M/s. Sofcom Systems Ltd, D-36, Subhash Marg, Flat No.802, Sheel Mohar Apartment, C-Scheme, Jaipur, Jaipur V. ITO Ward-6(4), Jaipur, ITO Ward-6(4), Jaipur

ITA 258/JPR/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1604 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 28-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROSHANTA MEENA
• Keywords: Earning of tax free income; Rule 8D
• Section: 143(3); 14A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES SMC, JAIPUR JH JES'K LH 'KEKZ] YS[KK LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA, ACCOUNTANT MEMBER VK;DJ VIHY LA -@ ITA NO. 258/JP/2019 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2015-16 M/S. SOFCOM SYSTEMS LTD. D-36, SUBHASH MARG, FLAT NO. 802, SHEEL MOHAR APARTMENTS, C-SCHEME, JAIPUR C UKE VS. I.T.O., WARD-6(4), ALWAR LFKK;H YS[KK LA -@THVKBZVKJ LA-@ PAN/GIR NO.: AACCS4859A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI ROHAN SOGANI (CA) JKTLO DH VKSJ LS @ REVENUE BY : SMT. ROSHANTA MEENA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 15/04/2019 MN?KKS 'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 11/06/2019 VKNS'K@ ORDER PER: R.C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD.CIT(A), AJMER DATED 14/12/2018 FOR THE A.Y. 2015-16 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE ONLY GRIEVANCE OF THE ASSESSEE RELATES TO DISALLOWANCE U/S 14A OF THE ACT READ WITH RULE 8D OF THE INCOME TAX RULES, 1962 (IN SHORT, THE RULES) IN RESPECT OF EXEMPTED INCOME. ITA NO.258/JP/19 M/S. SOFCOM SYSTEMS LTD. VS ITO 2 3. IT WAS THE CONTENTION OF THE ASSESSEE BEFORE THE A.O. AS WELL AS BEFORE THE LD. CIT(A) TO THE EFFECT THAT DURING THE YEAR UNDER CONSIDERATION, THERE WAS NO EXEMPT INCOME, ACCORDINGLY, NO DISALLOWANCE CAN BE MADE. HOWEVER, THE A.O. DID NOT AGREE AND MADE DISALLOWANCE U/S 14A R.W.R 8D. AS PER OUR CONSIDERED VIEW, THE PROVISIONS OF SECTION 14A PROVIDES THAT IF THERE IS ANY INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT, THE EXPENDITURE WHICH IS INCURRED FOR EARNING SUCH INCOME IS NOT AN ALLOWABLE DEDUCTION. HENCE, IN THE ABSENCE OF ANY TAX-FREE INCOME, THE CORRESPONDING EXPENDITURE, IF ANY, COULD NOT BE WORKED OUT FOR DISALLOWANCE. SINCE THE ASSESSEE DID NOT EARN ANY EXEMPT INCOME IN THE FORM OF DIVIDED FROM ITS INVESTMENT IN THE COMPANY, NO DISALLOWANCE CAN BE MADE WITH REFERENCE TO SUCH INVESTMENT IN THE CALCULATION PRESCRIBED UNDER RULE 8D OF THE RULES. IN THIS REGARD, RELIANCE CAN BE PLACED ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: (I) OIL INDUSTRY DEVELOPMENT BOARD (2019) 103 TAXMANN.COM 326 (SC). (II) JAYNEER INFRAPOWER & MULTIVENTURES (P) LTD. (2019) 103 TAXMANN.COM 118 (MUM-TRIB) (III) CHEMNIVEST LTD. (2015) 61 TAXMANN.COM 118 (DELHI). 4. RESPECTFULLY FOLLOWING THE ABOVE JUDICIAL PRONOUNCEMENTS, I DO NOT FIND ANY MERIT IN THE DISALLOWANCE SO MADE WHEN NO EXEMPT INCOME WAS EARNED DURING THE YEAR UNDER CONSIDERATION. ITA NO.258/JP/19 M/S. SOFCOM SYSTEMS LTD. VS ITO 3 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH JUNE, 2019. SD/- JES'K LH 'KEKZ (RAMESH C SHARMA) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 11 TH JUNE, 2019 *PP, SPS VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S SOFCOM SYSTEMS LTD., JAIPUR 2. IZR;FKHZ @ THE RESPONDENT- THE I.T.O. WARD 6(4), JAIPUR 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 258/JP/2019) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR