DCIT, New Delhi V. M/s Futurz Next Services Ltd., New Delhi

ITA 3557/DEL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3511 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 15-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B RAMANJANEYULU
• Keywords: Search and seizure; Earning of tax free income
• Section: 143(3); 14A; 132

Judgement Text

1 ITA NO. 3557/DEL /2016 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI N. K. SAINI, ACCOUNTANT MEM BER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER ITA NO. 3557/DEL/201 6 ( A.Y 2012-13) DCIT CENTRAL CIRCLE-29 NEW DELHI (APPELLANT) VS FUTURZ NEXT SERVICES LTD. FA-45, SHIVAJI ENCLAVE, NEW DELHI AABCJ7692K (RESPONDENT) APPELLANT BY SH. RANO JAIN, ADV RESPONDENT BY SH. B. RAMANJANEYULU, SR. DR ORDER PER SUCHITRA KAMBLE, JM THE APPEAL IS FILED BY THE REVENUE AGAINST THE ORDE R DATED 17/3/2016 PASSED BY CIT(A)-30, NEW DELHI. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- (A) ON THE FACT AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWA NCE U/S 14A READ WITH RULE 8D OF THE INCOME TAX RULES IGNORING THE FACT T HAT THE PROVISIONS OF SECTION 14A ARE MANDATORY. (B) ON THE FACT AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IS NOT APPRECIATING THE C ONTENT OF CBDT CIRCULAR NO. 05/2014 DATED 11/2/2014 WHICH CLARIFIES THAT RU LE 8D READ WITH DATE OF HEARING 26.10.2017 DATE OF PRONOUNCEMENT 07.11.2017 2 ITA NO. 3557/DEL /2016 SECTION 14A OF HE ACT PROVIDES FOR DISALLOWANCE OF HE EXPENDITURE EVEN WHERE TAX PAYER IN PARTICULAR YEAR, HAS NOT EARNED ANY EXEMPT INCOME (C) THAT THE ORDER OF THE CIT(A) IS ERRONEOUS AN D IS NOT TENABLE ON FACTS AND IN LAW. (D) THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUD ICE TO EACH OTHER. 3. DURING THE YEAR UNDER CONSIDERATION, SEARCH AND SEIZURE ACTION U/S 132 TOOK PLACE ON 30/3/2012. THE RETURN OF INCOME WAS FILED ON 30/9/2012 DECLARING LOSS OF RS.1,82,291/-. CONSEQUENTLY, THE CASE OF APPELLANT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION I.E. ASSESSMENT YEAR 2012-13 WAS SELECTED OR SCRUTINY AND NOTICES U/S 143(2) AND 142 (1) DATED 5/8/2013, 9/9/2013 AND 10/9/2013 WERE ISSUED. IN RESPONSE TO THESE NOTICES, THE AR OF THE APPELLANT APPEARED BEFORE THE A.O TIME TO TIME AND FILED THE RELEVANT DETAILS. ASSESSMENT U/S 143(3) WAS COMPLETED VIDE ORDER DATED 30/3/2015 AT TOTAL INCOME OF RS.2,69,37,430/- AFTER MAKING FOLLO WING ADDITION:- (A) ON ACCOUNT OF DISALLOWANCE U/S 14A 4. BEING AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY RELYIN G ON THE JURISDICTIONAL HIGH COURT DECISION IN CASE OF CIT VS. HOLCIM INDIA PVT. LTD. 5. THE LD. DR RELIED UPON THE ORDER OF THE ASSESSIN G OFFICER AND SUBMITTED THAT THE ADDITION WAS RIGHTLY MADE. 6. THE LD. AR SUBMITTED THAT THERE WAS NO EXEMPT IN COME EARNED BY THE ASSESSEE DURING THE YEAR. THEREFORE, RULE 8D WILL NOT BE APPLICABLE IN THE PRESENT CASE. THE LD. AR RELIED UPON THE ORDER OF THE HONBLE DELHI HIGH COURT IN CASE OF CHEMINVEST INVESTMENT LTD. REPORTED AT 371 ITR 23. 3 ITA NO. 3557/DEL /2016 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. IT IS CLEAR FROM THE RECORDS THAT THAT THE RE WAS NO EXEMPT INCOME ATTRIBUTABLE IN THE HANDS OF THE ASSESSEE. THEREFO RE, APPLYING SECTION 14A READ WITH RULE 8D IS NOT APPROPRIATE ON PART OF ASSESSIN G OFFICER. THE CIT(A) RIGHTLY HELD THAT NO EXPENDITURE CAN BE DISALLOWED AGAINST NIL EXEMPT INCOME AND THIS VIEW IS ALSO SUPPORTED BY THE DECISION OF THE JURIS DICTIONAL HIGH COURT OF DELHI IN CASE OF CIT VS. HOLCIM INDIA PVT. LTD. (SUPRA) A ND CHEMNVEST INVESTMENT LTD. REPORTED AT 371 ITR 23. 8. IN RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 07TH NOVEMBE R, 2017 . SD/- SD/- (N. K. SAINI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 07/11/2017 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 4 ITA NO. 3557/DEL /2016 DATE 1. DRAFT DICTATED ON 26/10/2017 PS 2. DRAFT PLACED BEFORE AUTHOR 26/10/2017 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2017 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 07.11.2017 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 0 7 .1 1 .2017 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.