ITO, New Delhi V. M/s. Olympus Global Stock P. Ltd., New Delhi

ITA 2773/DEL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0848 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 07-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Keywords: Earning of tax free income
• Section: 14A; 68

Judgement Text

ITA NO. 2773/DEL/2015 ASSESSMENT YEAR 2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI N.K.BILLAIYA, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO.2773/DEL/2015 ASSESSMENT YEAR: 2009-10 INCOME TAX OFFICER, WARD-19(1), ROOM NO. 225B, C.R. BUILDING, NEW DELHI. VS OLYMPUS GLOBAL STOCK P. LTD., (FORMERLY KNOWN AS M/S ORANGE BUILDWELL PVT. LTD.), 2318/22, TOTA RAM BAZAR, TRI NAGAR, NEW DELHI-110035 (PAN: AABCO0085F) APPELLANT RESPONDENT DEPARTMENT BY : MS ASHIMA NEB, SR. DR ASSESSEE BY: NONE DATE OF HEARING : 13.06.2018 DATE OF PRONOUNCEMENT : 11.09.2018 O R D E R PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER : THIS APPEAL HAS BEEN PREFERRED BY THE DEPARTMENT AG AINST ORDER DATED 17.02.2015 PASSED BY THE LD. CIT (APPEA LS)-7, NEW DELHI FOR THE ASSESSMENT YEAR 2009-10 AND THE SOLE ISSUE UNDER CHALLENGE IS THE ACTION OF THE LD. COMMISSIONER OF INCOME TAX(A) IN DELETING THE ADDITION OF RS. 4,26,31,548/- ON AC COUNT OF DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S 14A OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED 'THE ACT') . ITA NO. 2773/DEL/2015 ASSESSMENT YEAR 2009-10 2 2. BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF I NCOME WAS FILED DECLARING LOSS OF RS. 10,41,75,995/-. SUBSEQUENTLY , THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLE TED AT A LOSS OF RS. 4,65,04,702/- AFTER MAKING A DISALLOWANCE OF RS. 4,26,31,548/- U/S 14A OF THE ACT, ADDITION OF SHARE CAPITAL AND SHARE APPLICATION MONEY U/S 68 OF THE ACT AMOUNTING TO RS. 1,50,00,000/-ON ACCOUNT OF ROC FEE PAID FOR INCREAS E IN AUTHORISED CAPITAL AND ALSO A DISALLOWANCE OF RS. 3 9,745/- RELATING TO UNVERIFIABLE EXPENSES. 2.1 AGGRIEVED, THE ASSESSEE APPROACHED THE LD. COM MISSIONER OF INCOME TAX(A) WHO PARTLY ALLOWED THE ASSESSEES APP EAL BY DELETING THE DISALLOWANCE MADE U/S 14A OF THE ACT O N THE GROUND THAT THE ASSESSEE DID NOT HAVE ANY EXEMPT INCOME DU RING THE YEAR UNDER CONSIDERATION. HOWEVER, THE LD. COMMISS IONER OF INCOME TAX(A) UPHELD THE ADDITION OF RS. 1,50,00,00 0/- U/S 68 OF THE ACT. 2.2 AGGRIEVED BY THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX(A), THE DEPARTMENT HAS NOW APPROACHED THE ITAT AND IS CHALLENGING THE DELETION OF ADDITION ON ACCOUNT OF DISALLOWANCE U/S 14A OF THE ACT. ITA NO. 2773/DEL/2015 ASSESSMENT YEAR 2009-10 3 3. NONE WAS PRESENT ON BEHALF OF THE ASSESSEE RESPO NDENT WHEN THE APPEAL WAS CALLED OUT FOR HEARING NOR WAS ANY APPLICATION FOR ADJOURNMENT RECEIVED ON BEHALF OF T HE ASSESSEE RESPONDENT. IT IS ALSO SEEN FROM THE RECORDS THAT THE NOTICE SENT FOR THE HEARING BY THE REGISTRY OF THE ITAT HAS BEE N RECEIVED BACK UNSERVED FROM THE POSTAL DEPARTMENT WITH THE NOTING THAT THE PREMISES HAVE REMAINED CLOSED SINCE LONG. THEREFOR E, LOOKING INTO THE FACTS AND CIRCUMSTANCES, WE PROCEED TO HEA R THE DEPARTMENTAL APPEAL EX PARTE QUA THE ASSESSEE RESPONDENT. 3.1 LD. SR. DR SUBMITTED THAT THE DISALLOWANCE HAD BEEN CORRECTLY COMPUTED BY THE ASSESSING OFFICER IN TERM S OF PROVISIONS OF RULE 8D R/W SECTION 14A OF THE ACT. IT WAS FURTHER SUBMITTED THAT AS PER SECTION 14A(2) OF THE ACT, IF THE ASSESSING OFFICER, HAVING REGARD TO THE ACCOUNTS OF THE ASSES SEE, IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF SUCH EXPENDITURE IN RELATION TO INCOME W HICH DOES NOT FORM PART OF THE TOTAL INCOME, THE ASSESSING OFFICE R IS AUTHORISED TO DETERMINE THE AMOUNT INCURRED IN RELATION TO SUC H INCOME IN ACCORDANCE WITH RULE 8D OF THE INCOME TAX RULES. I T WAS SUBMITTED THAT THE OBJECTIVE OF SECTION 14A IS TO T AX ALL EXPENSES DIRECTLY OR INDIRECTLY ATTRIBUTABLE TO EARNING OF E XEMPT INCOME. ITA NO. 2773/DEL/2015 ASSESSMENT YEAR 2009-10 4 THE LD. SR. DR PLACED EXTENSIVE RELIANCE ON THE JUD GMENT OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF PUNJAB TRACTORS LTD. REPORTED IN (2017) TOIL-3-53-P&H. RE LIANCE WAS ALSO PLACED ON CIRCULAR NO. 5 OF 2004. IT WAS SUBM ITTED THAT THE DELETION MADE BY THE LD. COMMISSIONER OF INCOME TAX (A) BE REVERSED. 3.2 WE HAVE HEARD THE LD. SR. DR AND HAVE ALSO GONE THROUGH THE IMPUGNED ORDER. IT IS SEEN THAT THE LD. COMMIS SIONER OF INCOME TAX(A) HAS GIVEN A CATEGORICAL FINDING THAT THE ASSESSEE DID NOT HAVE ANY EXEMPT/DIVIDEND INCOME DURING THE YEAR UNDER CONSIDERATION AND, THEREFORE, NO DISALLOWANCE U/S 1 4A COULD HAVE BEEN MADE. THE LD. COMMISSIONER OF INCOME TAX(A) H AS PLACED RELIANCE ON THE JUDGEMENT OF THE HONBLE DELHI HIGH COURT WHICH IS THE JURISDICTIONAL HIGH COURT OF THE ASSESSEE IN THE CASE OF CIT VS HOLCIM INDIA PVT. LTD. IN ITA NO. 486/2014 & 299 /2014 DATED 5 TH SEPTEMBER, 2014 WHEREIN IT HAS BEEN HELD THAT IF T HERE IS NO EXEMPT INCOME, THEN NO DISALLOWANCE CAN BE MADE U/S 14A OF THE ACT. WE AGREE WITH THE OBSERVATIONS OF THE LD. COMMISSIONER OF INCOME TAX(A) THAT THE LANGUAGE OF SUB-SECTION 1 4A(1) IS CLEAR THAT RELATION HAS TO BE SEEN BETWEEN THE EXEMPT INC OME AND EXPENDITURE INCURRED IN RELATION TO IT. ALTHOUGH T HE LD. SR. DR ITA NO. 2773/DEL/2015 ASSESSMENT YEAR 2009-10 5 HAS ARGUED VEHEMENTLY AGAINST THE ACTION OF THE LD. COMMISSIONER OF INCOME TAX(A) IN DELETING THE DISAL LOWANCE, SHE COULD NOT NEGATE THE CATEGORICAL FINDING RECORDED B Y THE LD. COMMISSIONER OF INCOME TAX(A) THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD NOT EARNED ANY EXEM PT INCOME. THEREFORE, RESPECTFULLY FOLLOWING THE JUDGMENT OF T HE HONBLE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INC OME TAX(A) VS HOLCIM INDIA PVT. LTD. (SUPRA), AND IN VIEW OF T HE UNDISPUTED FACT THAT THE ASSESSEE DID NOT EARN ANY EXEMPT INCO ME DURING THE YEAR UNDER CONSIDERATION, WE FIND NO REASON TO INTE RFERE WITH THE FINDINGS OF THE LD. COMMISSIONER OF INCOME TAX(A) O N THE ISSUE AND WE DISMISS THE GROUND RAISED BY THE DEPARTMENT. 4. IN THE RESULT, THE APPEAL OF THE DEPARTMENT STAN DS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH SEPTEMBER, 2018. SD/- SD/- (N.K.BILLAIYA) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11 TH SEPTEMBER, 2018 GS ITA NO. 2773/DEL/2015 ASSESSMENT YEAR 2009-10 6 COPY FORWARDED TO: - 1) APPELLANT 2) RESPONDENT 3) CIT(A) 4) CIT 5) DR TRUE COPY BY ORDER ASSTT. REGISTRAR