M/s. Lakhani Rubber Udyog (Pvt) Ltd., New Delhi V. ACIT, Faridabad

ITA 4124/DEL/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9723 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 26-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR CHADHA
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI D BEN CH, NEW DELHI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI KULDIP SINGH, JUDICIAL MEM BER ITA NO. 4124/DEL/2016 [A.Y 2012-13] M/S LAKHANI RUBBER UDYOG [PVT] LTD VS. THE A.C.I. T W 9, G.K. - II CIRCLE - II NEW DELHI FARIDABAD PAN: AAACL 3111 E (APPLICANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY : SHRI VIJAY KUMAR CHADHA SR. DR DATE OF HEARING : 16.09.2019 DATE OF PRONOUNCEMENT : 18.09.2019 ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX [APPEALS], FARIDABAD DAT ED 24.05.2016 PERTAINING TO ASSESSMENT YEAR 2012-13. 2 2. THE SHORT GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF ADMINISTRATIVE EXPEN SES OF RS. 11,47,420/- IN TERMS OF RULE 8D(2)(III) OF THE INCO ME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT']. 3. NONE APPEARED ON BEHALF OF THE ASSESSEE. WE, TH EREFORE, DECIDED TO PROCEED EXPARTE QUA THE ASSESSEE AFTER H EARING THE LD. DR. 4. FACTS EMANATING FROM THE ASSESSMENT ORDER SHOW T HAT DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSE SSING OFFICER NOTICED THAT INVOICES IN EQUITY SHARES OF SEVERAL C OMPANIES. THE ASSESSEE WAS ASKED TO EXPLAIN WHY DISALLOWANCE U/S 14A R.W.R 8D BE NOT MADE SINCE IT HAS NOT DISALLOWED ANY EXPENDITUR E FOR EARNING EXEMPT INCOME. 5. THE ASSESSEE IN ITS REPLIED EXPLAINED THAT DURIN G THE YEAR, THE ASSESSEE HAS NOT RECEIVED ANY DIVIDEND INCOME FROM THESE COMPANIES WHICH ARE EXEMPT. THEREFORE, THERE IS NO QUESTION OF ANY DISALLOWANCE U/S 14A OF THE ACT. 3 6. REPLY OF THE ASSESSEE DID NOT FIND ANY FAVOUR WI TH THE ASSESSEE WHO PROCEEDED BY COMPUTING THE DISALLOWANCE BY INVO KING THE PROVISIONS OF SECTION 14A R.W.R. 8D OF THE ACT AND MADE DISALLOWANCE OF RS. 2,59,63,959/-. 7. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) BUT COULD GET PART RELIEF ONLY. 8. AS MENTIONED ELSEWHERE, SINCE DURING THE SUBJECT ASSESSMENT YEAR THERE IS NO EXEMPT INCOME EARNED BY THE ASSESS EE DURING THE YEAR, THERE CANNOT BE ANY DISALLOWANCE U/S 14A R.W. R 8D. THIS ISSUE IS BY NOW WELL SETTLED IN FAVOUR OF THE ASSESSEE AND A GAINST THE REVENUE BY THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNA L IN THE CASE OF M/S CHEMINVEST LTD 121 ITD 318 WHICH WAS AFFIRMED BY TH E HON'BLE HIGH COURT OF DELHI. SAME VIEW IS TAKEN BY THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CORRTECH ENERGY (P) LTD 372 ITR 97. IN VIEW OF THE ABOVE, THE IMPUGNED DISALLOWANCE IS DIRECTED TO BE DELETED. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IS A LLOWED. 4 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO. 4124/DEL/2016 IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 18.09. 2019. SD /- SD/- [ KULDIP SINGH] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 18 TH SEPTEMBER, 2019 VL/ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI 5 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P S/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER