ACIT, Circle-13(2), New Delhi V. Jyestha Infrastructure Pvt. Ltd., New Delhi

ITA 3496/DEL/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 9276 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2015-2016
• Appeal Filed On: 22-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUPAMA SINGHLA
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A; 250

Judgement Text

Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “H”: NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI ANUBHAV SHARMA, JUDICIAL MEMBER ITA No. 3496/Del/2019 (Assessment Year: 2015-16) ACIT, Circle-13(2), New Delhi Vs. Jyestha Infrastructure Pvt. Ltd, 296, Forest Lane, Neb Sarai, Sainik Farms, New Delhi PAN: AABCJ7290F (Appellant) (Respondent) Revenue by : Ms. Anupama Singhla, Sr. DR Assessee by: None Date of Hearing 06/06/2022 Date of pronouncement 08/06/2022 O R D E R PER ANUBHAV SHARMA, J. M.: 1. The appeal has been preferred by the revenue against the order dated 30.01.2019 of Ld Commissioner of Income Tax (Appeals)-5, New Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. „FAA‟) in appeal No. 5/0103/2017-18 arising out of an appeal before it against the order dated 15.12.2017 u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as „the Act‟) passed by the ld. Assessing Officer, ACIT, Circle-13(2), New Delhi (hereinafter referred as the Ld. AO). 2. Facts in brief are the appellant submitted its return of income on 24.09.2015, declaring loss of Rs. 3,07,39,510/-. During the Page | 2 scrutiny proceedings, it was observed by the AO that Assessee has earned various exempt income mainly consisting of dividend income amounting to Rs. 4 crores and STCG amounting to Rs. 2,56,31,166/. However, no disallowance has been made by the Assessee u/s 14A of the Act. The Assessee was given show cause notice for disallowance of Rs. 13,60,88,805/- as worked out after applying the calculation as per Rule 8D of the IT Rules. The submission of the Assessee in this regard was not considered favorably by the AO and the said amount has been added in total income. A subsequent rectification was made by AO vide order dated 17.01.2018, and the disallowance has been restricted to Rs. 10,95,02,855/- to the extent of the total expenditure incurred. Therefore, the revised income has been determined at Rs. 7,87,61,827/-. However, during the appeal before Ld CIT(A), relying on the judgment of the Hon‟ble High Court in Joint Investment Pvt. Ltd Vs. CIT, in ITA No. 117/2015 and Delhi Bench of ITAT in ITA No. 919/Del/2014 Ganga Kaveri Credit and Holding Pvt. Ltd case it was held that disallowances cannot exceed the exempt income. 3. The revenue has raised the following grounds of appeal:- 1. Whether on the facts and in the circumstances of the case & in law, the Ld. CIT(A) erred in holding that the disallowance u/s 14A has to be limited to the quantum of income not forming part of the total income of the assessee even when clear, explicit and unambiguous provision of Section 14A read with Rule 8D do not stipulate such restriction. 2. Whether in the facts and circumstances of the case & in law, the Ld. CIT(A) is legally justified in holding a principal that quantum of expenditure attributable for the purpose of section 14A cannot exceed the exempt income earned by the assessee.” 4. Heard and perused the record. 5. During the course of hearing the ld DR could not cite any other proposition of law then one followed by the ld CIT(A). The Ld. AO Page | 3 made the addition placing reliance on the Circular No. 5/2014 of the CBDT dated 11.02.2014. and the Ld.CIT(A) deleted the addition. Hon‟ble High Court of Delhi in the case of Pr. Commissioner of Income Tax Vs. IL &FS Energy Development Company Ltd. reported in 250 Taxman 0174 considered the Board Circular and held that the Circular cannot override the express provisions of section 14A r.w.Rule 8D of I.T.Rules. After considering various decisions, Hon‟ble High Court of Delhi held that no disallowance u/s 14A of the Act was called for in case of no exempt income earned by the assessee, in the relevant assessment years. 6. The grounds raised have no substance. Consequently, the appeal of the revenue is dismissed. Order pronounced in the open court on 08/06/2022. - Sd/- -Sd/- (SHAMIM YAHYA) (ANUBHAV SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated:08/06/2022 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi