Deputy Commissioner of Income Tax Circle-1(1)(1), Bangalore V. M/s Avesthagen Limited , Bangalore

ITA 291/BANG/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6819 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 18-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: GURURAJAN
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI B.R BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.291/BANG/2019 ASSESSMENT YEAR : 2013-14 THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-1(1)(1), BENGALURU. VS. M/S AVESTHAGEN LTD.. NO.7/6, BRUNTON ROAD BEHIND HOTEL AJANTHA BENGALURU. PAN AABCA 7217 K APPELLANT RESPONDENT APPELLANT BY : SHRI R.N SIDDAPPAJI, ADDL. CIT RESPONDENT BY : SHRI GURURAJAN, DATE OF HEARING : 24.07.2019 DATE OF PRONOUNCEMENT : 26.07.2019 O R D E R PER B.R BASKARAN, ACCOUNTANT MEMBER THE REVENUE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 26/11/2018 PASSED BY LD CIT(A)-1, BENGALURU FOR ASS T. YEAR 2013- 14. 2. THE REVENUE IS AGGRIEVED BY THE DECISION OF LD C IT(A) IN DELETING THE DISALLOWANCE MADE BY THE AO U/S 14A OF THE ACT. 3. WE HEARD THE PARTIES AND PERUSED THE RECORD. T HE ASSESSEE IS ENGAGED IN THE BUSINESS OF RESEARCH AND DEVELOPM ENT IN BIO- ITA NO.291/BANG/2019 PAGE 2 OF 4 TECHNOLOGY AND BIO INFORMATICS. DURING THE COURSE O F ASST. PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAS M ADE INVESTMENTS IN SHARES OF CERTAIN COMPANIES. EVEN TH OUGH THE ASSESSEE DID NOT EARN ANY EXEMPT INCOME, YET THE AO TOOK THE VIEW THAT THE DISALLOWANCE U/S 14A OF THE ACT IS REQUIRE D TO BE MADE. ACCORDINGLY, BY APPLYING THE PROVISIONS OF RULE 8D, THE AO DISALLOWED A SUM OF RS.297.65 LAKHS. THE LD CIT(A) DELETED THE SAME AND HENCE THE REVENUE HAS FILED THIS APPEAL BE FORE US. 4. THE LD DR SUBMITTED THAT THE ASSESSEE HAS MADE I NVESTMENT IN SHARES, THE INCOME FROM WHICH IS EXEMPT FROM TAX ATION. HENCE DISALLOWANCE U/S 14A WAS RIGHTLY MADE BY THE AO. 5. WE HEARD THE PERSON APPEARING ON BEHALF OF THE A SSESSEE. WE NOTICED THAT THE LD CIT(A) HAS VERIFIED THE RECORDS AND FOUND THAT THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME. ACC ORDINGLY, BY FOLLOWING THE DECISION RENDERED BY THE COORDINATE B ENCH OF ITAT IN THE CASE OF QUALITY ENGINEERING AND SOFTWARE TECHNO LOGIES (2014) 52 TAXMAN 55, THE LD CIT(A) HAS HELD THAT NO DISALL OWANCE U/S 14A IS REQUIRED TO BE MADE IN THE ABSENCE OF ANY EXEMPT INCOME. ACCORDINGLY HE HAS DELETED THE ADDITION MADE BY THE AO U/S 14A OF THE ACT. 6. WE NOTICED THAT THE VIEW TAKEN BY THE LD CIT(A) ALSO GETS SUPPORT FROM THE DECISION RENDERED BY HONBLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST INVESTMENT LTD. VS. CIT, 378 ITR 33. SINCE THE ASSESSEE DID NOT EARN EXEMPT INCOME, NO DISALLO WANCE U/S 14A IS CALLED FOR AS PER THE DECISION RENDERED BY HONB LE DELHI HIGH ITA NO.291/BANG/2019 PAGE 3 OF 4 COURT IN THE ABOVE CITED CASE. ACCORDINGLY WE DO NO T FIND ANY REASON TO INTERFERE WITH THE ORDER PASSED BY LD CIT (A). 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH JULY, 2019. SD/ - (BEENA PILLAI) JUDICIAL MEMBER SD/ - (B.R BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED, 26 TH JULY, 2019. /VMS / COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3 . THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER A SST. REGISTRAR, ITAT, BANGALORE. ITA NO.291/BANG/2019 PAGE 4 OF 4 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR.P.S .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE.. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER . 13. DATE OF DESPATCH OF ORDER. ..