Appeal Details
Counselvise Citation
[2020] 110 COUNSELVISE.COM (IT) 6897 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
1 year(s) 5 month(s) 6 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
11-09-2020
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
A
Assessment Year
2013-2014
Appeal Filed On
05-04-2019
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 2112 /MUM/2019 ASSESSMENT YEAR: 2013 - 14 DCIT CIRCLE - 14(1)(1) VS. M/S. ASSET AUTO INDIA PVT. LTD. 14/3, UNION PARK, CHEMBUR, M UMBAI 400074 . PAN NO. AAECA0733F APPELLANT RESPONDENT REVENUE BY : SHRI MICHAEL JERALD (DR) ASSESSEE BY : NONE LAST DATE OF HEARING : 10 /09/2020 DATE OF PRONOUNCEMENT : 11 /09/2020 ORDER PER N.K. PRADHAN, A.M. THIS IS AN APPEAL FILED BY THE REVENUE . THE RELEVANT ASSESSMENT YEAR IS 2013 - 14 . THE APPEAL IS DIRECTED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 2 1 , MUMBAI [IN SHORT CIT(A)] AND ARISES OUT OF ASSESSMENT COMPLETED U/S. 143(3) OF THE INCOME TAX ACT. 1961 (THE ACT). THOUGH THE CASE WAS FIXED FOR HEARING ON 10.09.2020, NEITHER THE ASSESSEE NOR ITS AUTHOR ISED REPRESENTATIVE APPEARED BEFORE THE TRIBUNAL ON THE ABOVE DATE. AS THERE IS NON - COMPLIANCE BY THE ASSESSEE, WE ARE PROCEEDING TO DISPOSE OF THIS APPEAL AFTER EXAMINING THE MATERIALS AVAILABLE ON RECORD AND AFTER HEARING THE LD. DEPARTMENTAL REPRESENT ATIVE (DR). 2 ITA NO. 2112/MUM/2019 M/S. ASSET AUTO INDIA PVT. LTD. 2. THE GROUNDS OF APPEAL FILED BY THE REVENUE READ AS UNDER: 1. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE U/S 14A R.W.R. 8D, AMOUNTING TO RS.1,59,65,004/ - ?' 2. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW, THE LD, CIT(A) ERRED IN DIRECTING THE AO TO DELETE THE DISALLOWANCE U/S 14A R.W.R. 8D BY RELYING UPON THE JUDICIAL PRECEDENTS WHICH DID NOT CONSIDER IN RIGHT PERSPECTIVE, THE LEGISLATIVE INTENT CONTAINED IN CIRCULAR 5 OF 2014 DATED 11.02.2014 WHICH CLEARLY LAYS DOWN THAT FOR MAKING THE ABOVE DISALLOWANCE, ACTUAL RECEIPT OF EXEMPT INCOME DURING THE RELEVANT A. Y. IS NOT NECESSARY'? 3. 'THE APPELLANT PRAYS THAT THE ORDER OF T HE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED . 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR (A.Y.) 2013 - 14 ON 28.09.2013 DECLARING TOTAL INCOME OF RS.55,12,590/ - AND CARRIED FORWARD BUSINESS LOSS OF RS. 5,55,59,262/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) MADE A DISALLOWANCE OF RS.1,59,65,004/ - UNDER SECTION 14A R.W. RULE 8D OF THE INCOME - TAX RULES, 1963 (THE RULES). 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LEARNED CIT (A). SINCE NO EXEMPT INCOME WAS EARNED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION, THE LD. CIT(A) DIRECTED THE AO TO DELETE THE ABOVE ADDITION OF RS.1,59,65,004/ - WITH THE FOLLO WING OBSERVATIONS: - 3 ITA NO. 2112/MUM/2019 M/S. ASSET AUTO INDIA PVT. LTD. ........... SINCE NO EXEMPT INCOME HAS BE E N E A RNED BY THE APPELLANT DURING THE YEAR, NO DISALLOWANCE CAN BE MADE UNDER SECTION 14A OF THE IT ACT. RELIANCE IN TH IS REGARD IS PLACED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASES OF CIT V. HOLCIM INDIA (P.) LTD. [2015] 57 TAXMANN.COM 28 AND PR. CIT VS. IL & FS ENERGY DEVELOPMENT COMPANY LTD., [2017] 84 TAXMANN.COM 186 (DELHI) WHERE IT HAS BEEN HELD THAT TH ERE CAN BE NO DISALLOWANCE U/S 14A IN THE ABSENCE OF EXEMPT INCOME. SIMILAR VIEW HAS BEEN TAKEN IN REDINGTON (INDIA) LTD., V. ADDL. CIT [2017] 392 ITR 633/77TAXMANN.COM 257 (MAD.), CIT V. LAKHANI MARKETING INC. [2014] 49 TAXMANN.COM 257/226 TAXMAN 45 (MAG .), CIT V. WINSOME TEXTILE INDUSTRIES LTD., [2009] 319 ITR 204, CIT V. SHIVAM MOTORS (P.) LTD., [2015] 230 TAXMAN 63/55TAXMANN.COM 262 (ALL.) AND QUANTUM ADVISORS (P.) LTD., VS. DCIT [2016] 73 TAXMANN.COM 233 (MUMBAI TRIB.) HONBLE SUPREME COURT HAS ALSO DISMISSED THE SLP AGAINST DECISION OF MADRAS HIGH COURT IN THE CASE OF CIT V. CHETTINAD LOGISTICS (P.) LTD. [2017] 80 TAXMANN.COM 221/248 TAXMAN 55 (MAD.) WHEREIN IT WAS HELD THAT THAT SECTION 14A CANNOT BE INVOKED WHERE NO EXEMPT INCOME WAS EARNED BY ASSE SSEE IN RELEVANT ASSESSMENT YEAR. [CIT VS. CHETTINAD LOGISTICS (P.) LTD., [ 2018] 95 TAXMANN.COM 250 (SC)]. 5. THE LD. DR RELIES ON CBDT CIRCULAR NO. 5 OF 2014 DATED 11.02.2014 AND SUPPORTS THE ORDER PASSED BY THE AO. 6. WE HAVE HEARD THE LD. DR AND PERU SED THE MATERIAL AVAILABLE ON RECORD. THE FACT REMAINS THAT NO EXEMPT INCOME WAS EARNED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. THE LD. CIT(A) HAS RIGHTLY FOLLOWED THE JUDGEMENT OF THE HONBLE DELHI HIGH C OURT IN HOLCIM INDIA (P.) LTD (S UPRA).; IL & FS ENERGY DEVELOPMENT COMPANY LTD (SUPRA) , WHERE IT HAS BEEN HELD 4 ITA NO. 2112/MUM/2019 M/S. ASSET AUTO INDIA PVT. LTD. THAT THERE CAN BE NO DISALLOWANCE UNDER SECTION 14A IN THE ABSENCE OF EXEMPT INCOME. THE LD. CIT(A) HAS RIGHTLY REFERRED TO THE SLP DISMISSED BY THE HONBLE SUPREME COURT AGAI NST THE ORDER OF THE HONBLE MADRAS HIGH COURT IN CIT V. CHETTINAD LOGISTICS (P.) LTD., [2017] 80 TAXMANN.COM 221 (MAD.) , WHEREIN IT IS HELD THAT SECTION 14A CANNOT BE INVOKED WHERE NO EXEMPT INCOME WAS EARNED BY THE ASSESSEE IN THE RELEVANT ASSESSMENT YEA R. IN VIEW OF THE ABOVE POSITION OF THE LAW, WE UPHOLD THE ORDER OF THE LD. CIT(A). 7. IN T HE RESULT, APPEAL FILED BY THE R EVENUE IS DISMISSED. ORDER PRONOUNCED THROUGH NOTICE BOARD UNDER RULE 34(4) OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963. S D / - S D / - ( SAKTIJIT DEY ) (N.K. PRADHAN) JUDI CIAL MEMBER ACCOUNTANT MEMBER MUMBAI : DATED: GIRIDHAR, SR.PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI
Other Referred Cases
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Laws Referred To
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Expert Summary
In the given case, the AO made a disallowance of expenditure under section 14A read with Rule 8D. Relying on the judgment of the Delhi High Court in Holcim India (P.) Ltd., the Ld. CIT(A) held that since no exempt income was earned by the assessee during the relevant year, the provisions of section 14A could not be invoked. Accordingly, the CIT(A) directed the AO to delete the disallowance. The same was upheld by the Hon’ble Tribunal.
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