CHHATTISGARH SPONGE MANUFACTURING CONSORTIUM COALFIELDS PRIVATE LIMITED, RAIPUR V. INCOME TAX OFFICER, WARD 1(3), RAIPUR

ITA 207/RPR/2018

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 0588 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 28-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Rule 8D
• Section: 143(3)

Judgement Text

आयकर अपीलȣय अͬधकरण Ûयायपीठ रायप ु र मɅ। IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR (Through Virtual Court) BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI RATHOD KAMLESH JAYANTBHAI, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.207/RPR/2018 Ǔनधा[रण वष[ / Assessment Year : 2015-16 C.G. Sponge Manufacturing Consortium Coalfields Pvt. Ltd. Room No.208, Lalganga Midas, Bilaspur Road, Fafadih, Raipur-492 009 PAN : AACCC6516E .......अपीलाथȸ / Appellant बनाम / V/s. The Income Tax Officer-1(3), Raipur (C.G.) ......Ĥ×यथȸ / Respondent Assessee by : Shri R.B Doshi, AR Revenue by : Shri G.N Singh, DR स ु नवाई कȧ तारȣख / Date of Hearing : 27.05.2022 घोषणा कȧ तारȣख / Date of Pronouncement : 31.05.2022 2 C.G. Sponge Manufacturing Consortium Coalfields Pvt. Ltd. Vs. ITO-1(3) ITA No. 207/RPR/2018 आदेश / ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the CIT(Appeals)-I, Raipur, dated 18.09.2018, which in turn arises from the order passed by the A.O under Sec.143(3) of the Income- tax Act, 1961 (in short ‘the Act’) dated 07.12.2017 for assessment year 2015-16. Before us the assessee has assailed the impugned order on the following grounds of appeal: “1. For that the order passed by the learned Commissioner of Income Tax (Appeals)-1, Raipur is bad in law as well as on facts. 2. The Ld. CIT(A) erred in confirming the addition of Rs.8,00,790/- u/s.14A r/w Rule 8D of the Income Tax Act, 1961 without giving proper opportunity. 3. For that the appellant craves leave to add, alter or amend any ground/s of appeal on or before hearing of the case.” 2. Succinctly stated, the assessee company which is engaged in the business of mining of coal had e-filed its return of income for the assessment year 2015-16 on 29.09.2015, declaring an income of Rs.31,01,660/-. Subsequently, the case of the assessee was selected for scrutiny assessment u/s.143(2) of the Act. 3. Assessment was, thereafter, framed by the A.O vide his order passed u/s. 143(3) dated 07.12.2017 wherein after making disallowance u/s.14A 3 C.G. Sponge Manufacturing Consortium Coalfields Pvt. Ltd. Vs. ITO-1(3) ITA No. 207/RPR/2018 r.w.r. 8D(2)(ii) of Rs.8,00,790/-, the income of the assessee was determined at Rs.39,02,450/-. 4. Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals) but without any success. 5. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 6. We have heard the ld. authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the ld. AR in order to drive home his contentions. Admittedly, as is discernible from the assessment order, the assessee company during the year under consideration had though made investment in exempt income yielding shares but had not received any exempt dividend income during the year under consideration. On the basis of the aforesaid facts, it was submitted by the Ld. Authorized Representative (for short ‘AR’) that now when the assessee company had not received any exempt dividend income during the year under consideration, therefore, no disallowance u/s.14A of the Act could have been validly made in its hands. Accordingly, on the basis of his aforesaid contentions, it was submitted by the Ld. AR that the disallowance u/s.14A 4 C.G. Sponge Manufacturing Consortium Coalfields Pvt. Ltd. Vs. ITO-1(3) ITA No. 207/RPR/2018 r.w.r.8D made by the A.O could not be sustained and was liable to be vacated. 7. Per contra, the Ld. Departmental Representative (for short ‘DR’) relied on the orders of the lower authorities. 8. After having given a thoughtful consideration to the contentions advanced by the Ld. Authorized Representative of both the parties, we find substantial force in the claim of the Ld. AR that now when the assessee company had admittedly not received any exempt income during the year under consideration, therefore, no disallowance u/s.14A of the Act was called for in its hand. Our aforesaid view is fortified by the judgment of the Hon’ble Supreme Court in the case of CIT Vs. Chettinad Logistics Pvt. Ltd. (2018) 257 Taxmann 2 (SC) and also of the Hon’ble High Court of Delhi in the case of Cheminvest Limited Vs. CIT, (2015) 378 ITR 33 (Delhi). Backed by the aforesaid judicial pronouncements, it was submitted by the Ld. AR that as per the settled position of law no disallowance u/s.14A in absence of any exempt income could have been made in the hands of the assessee. In the backdrop of the facts involved in the case before us r/w. the aforesaid settled position of law we find substance in the claim of the Ld. AR that now when the assessee company had not received any exempt dividend income during the year under consideration, therefore, no disallowance u/s.14A of the Act was warranted in its case. We, thus, in 5 C.G. Sponge Manufacturing Consortium Coalfields Pvt. Ltd. Vs. ITO-1(3) ITA No. 207/RPR/2018 terms of our aforesaid observations vacate the disallowance of Rs.8,00,790/- made by the A.O. 9. In the result, appeal of the assessee is allowed in terms of our aforesaid observations. Order pronounced in open court on 31 st day of May, 2022. Sd/- Sd/- RATHOD KAMLESH JAYANTBHAI RAVISH SOOD ACCOUNTANT MEMBER JUDICIAL MEMBER रायप ु र/ RAIPUR ; Ǒदनांक / Dated : 31 st May, 2022 SB आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals)-1, Raipur (C.G) 4. The Pr. CIT-1, Raipur (C.G) 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण,रायप ु र बɅच, रायप ु र / DR, ITAT, Raipur Bench, Raipur. 6. गाड[ फ़ाइल / Guard File. आदेशान ु सार / BY ORDER, // True Copy // Ǔनजी सͬचव / Private Secretary आयकर अपीलȣय अͬधकरण, रायप ु र / ITAT, Raipur. 6 C.G. Sponge Manufacturing Consortium Coalfields Pvt. Ltd. Vs. ITO-1(3) ITA No. 207/RPR/2018 Date 1 Draft dictated on 27.05.2022 Sr.PS/PS 2 Draft placed before author 27.05.2022 Sr.PS/PS 3 Draft proposed and placed before the second Member JM/AM 4 Draft discussed/approved by second Member AM/JM 5 Approved draft comes to the Sr. PS/PS Sr.PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order