ITO, New Delhi V. M/s. Incredible Capital Ltd., New Delhi

ITA 3315/DEL/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9686 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 06-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR VIJAY KUMAR CHADHA
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : D : NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.3315/DEL/2016 ASSESSMENT YEAR: 2013-14 ITO, WARD-12(2), NEW DELHI,. VS INCREDIBLE CAPITAL LTD., 8/19, GROUND FLOOR, SMILE CHAMBER, WEA, KAROL BAGH, NEW DELHI. PAN: AABCI4307C (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI LALIT MOHAN, CA REVENUE BY : DR. VIJAY KUMAR CHADHA, SR. DR DATE OF HEARING : 12.09.2019 DATE OF PRONOUNCEMENT : 24.09.2019 ORDER PER R.K. PANDA, AM: THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 25 TH APRIL, 2016 OF THE CIT(A)-4, NEW DELHI RELATING TO ASSESSMENT YEAR 2013-14. 2. DELETION OF ADDITION OF RS.4,26,82,986/- MADE BY THE U/S 14A IS THE ONLY ISSUE RAISED BY THE REVENUE IN THE GROUNDS OF APPEA L. [[[[ ITA NO.3315/DEL/2016 2 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A COMPANY ENGAGED IN THE BUSINESS OF PROVIDING FINANCIAL SERVICES AND OTHER ALLIED ACTIVITIES. IT FILED ITS RETURN OF INCOME ON 18 TH MARCH, 2014, DECLARING TOTAL INCOME OF RS.54,21,43 0/-. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OF FICER NOTED THAT THE ASSESSEE COMPANY HAS PAID INTEREST AMOUNTING TO RS.4,26,82,9 86/- WHICH INCLUDED INTEREST OF RS.58,43,588/- TO RELIGARE ON TERM LOAN AND RS.3 ,68,39,588/- TO OTHERS. HE, THEREFORE, ASKED THE ASSESSEE TO EXPLAIN AS TO WHY DISALLOWANCE U/S 14A SHOULD NOT BE MADE, SINCE THE ASSESSEE IS PAYING HUGE INTEREST OF RS.4.27 CRORES AND HAS INVESTED IN NON-CURRENT INVESTMENT AMOUNTING TO RS. 33.76 CRORES AND RS.49.20 CRORES IN CERTAIN LOANS AND ADVANCES. IT WAS EXPLA INED BY THE ASSESSEE THAT THE PROVISIONS OF SECTION 14A OF THE ACT ARE NOT APPLIC ABLE SINCE IT HAS NOT EARNED ANY EXEMPT INCOME FROM THE RESPECTIVE INVESTMENT. FOR THE ABOVE PROPOSITION, THE ASSESSEE RELIED ON VARIOUS DECISIONS. HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE ARGUMENTS ADVANCED BY THE ASSESS EE AND MADE DISALLOWANCE OF RS.4,26,82,986/- UNDER THE PROVISIONS OF SECTION 14 A OF THE IT ACT. 4. IN APPEAL, THE LD.CIT(A), RELYING ON THE DECISIO NS OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. HOLCIM INDIA (P) LTD., IN THE CASE OF CHEMINVEST LTD. VS. CIT 61 TAXMANN.COM 118 AND VARIOUS OTHER DECISIONS, DELETED THE ADDITION ON THE GROUND THAT THE ASSESSEE HAS NOT RECEIVED ANY E XEMPT INCOME DURING THE YEAR. FURTHER, HE ALSO HELD THAT THE ASSESSING OFFICER HA S NOT ASCERTAINED THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF THE EXPE NDITURE INCURRED OR NOT INCURRED IN ITA NO.3315/DEL/2016 3 RELATION TO THE INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT AND FURTHER, THERE IS NO SATISFACTION RECORDED BY T HE ASSESSING OFFICER IN TERMS OF SECTION 14A(III) OF THE IT ACT. 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE REV ENUE IS IN APPEAL BEFORE THE TRIBUNAL. 6. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES AND PERUSED THE ORDERS OF THE ASSESSING OFFICER AND CIT(A). WE FIND, THE ASSESSING OFFICER, IN THE INSTANT CASE, MADE DISALLOWANCE OF RS.4,26,82,9 86/- U/S 14A OF THE IT ACT ON THE GROUND THAT THE ASSESSEE HAS PAID HUGE INTEREST OF RS.4.27 CRORES AND HAS INVESTED AN AMOUNT OF RS.33.76 CRORES IN NON-CURREN T INVESTMENT AND RS.49.20 CRORES IN CERTAIN LOANS AND ADVANCES. WE FIND THE LD.CIT(A) DELETED THE DISALLOWANCE ON THE GROUND THAT THE ASSESSEE HAS NO T RECEIVED ANY EXEMPT INCOME DURING THE YEAR AND, FURTHER THE ASSESSING OFFICER HAS NOT RECORDED ANY SATISFACTION WHILE MAKING DISALLOWANCE U/S 14A OF THE ACT. WE D O NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) IN DELETING THE DISALLOWANCE MA DE BY THE ASSESSING OFFICER BY RELYING ON THE DECISION OF THE HON'BLE DELHI HIGH C OURT IN THE CASE OF CIT VS. HOLCIM INDIA (P) LTD., AND THE DECISION IN THE CASE OF CHEMINVEST LTD. VS. CIT (SUPRA) WHEREIN IT IS HELD THAT IN ABSENCE OF RECEIPT OF AN Y EXEMPT INCOME NO DISALLOWANCE U/S 14A CAN BE MADE. THE LD. DR ALSO C OULD NOT CONTROVERT THE FINDINGS GIVEN BY THE CIT(A) THAT THE ASSESSING OFF ICER HAS NOT RECORDED HIS SATISFACTION WHILE MAKING DISALLOWANCE U/S 14A. SI NCE THE LD.CIT(A) WHILE ITA NO.3315/DEL/2016 4 DELETING THE DISALLOWANCE HAS FOLLOWED THE DECISION OF THE HON'BLE HIGH COURT WHICH HAS SINCE BEEN UPHELD BY THE HON'BLE SUPREME COURT, THEREFORE, IN ABSENCE OF ANY DISTINGUISHABLE FEATURES BROUGHT TO OUR NOTI CE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) DELETING THE DISALLOWANC E. ACCORDINGLY, THE SAME IS UPHELD AND THE GROUND RAISED BY THE REVENUE IS DISM ISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE REV ENUE IS DISMISSED. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 2 4.09.2019. SD/- SD/- (KULDIP SINGH) (R.K. PANDA) JUDICIAL MEMBER ACC OUNTANT MEMBER DATED: 24 TH SEPTEMBER, 2019 DK COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASSTT. REGISTRAR, ITAT, NEW DELHI