Premier Udyog Ltd, New Delhi V. ACIT Circle-20(1), New Delhi

ITA 241/DEL/2021

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0718 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 18-03-2021
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: SMC-1 NEW DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER [THROUGH VIDEO CONFERENCING] ITA NO.241/DEL/2021 ASSESSMENT YEAR: 2017-18 M/S. PREMIER UDYOG LTD., C/O- RAJ KUMAR & ASSOCIATES, CA, L-7A (LGF), SOUGH EXTENSION, PART-II, NEW DELHI VS. ACIT, CIRCLE -20(1), NEW DELHI PAN :AADCP4119K (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORD ER DATED 03/03/2021 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS), NATIONAL FACELESS APPEAL CENTRE, DELHI [ IN SHORT THE LD. CIT(A)] FOR ASSESSMENT YEAR 2017-18 RAISING FO LLOWING GROUNDS: APPELLANT BY SH. J.P. SHARMA, CA RESPONDENT BY SH. R.K. GUPTA, SR. DR DATE OF HEARING 01.07.2021 DATE OF PRONOUNCEMENT 09.07.2021 2 ITA NO. 241/DEL/2021 1. THAT UNDER THE FACTS AND CIRCUMSTANCES, IN THE A BSENCE OF EXEMPT INCOME A.O. ERRED IN LAW IN MAKING DISALLOWANCE U/S 14A R/W R. 8D. 2. THAT UNDER THE FACTS AND CIRCUMSTANCES, IN THE A BSENCE OF RECORDING OF SATISFACTION, A.O. ERRED IN LAW IN MAK ING DISALLOWANCE U/S 14A R/W R. 8D. 3. THAT UNDER THE FACTS AND CIRCUMSTANCES, IN THE A BSENCE OF ANY EXEMPTED INCOME, THE SELF DISALLOWANCE OF RS.20,322 /- ALSO NEEDS TO BE DELETED. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSE SSEE IS A NON BANKING FINANCIAL COMPANY (NBFC) AND E-FILED ITS RE TURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 07/11/20 17 DECLARING TOTAL INCOME OF RS.36,35,540/-. THE RETUR N OF INCOME FILED BY THE ASSESSEE WAS SELECTED FOR SCRUTINY ASS ESSMENT AND STATUTORY NOTICES UNDER THE INCOME-TAX ACT, 1961 (I N SHORT THE ACT) WERE ISSUED AND COMPLIED WITH. IN THE ASSESSM ENT COMPLETED UNDER SECTION 143(3) OF THE ACT, THE ASSESSING OFFI CER DISALLOWED A SUM OF 2,22,700/- IN TERMS OF SECTION 14A OF THE ACT. THE LD. CIT(A) ALSO UPHELD THE DISALLOWANCE. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL RAISING THE GROUNDS AS R EPRODUCED ABOVE. 3. BOTH THE PARTIES APPEARED BEFORE US THROUGH VIDEO CONFERENCING FACILITY AND FILED DOCUMENTS ELECTRONI CALLY. 4. THE LEARNED COUNSEL OF THE ASSESSEE SUPPORTING GROU ND NO. 1 & 2 OF THE APPEAL SUBMITTED THAT THERE BEING NO E XEMPTED INCOME, NO DISALLOWANCE CAN BE MADE IN THE HANDS OF THE ASSESSEE FOLLOWING THE DECISION OF THE HONBLE DELH I HIGH COURT IN THE CASE OF CHEMINVEST LIMITED VS. COMMISSIONER OF INCOME TAX- VI, (2015) 378 ITR 33. 5. THE LEARNED DR, ON THE OTHER HAND, RELIED ON THE O RDER OF THE LOWER AUTHORITIES. 3 ITA NO. 241/DEL/2021 6. WE HAVE HEARD RIVAL SUBMISSION OF THE PARTIES AND PERUSED THE RELEVANT MATERIAL ON RECORD. IN THE CASE, THE A SSESSING OFFICER OBSERVED INVESTMENT BY THE ASSESSEE IN SHARES AND T HUS INVOKING SECTION 14A MADE DISALLOWANCE FOR EXPENSES TOWARDS EARNING EXEMPT INCOME AT THE RATE 1% OF ANNUAL AVERAGE OF M ONTHLY AVERAGE OPENING AND CLOSING BALANCES OF VALUE OF IN VESTMENT, WHICH WAS WORKED OUT TO 2,43,022/- AND AFTER SUBTRACTING THE SUO MOTU DISALLOWANCE OF 20,322/-, MADE DISALLOWANCE OF 2,22,700/-. THE LD. CIT(A) REJECTED THE OBJECTION O F THE ASSESSEE AGAINST NON-RECORDING OF DISSATISFACTION ON THE ACC OUNTS OF THE ASSESSEE AND UPHELD THE DISALLOWANCE. BEFORE US, TH E LEARNED COUNSEL OF THE ASSESSEE HAS SUBMITTED THAT THERE WA S NO EXEMPTED INCOME EARNED DURING THE YEAR IN THE CASE OF THE ASSESSEE. THIS FACT ALSO GET CONFIRMED FROM THE ASS ESSMENT ORDER, WHEREIN THE ASSESSING OFFICER HAS HELD THAT DISALLO WANCE OF THE EXPENDITURE HAS TO BE MADE EVEN IN A PARTICULAR YEA R THE ASSESSEE HAS NOT EARNED ANY EXEMPTED INCOME. THIS FACT IS A LSO VERIFIED FROM FINANCIAL STATEMENTS FILED BY THE ASSESSEE BEF ORE US. WE FIND THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LIMITED (SUPRA), HELD THAT NO DISALLOWANCE UNDER SECTION 14A IS REQUIRED WHERE THERE IS NO EXEMPTED INCOME EARNED B Y THE ASSESSEE DURING THE YEAR. RESPECTFULLY, FOLLOWING T HE FINDING OF THE HONBLE DELHI HIGH COURT (SUPRA), NO DISALLOWANCE C AN BE SUSTAINED IN THE CASE OF THE ASSESSEE. ACCORDINGLY, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND SUST AINED BY THE LEARNED CIT(A) IS DELETED. 4 ITA NO. 241/DEL/2021 6.1 THE GROUND 1 AND 2 OF THE APPEAL OF THE ASSESSEE A RE ACCORDINGLY ALLOWED. THE GROUND NO. 3 WAS NOT PRESS ED BY THE ASSESSEE BEFORE US AND THEREFORE IT IS DISMISSED AS INFRUCTUOUS. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED PARTLY. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH JULY, 2021. SD/- SD/- (KUL BHARAT) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 9 TH JULY, 2021. RK/- (DTDC) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI