Babanrao Dagadu Shelke, Pune V. Deputy Commissioner of Income-tax, Circle - 6, Pune

ITA 2515/PUN/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 9755 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-01-2021
• Assessment Year: 2013-2014
• Appeal Filed On: 30-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ARISES OUT OF PASSED
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE VIRTUAL COURT BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO. 2515/PUN/2017 / ASSESSMENT YEAR : 2013-14 BABANRAO DAGADU SHEKE, FLAT NO.8, IST FLOOR, GANESH GAYATRI APARTMENT, 291, SOMWAR PETH, PUNE 411 011 PAN : ARXPS0079D VS. DCIT, CIRCLE-6, PUNE APPELLANT RESPONDENT / ORDER PER R.S. SYAL, VP : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASS ED BY THE CIT(A)-4, PUNE ON 06-06-2017 IN RELATION TO THE ASSESSM ENT YEAR 2013-14. 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE CONFIRMATION OF DISALLOWANCE OF RS.850,066/- MADE BY THE ASSESSING OFFICER (AO) U/S.14A OF THE INCOME-TAX ACT, 196 1 (HEREINAFTER ALSO CALLED THE ACT). 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSE E IS A CIVIL CONTRACTOR. THE AO OBSERVED DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE ASSESSEE BORROWED CERTAIN FUNDS ASSESSEE BY SHRI CHANDRASEKHAR L.S. REVENUE BY SHRI VITTHAL BHOSALE DATE OF HEARING 18-03-2021 DATE OF PRONOUNCEMENT 18-03-2021 ITA NO.2515/PUN/2017 BABANRAO DAGADU SHELKE 2 ON WHICH LIABILITY TO PAY INTEREST WAS INCURRED AND CERTAIN AMOUN TS WERE INVESTED IN EARNING TAX FREE DIVIDEND INCOME. HE, THER EFORE, COMPUTED THE DISALLOWANCE U/S.14A R.W.RULE 8D AT RS.8,50,0 66/-. THE ASSESSEE CONTENDED BEFORE THE LD. CIT(A), AS HAS B EEN RECORDED ON PAGE 10 PARA 5.2.3 OF THE IMPUGNED ORDER , THAT NO EXEMPT INCOME WAS EARNED DURING THE YEAR. THE LD. CIT(A ) ECHOED THE ASSESSMENT ORDER ON THIS POINT. 4. WE HAVE HEARD BOTH THE SIDES THROUGH VIRTUAL COURT AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD. IT IS SEEN THAT THE ASSESSEE SPECIFICALLY RAISED THE ISSUE BEFORE THE LD. CIT(A) THAT NO EXEMPT INCOME WAS EARNED. THE SAME WAS NOT CONTROVERTED. STILL TH E AUTHORITIES PROCEEDED TO MAKE AND CONFIRM THE DISALLOWANCE U/S.14A. IN THE ABSENCE OF ANY FINDING TO THIS EFFECT, WE HAVE PROCEEDED TO EXAMINE THE CONTENTION. A COPY OF THE ASSESS EES PROFIT AND LOSS ACCOUNT HAS BEEN PLACED AT PAGE 4 OF THE PAPER BOOK, WHICH SHOWS THE FIGURE OF NET PROFIT AT RS.2,46,98,8 81/-. IN THE COMPUTATION OF INCOME, AT PAGE 2 OF THE PAPER BOOK, SAME FIGURE HAS BEEN ADOPTED FOR COMPUTING INCOME FROM BUSINES S AND PROFESSION. THUS, IT IS EVIDENT THAT THE ENTIRE INCOME FROM BUSINESS, AS SHOWN IN THE PROFIT AND LOSS ACCOUNT, HAS BE EN ITA NO.2515/PUN/2017 BABANRAO DAGADU SHELKE 3 CONSIDERED AS TAXABLE FORMING PART OF BUSINESS PROFITS OF TH E ASSESSEE AND THERE IS NO EXEMPT INCOME. 5. T HE HON'BLE DELHI HIGH COURT IN CHEMINVEST LTD. VS. CIT (2015) 378 ITR 33 (DEL) HAS HELD THAT IF THERE IS NO EXEMPT INCOME, THERE CAN BE NO QUESTION OF MAKING ANY DISALLOWANCE U/S 14A OF THE ACT. SIMILAR VIEW HAS BEEN TAKEN BY THE HON'BLE DELHI HIGH COURT IN CIT VS. HOLCIM INDIA P. LTD. (2014) 90CCH 081-DEL-HC . MORE RECENTLY THE HONBLE JURISDICTIONAL HIGH COURT IN PR. CIT VS. KOHINOOR PROJECTS PVT. LTD. (2020) 425 ITR 700 (BOM) HAS HELD THAT IN THE ABSENCE OF ANY EXEMPT INCOME, THERE CANNOT BE A NY DISALLOWANCE OF EXPENSES U/S 14A OF THE ACT. AS THE ASSE SSEE IN THE INSTANT CASE DID NOT EARN ANY EXEMPT INCOME, RESPECTFULLY FOLLOWING THE PRECEDENT, WE HOLD THAT NO DISALLOWANCE WAS CALLED FOR. THE IMPUGNED ORDER IS OVERTURNED AND THE SUSTENAN CE OF THE DISALLOWANCE IS DELETED. 6. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH MARCH, 2021. SD/- SD/- (S.S. VISWANETHRA RAVI) (R.S.SY AL) JUDICIAL MEMBER VIC E PRESIDENT PUNE; DATED : 18 TH MARCH, 2021 ITA NO.2515/PUN/2017 BABANRAO DAGADU SHELKE 4 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-4, PUNE 4. 5. THE PR. CIT-3, PUNE , , A / DR A, ITAT, PUNE 6. / GUARD FILE / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE DATE 1. DRAFT DICTATED ON 18-03-2021 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 18-03-2021 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *