M/s NM Merchantiles Ltd., Ludhiana V. ACIT, C-7, Ludhianan

ITA 314/CHANDI/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4538 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-03-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 12-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B, CHANDIGARH , ! '# $ % & '# , () BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NO. 314/CHD/2018 / ASSESSMENT YEAR : 2014-15 M/S N.M. MERCHANTILES LIMITED, 85,INDUSTRIAL AREA-A, LUDHIANA THE ACIT, CIRCLE-7, LUDHIANA ./PAN NO. AACCN6753A / APPELLANT /RESPONDENT ! /ASSESSEE BY : SHRI ASHWANI KUMAR, CA ' ! / REVENUE BY : SH. MANJIT SINGH, SR. DR # $ % /DATE OF HEARING : 05.03.2019 &'() % / DATE OF PRONOUNCEMENT : 30. 05.2019 (*/ ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 25.01.2018 OF THE. COMMISSIONER OF INC OME TAX (APPEALS)- 3, LUDHIANA [HEREINAFTER REFERRED TO AS CIT(A)] AG ITATING THE ACTION OF THE LOWER AUTHORITIES IN MAKING / CONFIRMING O F DISALLOWANCE OF 67,955/- U/S 14A OF THE INCOME TAX ACT READ WITH RU LE 8D OF THE INCOME TAX RULES ON ACCOUNT OF THE EXPENDITURE INC URRED FOR EARING OF TAX EXEMPT INCOME. ITA NO. 314-C-2018- M/S N.M. MERCHANTILES LIMITED, LUDHIANA 2 2. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT T HE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD MADE CERTAIN INVESTME NTS IN SHARES OF GROUP CONCERNS, HOWEVER, THE ASSESSEE CLAIMED TOTAL LOSS OF 67,955/-. THE LD. ASSESSING OFFICER HELD THAT SINCE THE ASSES SEE HAD MADE INVESTMENTS / INCOME FROM WHICH WAS EXEMPT FROM TAX ATION. HE, THEREFORE, INVOKING THE PROVISIONS OF SECTION 14A READ WITH RULE 8D OF THE INCOME TAX RULES MADE A DISALLOWANCE OF EXPEND ITURE OF 67,955/- I.E. EQUAL TO THE LOSS CLAIMED BY THE ASSE SSEE IN THE RETURN OF INCOME. 3. THE LD. CIT(A) CONFIRMED THE DISALLOWANCE SO MAD E BY THE ASSESSING OFFICER. 4. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS NOT EARNED TAX EXEMPT INCOME DURIN G THE YEAR. HE HAS RELIED UPON THE VARIOUS DECISIONS OF THE HON'BLE HI GH COURTS INCLUDING THAT OF THE JURISDICTIONAL HIGH COURT OF PUNJAB AN D HARYANA IN THE CASE OF CIT VS. WINSOME TEXTILES (2009) 319 ITR 204 (P &H) AND HON'BLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD VS. ITO (2015) 378 ITR 33 (DELHI) AND OF THE HON'BLE GUJARAT HIGH CO URT IN THE CASE OF CORRTECH ENERGY P. LTD. (2014) 45 TAXMAN.COM 116 AND FURTHER OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS . M/S SHIVAM MOTORS (P) LTD (2014) 272 CTR (ALL) 277 AND VARIOU S OTHER CASE LAWS. IN ALL THE ABOVE REFERRED TO CASE LAWS, THE HON'BLE HIGH COURTS HAVE ITA NO. 314-C-2018- M/S N.M. MERCHANTILES LIMITED, LUDHIANA 3 BEEN UNANIMOUS TO HOLD THAT NO DISALLOWANCE IS ATTR ACTED U/S 14A IN CASE THE ASSESSEE HAS NOT EARNED ANY INCOME NOT FOR MING PART OF THE TOTAL INCOME. SINCE THE ASSESSEE DID NOT EARN ANY TAX EX EMPT INCOME, HENCE, NO DISALLOWANCE U/S 14A IS ATTRACTED. 5. SO FAR AS THE CONTENTION OF THE LD. DR THAT THE ASSESSEE HIMSELF HAD AGREED DURING THE ASSESSMENT PROCEEDINGS WHEN C ALLED FOR BY THE ASSESSING OFFICER FOR MAKING THE AFORESAID DISALLOW ANCE U/S 14A OF THE ACT IS CONCERNED, WE ARE NOT CONVINCED WITH THE ABO VE SUBMISSIONS OF THE LD. DR. IF THE ASSESSEE UNDER THE MISTAKEN BEL IEF HAD AGREED TO THE AFORESAID DISALLOWANCE, THAT ITSELF, DOES NOT DEB AR THE ASSESSEE TO AGITATE THE SAID DISALLOWANCE IN AN APPEAL IF THE A SSESSEE OTHERWISE LEGALLY IS NOT LIABLE TO PAY ANY TAX ON SUCH DISALL OWANCE / ADDITION MADE BY THE ASSESSING OFFICER. IN VIEW OF THIS, THE ASSESSING OFFICER IS ORDERED T O DELETE THE DISALLOWANCE SO MADE U/S 14A OF THE INCOME TAX ACT. THE APPEAL OF THE ASSESSEE IS HEREBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.5.2019 SD/- SD/- ( $ % & '# / ANNAPURNA GUPTA) () / ACCOUNTANT MEMBER ( / SANJAY GARG) / JUDICIAL MEMBER DATED : 30. 05.2019 .. ITA NO. 314-C-2018- M/S N.M. MERCHANTILES LIMITED, LUDHIANA 4 '+ ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , % 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7$ / GUARD FILE '+ # / BY ORDER, 8 ' / ASSISTANT REGISTRAR