Dy. Commissioner of Income Tax , Circle-3(2), Hyderabad V. Soma Highways Private Limited , Hyderabad

ITA 2240/Hyd/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 4803 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-B
• Next Hearing Date: 16-03-2021
• Assessment Year: 2015-2016
• Appeal Filed On: 03-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income
• Section: 143(3); 14A; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B ', HYDERABAD BEFORE S HRI SATBEER SINGH GODARA , JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU , ACCOUNTANT MEMBER ITA NO. 2240 /H/201 8 ASSESSMENT YEAR: 20 1 5 - 1 6 DY. COMMISSIONER OF INCOME - TAX, CIRCLE 3(2), HYDERABAD VS. SOMA HIGHWAYS PVT. LTD., HYDERABAD. PAN AANCS 2909 Q (APPELLANTS) (RESPONDENT) ASSESSEE BY: SHRI ROHIT MUJUMDAR REVENUE BY: SHRI MOHD. AFZAL DATE OF HEARING: 16/03/2021 DATE OF PRONOUNCEMENT: 10 /05/2021 O R D E R PER L.P. S AHU , AM: THIS APPEAL FILED BY THE REVENUE FOR AY 20 15 - 16 IS DIRECTED AGAINST THE CIT(A) - 3 , HYDERABADS ORDER, DATED 18 /0 9 /201 8 INVOLVING PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961 ; IN SHORT THE ACT . 2. THE REVENUE HAS RAISED 5 GROUNDS OF APPEAL, THE SUM AND SU BSTANCE OF WHICH ARE AGAINST THE ACTION OF THE CIT(A) IN DELETING THE DISALLOWANCE MADE BY THE AO U/S 14A OF THE ACT. I.T.A. NO. 2240 /HYD/201 8 SOMA HIGHWAYS PVT. LTD., HYD. 2 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSESSEE ENGAGED IN THE INFRASTRUCTURE BUSINESS FILED ITS RETURN OF INCOME FOR THE AY 2015 - 16 ON 27/09/2015 DECLARING A TOTAL LOSS OF RS. 3,64,320,313/ - . SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND ACCORDINGLY, STATUTORY NOTICES WERE ISSUED TO THE ASSESSEE, IN RESPONSE TO WHICH, THE AR OF THE ASSESSEE FILED THE REQUIRED INFO RMATION. AFTER CONSIDERING THE INFORMATION, THE AO COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT BY ASSESSING THE TOTAL LOSS AT NIL BY MAKING THE ADDITION OF RS. 3,64,20,313/ - U/S 14A OF THE ACT. 4. WHEN THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) , THE CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE, AGAINST WHICH, THE REVENUE IS IN APPEAL BEFORE THE ITAT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD AS WELL AS GONE THROUGH THE ORDERS OF REVENUE AUTHORITIES. IT IS SETT LED POSITION OF LAW THAT THE PROVISIONS OF SECTION 14A CAN BE APPLIED TO QUANTIFY THE EXPENSES IN RELATION TO EXEMPT INCOME. SINCE THE EXEMPT INCOME IS NIL, SECTION 14A WILL NOT APPLY. THE HONBLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD., REPORTED I N (2015) 378 ITR 33 (DEL.) HAS HELD THAT SECTION 14A WILL NOT APPLY WHERE NO EXEMPT INCOME IS RECEIVED OR RECEIVABLE DURING THE RELEVANT ASSESSMENT YEAR. I.T.A. NO. 2240 /HYD/201 8 SOMA HIGHWAYS PVT. LTD., HYD. 3 5.1 IN THE CASE UNDER CONSIDERATION, WE FIND THAT THE INVESTMENTS WERE MADE PURELY ON ACCOUNT OF COMM ERCIAL NECESSITY AND AS NO EXEMPT INCOME WAS EARNED FROM THE INVESTMENT SO MADE, THE PROVISIONS OF SECTION 14A WILL NOT APPLICABLE TO THE CASE OF ASSESSEE. THEREFORE, FOLLOWING THE SAID DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD., ( SUPRA), WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) AND ACCORDINGLY WE UPHOLD THE SAME AND DISMISS THE GROUNDS RAISED BY THE REVENUE. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 10 TH MAY , 2021. SD/ - SD/ - ( S.S. GODARA ) JUDICIAL MEMBER ( L.P. SAHU ) ACCOUNTANT MEMBER HYDERABAD, DATED 1 0 TH MAY , 2021 KV 1 DCIT, ROOM NO.713, 7 TH FLOOR, SIGNATURE TOWERS, OPP . BOTANICAL GARDENS, KONDAPUR, HYDERABAD. 2 SOMA HIGHWAYS PVT. LTD., 14, AVENUE - 4, BANJARA HILLS, HYDERABAD 500 034. 3 CIT(A) - 3 , HYDERABAD. 4 PR. CIT 3 , HYDERABAD. 5 ITAT, DR, HYDERABAD. 6 GUARD FILE.