGGRIEVED, THE REVENUE HAS COME UP BEFORE T HE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. LD. DR FOR THE REVENUE CHALLENGING THE IMPUGNED ORDER CONTENDED INTER ALIA THAT THE AO HAS WORKED OUT THE DISALLOWANCE UNDER RULE 8D AS PER ACCOUNTS RENDERED BY THE ASSES SEE HAVING BEEN DULY EXPLAINED AT THE SECOND LAST PAGE OF THE ASSESSMENT ORDER; THAT SECTION 114 OF THE EVIDENCE ACT, 1872 R AISES PRESUMPTION IN FAVOUR OF THE REVENUE THAT THERE WAS NON- SATISFACTION OF THE AO AND RELIED UPON THE DECISION RENDERED BY HONBLE SUPREME COURT IN MAXOPP INVESTMENT LTD. (2018) 402 ITR 640 (SC) . 6. HOWEVER, ON THE OTHER HAND, THE LD. AR FOR THE A SSESSEE TO REPEL THE ARGUMENTS ADDRESSED BY LD. DR CONTENDED T HAT SINCE THE ASSESSEE COMPANY HAS NOT EARNED ANY EXEMPT INCOME D URING THE YEAR UNDER ASSESSMENT FORMING PART OF THE TOTAL INC OME UNDER SECTION 14A READ WITH RULE 8D IS NOT ATTRACTED AND RELIED UPON THE DECISIONS OF HONBLE APEX COURT IN CIT, CENTRAL 1 VS. CHETTINAD LOGISTICS (P.) LTD. (2018) 95 TAXMANN.COM 250 (SC) AND PR. CIT ITA NO.185/DEL./2017 4 VS. OIL INDUSTRY DEVELOPMENT BOARD (2019) 103 TAXMA NN.COM 326 (SC) . 7. UNDISPUTEDLY, NO EXEMPT INCOME HAS BEEN EARNED B Y THE ASSESSEE DURING THE YEAR UNDER ASSESSMENT ON THE IN VESTMENT MADE. WHEN WE EXAMINE THE IMPUGNED ORDER PASSED BY THE LD . CIT (A), WE FIND THAT HE HAS DELETED THE ADDITION MADE ON AC COUNT OF DISALLOWANCE MADE U/S 14A OF THE ACT ON THE PREMISE THAT THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME DURING TH E YEAR UNDER ASSESSMENT, HENCE NO DISALLOWANCE CAN BE MADE U/S 1 4A OF THE ACT. THIS ISSUE HAS BEEN REPEATEDLY DECIDED BY HON BLE SUPREME COURT IN CASE OF CIT, CENTRAL 1 VS. CHETTINAD LOGISTICS (P.) LTD. AND PR. CIT VS. OIL INDUSTRY DEVELOPMENT BOARD (SUPRA) RELIED UPON BY THE LD. AR FOR THE ASSESSEE. 8. HONBLE APEX COURT IN CASE OF PR. CIT VS. OIL INDUSTRY DEVELOPMENT BOARD (SUPRA) HELD THAT WHEN THERE IS NO EXEMPT INCOME EARNED BY THE ASSESSEE DURING THE YEAR UNDER ASSESSMENT, DISALLOWANCE U/S 14A OF THE ACT IS NOT PERMISSIBLE. SIMILARLY, HONBLE APEX COURT IN CASE OF CIT, CENTRAL 1 VS. CHETTINAD LOGISTICS (P.) LTD. (SUPRA) HELD THAT, WHERE THERE IS NO EXEMPT INCOME I.E. DIVIDEND WAS NOT EARNED DURING THE RELE VANT ASSESSMENT YEAR BY THE ASSESSEE, SECTION 14A IS NOT BE ATTRACT ED. ITA NO.185/DEL./2017 5 9. IN VIEW OF THE MATTER, DECISION OF MAXOPP INVESTMENT LTD. (SUPRA) RELIED UPON BY THE LD. DR FOR THE REVENUE C HALLENGING THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) IS NOT APP LICABLE TO THE FACTS AND CIRCUMSTANCES OF THIS CASE. SO, WE ARE O F THE CONSIDERED VIEW THAT THE LD. CIT (A) HAS RIGHTLY ARRIVED AT TH E DECISION THAT WHEN THERE IS NO EXEMPT INCOME EARNED BY THE ASSESS EE DURING THE RELEVANT ASSESSMENT YEAR, NO DISALLOWANCE CAN BE MA DE BY INVOKING THE PROVISIONS CONTAINED U/S 14A OF THE AC T. SO, FINDING NO ILLEGALITY OR PERVERSITY IN THE IMPUGNED ORDER P ASSED BY THE LD. CIT (A), PRESENT APPEAL FILED BY THE REVENUE IS HER EBY DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 2 ND DAY OF JULY, 2019. SD/- SD/- (G.D. AGRAWAL) (KULDIP SINGH ) VICE PRESIDENT JUDICIAL MEMBER DATED THE 2 ND DAY OF JULY, 2019 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-12, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.