Hero Solar Energy (P) Ltd., New Delhi V. DCIT, Circle- 11(1), New Delhi

ITA 359/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7572 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 11-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIMA BARNWAL SENIOR
• Keywords: Opportunity of being heard; Earning of tax free income; Wholly owned subsidiary; Set aside
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C : NEW DELHI) BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCE) ITA NO.359/DEL./2018 (ASSESSMENT YEAR : 2014-15) M/S. HERO SOLAR ENERGY (P) LTD., VS. DCIT, CIRCLE 11 (1), C/O M/S. RRA TAXINDIA, NEW DELHI. D 28, SOUTH EXTENSION PART I, NEW DELHI 110 049. (PAN : AABCH0102L) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SOMIL AGGARWAL, CA SHRI DEEPAK GARG, ADVOCATE REVENUE BY : MS. ANIMA BARNWAL, SENIOR DR DATE OF HEARING : 18.08.2021 DATE OF ORDER : 27.08.2021 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, M/S. HERO SOLAR ENERGY (P) LTD. (HEREINAFTER REFERRED TO AS THE ASSESSEE) BY FILING THE PRESEN T APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 05.10.2017 PASSE D BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-35, NEW DELHI QUA THE ASSESSMENT YEAR 2014-15 ON THE GROUNDS INTER ALIA T HAT :- 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANC ES OF THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ITA NO.359/DEL./2018 2 ACTION OF LD. AO IN MAKING DISALLOWANCE OF RS.2,03, 30,249/- BEING THE LOSS CLAIMED UNDER THE HEAD BUSINESS. 2. LD. CIT (A) OUGHT TO HAVE DELETED THE DISALLOWAN CE SO MADE AND IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. CIT (A) IN NOT DELETING THE SAID LOSS, IS BAD IN LA W AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE.. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : IT IS THE FIRST YEAR OF I NCORPORATION OF ASSESSEE COMPANY, WHICH HAS RETURNED A LOSS UNDER T HE HEAD BUSINESS & PROFESSION TO THE TUNE OF RS.2,03,30,2 49/-. DURING THE YEAR UNDER ASSESSMENT, ASSESSEE COMPANY MADE AN INVESTMENT OF RS.9.15 CRORES IN THE WHOLLY OWNED SUBSIDIARY, N AMELY, HERO FUTURE ENERGIES PVT. LTD. ASSESSING OFFICER (AO) D ISALLOWED THE LOSS OF RS.2,03,30,249/- CLAIMED BY THE ASSESSEE CO MPANY UNDER THE HEAD BUSINESS & PROFESSION ON THE GROUND THAT SINCE THERE IS NO ACTIVITY DURING THE YEAR UNDER ASSESSMENT BUT FO R SETTING UP OF THE COMPANY AND THAT TOO BY MAKING INVESTMENTS ONLY . AO FRAMED THE ASSESSMENT AT TOTAL INCOME OF RS.4,69,058/- UND ER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT). 3. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) BY WAY OF FILING APPEAL WHO HAS ALLOWED THE APPEAL BUT WITHOU T DECIDING THE ISSUE AS TO ALLOWING THE LOSS CLAIMED BY THE ASSESS EE UNDER THE HEAD BUSINESS. FEELING AGGRIEVED, THE ASSESSEE HAS CO ME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. ITA NO.359/DEL./2018 3 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. ASSESSEE COMPANY HAS SPECIFICALLY RAISED THE GRO UND THAT, LD. CIT (A) HAS ERRED IN LAW AND FACTS IN CONFIRMI NG THE ACTION OF AO IN MAKING DISALLOWANCE OF RS.2,03,30,249/- BEING THE LOSS CLAIMED UNDER THE HEAD BUSINESS? 6. WE HAVE PERUSED THE ORDER PASSED BY THE LD. CIT (A) WHO HAS ALLOWED THE APPEAL BY RETURNING FOLLOWING FINDI NGS :- 4.3.3. IN VIEW OF SUBMISSIONS OF APPELLANT AND JUD ICIAL PRONOUNCEMENT IT IS OBSERVED THAT THE DECISION BY T HE HON'BLE ITAT DELHI HAS BEEN REVERSED BY THE HON'BLE DELHI H IGH COURT IN THE SAME CASE I.E. CHEMNIVEST LTD. VS. CIT-IV 61 TAXMANN.COM 118 (DELHI) VIDE ORDER DATED 02.09.2015 HOLDING THAT 'THE THE EXPRESSION DOES NOT FORM PART OF THE TOTAL INCOME. IN SECTION 14A ENVISAGES THAT THERE SHOULD BE AN AC TUAL RECEIPT OF INCOME, WHICH IS NOT INCLUDIBLE IN THE TOTAL INCOME , DURING THE RELEVANT PREVIOUS YEAR FOR THE PURPOSE OF DISALLOWI NG ANY EXPENDITURE INCURRED IN RELATION TO THE SAID INCOME . IN OTHER WORDS, SECTION 14A WILL NOT APPLY IF NO EXEMPT INCO ME IS RECEIVED OR RECEIVABLE DURING THE RELEVANT PREVIOUS YEAR. [P ARA 23].' IN THE SAID JUDGMENT THE HON'BLE DELHI HIGH COURT FOLL OWED THE CASE OF CIT VS. HOLSIM INDIA P. LTD. 57 TAXMANN.COM 28 (2015) DELHI AND DISTINGUISHED THE DECISION OF MAXOPP INVE STMENT LTD. 347 ITR 272. APPELLANT HAS ALSO RELIED UPON VARIOUS JUDGMENTS IN HIS FAVOUR ON THE SAME LINES. SINCE, THERE IS NO EXEMPT INCOME DURING THE YEAR, THE RATIO LAID DOWN BY HON'BLE DEL HI HIGH COURT IS SQUARELY APPLICABLE IN THE CASE OF APPELLANT AND ACCORDINGLY, NO ADDITIONS ARE CALLED FOR. HENCE, GROUND NO.3 IS ALLOWED. 7. BARE PERUSAL OF THE FINDINGS RETURNED BY THE LD. CIT (A) IN THE IMPUGNED ORDER GOES TO PROVE THAT HE HAS NOT MI NCED A WORD TO RETURN THE FINDINGS AS TO DISALLOWANCE OF THE LOSS OF ITA NO.359/DEL./2018 4 RS.2,03,30,249/- CLAIMED UNDER THE HEAD BUSINESS & PROFESSION. SO, WE ARE OF THE CONSIDERED VIEW THAT WHEN LD. CIT (A) BEING A FIRST APPELLATE AUTHORITY/FACT FINDING AUTHORITY HA S NOT TOUCHED THE ISSUE, THE CASE IS REQUIRED TO BE REMANDED BACK TO LD. CIT (A) TO DECIDE AFRESH QUA THE ISSUE AS TO WHETHER AO HAS ER RED IN MAKING DISALLOWANCE OF RS.2,03,30,249/- BEING THE LOSS CLA IMED BY THE ASSESSEE COMPANY UNDER THE HEAD BUSINESS & PROFESS ION BY PROVIDING AN OPPORTUNITY OF BEING HEARD. WE ORDER ACCORDINGLY. 8. RESULTANTLY, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 27 TH DAY OF AUGUST, 2021. SD/- SD/- (ANIL CHATURVEDI) (KULDIP SINGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 27 TH DAY OF AUGUST, 2021. TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-35, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.