M/s UB Infrastructure Projects Limited, Bangalore V. Deputy Commissioner of Income Tax, Bangalore

ITA 2098/BANG/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7032 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 30-11-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PADMA MEENAKSHI
• Assessee Lawyers: GIRIJA G P
• Keywords: Earning of tax free income
• Section: 234B; 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO , ACCOUNTANT MEMBER ITA NO.2098/BANG/2016 ASSESSMENT YEAR : 2012-13 M/S. UB INFRASTRUCTURE PROJECTS LIMITED, LEVEL 12, UB TOWERS, UB CITY, 24, VITTAL MALLYA ROAD, BENGALURU 560 001. PAN : AAACU 2311 H VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 7(1)(1), BENGALURU. APPELLANT RESPONDENT ASSESSEE BY : MISS. GIRIJA G. P, CA REVENUE BY : SMT. PADMA MEENAKSHI, JCIT DATE OF HEARING : 16 . 11 .201 7 DATE OF PRONOUNCEMENT : 22.12.2017 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER OF CIT(APPEALS)-7, BENGALURU, INTER ALIA , ON THE FOLLOWING GROUNDS: 1. THAT THE ORDER OF THE ASSESSING OFFICER IN SO FAR AS IT IS AGAINST THE APPELLANT IS AGAINST THE LAW, FACTS, CIRCUMSTANCES, NATURAL JUST ICE, EQUITY, WITHOUT JURISDICTION, BAD IN LAW AND ALL OTHER KNOWN PRINCIPLES OF LAW. 2. THAT THE TOTAL INCOME COMPUTED AND THE TOTAL TAX COMPUTED IS HEREBY DISPUTED. 3. THAT THE LEARNED AUTHORITIES BELOW ERRED IN DISA LLOWING RS.2,16,11,945/- U/S 14A R.W.R. 8D(2)(II) OF THE ACT AND RS.15,00,000/- U/S 14A RWR 8D(2)(III) OF THE ACT. 4. THAT THE LEARNED AUTHORITIES BELOW ERRED IN NOT APPRECIATING THAT WHEN THERE IS NO TAX FREE INCOME, THERE CANNOT BE ANY EXPENDITURE IN CURRED FOR EARNING EXEMPT INCOME. ITA NO. 2098/BANG/2016 PAGE 2 OF 4 5. THAT THE LEARNED AUTHORITIES BELOW ERRED IN NOT FOLLOWING THE BINDING/RELEVANT DECISIONS OF THE HIGHER APPELLATE AUTHORITIES ON TH E ISSUE. 6. THAT THE LEARNED CIT-APPEALS ERRED IN RELYING O N THE CBDT CIRCULAR DT.11.02.2014, THOUGH THE DECISION OF THE HON'BLE DELHI HIGH COURT IN CHEMINVEST LTD IN ITA 749/2014 DT 02.09.2015 CLINCHES THE ISSUE IN FAVOUR OF THE APPELLANT. 7. THE APPELLANT DENIES THE LIABILITY FOR INTEREST U/S 234B OF THE ACT. FURTHER PRAYS THAT INTEREST IF ANY SHOULD BE LEVIED ONLY ON THE R ETURNED INCOME. 8. NO OPPORTUNITY HAS BEEN GIVEN BEFORE LEVY OF INT EREST U/S 234B OF THE IT ACT. 9. WITHOUT PREJUDICE TO THE APPELLANT'S RIGHT OF SE EKING WAIVER BEFORE APPROPRIATE AUTHORITY THE APPELLANT BEGS FOR CONSEQUENTIAL RELI EF IN THE LEVY OF INTEREST U/S. 234B OF THE ACT. 2. DURING THE COURSE OF HEARING, THE LD. COUNSEL F OR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE FACT THAT THERE WAS NO EXEMPT INCO ME EARNED BY THE ASSESSEE DURING THE IMPUGNED ASSESSMENT YEAR. THEREFORE, THE PROVISIONS OF SECTION 14A CANNOT BE INVOKED. IN SUPPORT OF THIS CONTENTION, HE PLACED RELIANCE UPON THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD. V . CIT AS REPORTED IN 378 ITR 33 (DEL) AND ALSO THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FO R ASSESSMENT YEAR 2010-11 . THE LD. DR SIMPLY PLACED RELIANCE UPON THE ORDER OF THE AO. 3. HAVING CAREFULLY EXAMINED THE ORDERS OF AUTHORI TIES BELOW, WE FIND THAT UNDISPUTEDLY THE ASSESSEE HAS NOT EARNED ANY EXEMPTED INCOME. N OW IT IS SETTLED POSITION OF LAW THAT WHENEVER ASSESSEE DID NOT EARN ANY EXEMPT INCOME, N O DISALLOWANCE COULD BE MADE U/S. 14A OF THE ACT. THE HON'BLE DELHI HIGH COURT IN T HE CASE OF CHEMINVEST LTD. V. CIT, 378 ITR 33 (DEL) HAS CATEGORICALLY HELD THAT SECTION 14A ENVISAGES THAT THERE SHOULD BE ACTUAL RECEIPT OF INCOME WHICH WAS NOT INCLUDIBLE IN THE T OTAL INCOME DURING THE RELEVANT PREVIOUS YEAR FOR THE PURPOSE OF DISALLOWING ANY EXPENDITURE IN RELATION TO THE SAID INCOME. WHEREVER THERE IS NO EXEMPT INCOME INCLUDIBLE IN TH E TOTAL INCOME OF THE ASSESSEE, THE PROVISIONS OF SECTION 14A CANNOT BE INVOKED. THE RE LEVANT OBSERVATIONS OF THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT ARE EXTRACTED HEREUNDE R:- '15. TURNING TO THE CENTRAL QUESTION THAT ARISES FO R CONSIDERATION, THE COURT FINDS THAT THE COMPLETE ANSWER IS PROVIDED BY THE DECISIO N OF THIS COURT IN CIT V. HOLCIM INDIA (P) LTD. (DECISION DATED 5TH SEPTEMBER 2014, IN I. T. A. NO. 486 OF ITA NO. 2098/BANG/2016 PAGE 3 OF 4 2014). IN THAT CASE, A SIMILAR QUESTION AROSE, VIZ. , WHETHER THE INCOME-TAX APPELLATE TRIBUNAL WAS JUSTIFIED IN DELETING THE DI SALLOWANCE UNDER SECTION 14A OF THE ACT WHEN NO DIVIDEND INCOME HAD BEEN EARNED BY THE ASSESSEE IN THE RELEVANT ASSESSMENT YEAR ? THE COURT REFERRED TO TH E 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 VERY CASE, I. E., CHEMINVEST LTD. V. CIT [2009] 317 ITR (AT) 86 (DELHI) [SB]. THE COURT ALSO REFERRED TO THREE DECISIONS OF 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, 2014, 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 TU RN REFERRED TO TWO EARLIER DECISIONS OF THE SAME COURT IN CIT V. HERO CYCLES L TD. [2010] 323 ITR 518 (P&H) AND CIT V. WINSOME TEXTILE INDUSTRIES LTD. [2009] 3 19 ITR 204 (P&H). THE SECOND WAS OF THE GUJARAT HIGH COURT IN CIT V. CORR TECH ENERGY (P.) LTD. [2014] 223 TAXMANN 130 (GUJ) ; [2015] 372 ITR 97 (GUJ) AND THE THIRD OF THE ALLAHABAD HIGH COURT IN CIT V. SHIVAM MOTORS (P) LTD. (DECISI ON DATED 5TH MAY, 2014, IN I . T. A. NO. 88 OF ITA NO.1107/BANG/2016 2014). THES E THREE DECISIONS REITERATED THE POSITION THAT WHEN AN ASSESSEE HAD NOT EARNED A NY TAXABLE INCOME IN THE RELEVANT ASSESSMENT YEAR IN QUESTION 'CORRESPONDING EXPENDITURE COULD NOT BE WORKED OUT FOR DISALLOWANCE.' 4. THIS WAS ALSO EXAMINED BY THE TRIBUNAL IN THE A SSESSEES OWN CASE FOR ASSESSMENT YEAR 2010-11 AND HELD THAT WHEN THERE IS NO EXEMPT INCOME, PROVISION OF SECTION 14 OF THE ACT CANNOT BE APPLIED. 5. IN THE LIGHT OF THE AFORESAID JUDGMENT, THE PRO VISIONS OF SECTION 14A CANNOT BE INVOKED AS THERE IS NO EXEMPT INCOME IN THE HANDS O F THE ASSESSEE. ACCORDINGLY, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(APPEALS) WHO H AS RIGHTLY DELETED THE ADDITION. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 22 ND DAY OF DECEMBER, 2017. SD/- SD/- (INTURI RAMA RAO) (SUN IL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE : BANGALORE DATED : 22/12/2017 /NS/* ITA NO. 2098/BANG/2016 PAGE 4 OF 4 COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)-II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER SR. PRIVATE SECRETARY, ITAT, BANGALORE.