Dy. Commissioner of Income Tax , Circle-16(2), Hyderabad V. Pioneer Power Corporation Limited, Hyderabad

ITA 418/Hyd/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4160 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 27-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M H NAIK
• Assessee Lawyers: P VINOD
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

ITA NO 418 OF 2018 PIONEER POWER CORPORATION LTD H YDERABAD. PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO.418/HYD/2018 (ASSESSMENT YEAR:2014-15) DY. COMMISSIONER OF INCOME TAX, CIRCLE 16(2) HYDERABAD VS M/S. PIONEER POWER CORPORATION LIMITED HYDERABAD AADCP2141F (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI M.H. NAIK, DR FOR ASSESSEE : SHRI P. VINOD O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS REVENUES APPEAL FOR THE A.Y 2014-15 AGAINS T THE ORDER OF THE CIT (A)-4, HYDERABAD, DATED 28.12. 2017. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. CIT(A) ERRED IN DELETING THE DISALLOWANCE U/S 1 4A OF RS.1,86,98,114/-. 2. THE CIT (A) ERRED IN IGNORING CBDTS CIRCULAR NO .5 OF 2014, DATED 11.02.2014. 3, THE CIT (A) ERRED IN IGNORING THE SUPREME COURT DECISION IN THE CASE OF CIT VS. WALFORT SHARE OF STOCK BROKE RS (P) LTD (326 ITR 1), WHEREIN IT WAS HELD THAT THE MANDATE O F SECTION 14A WAS TO CURB THE PRACTICE OF CLAIMING DEDUCTION OF EXPENSES INCURRED IN RELATION TO EXEMPT INCOME AGAI NST TAXABLE INCOME AND AT THE SAME TIME AVAIL OF THE TA X INCENTIVE BY WAY OF EXEMPT INCOME WITHOUT MAKING AN Y APPORTIONMENT OF EXPENSES INCURRED IN RELATION TO E XEMPT INCOME DATE OF HEARING: 10.08. 201 8 DATE OF PRONOUNCEMENT: 17.08.2018 ITA NO 418 OF 2018 PIONEER POWER CORPORATION LTD H YDERABAD. PAGE 2 OF 3 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY, ENGAGED IN THE BUSINESS OF GENERATION AND SALE OF H YDRO BASED POWER AND ENERGY, FILED ITS RETURN OF INCOME FOR TH E A.Y 2014-15 ON 26.11.2014 DECLARING INCOME OF RS.NIL. THE RETUR N OF INCOME WAS INITIALLY PROCESSED U/S 143(1) OF THE I.T. ACT, 1961 AND THEREAFTER, THE CASE WAS SELECTED FOR SCRUTINY UNDE R CASS. CONSEQUENTLY, A NOTICE U/S 143(2) DATED 28.08.2015 WAS ISSUED AND DULY SERVED ON THE ASSESSEE COMPANY. IN RESPONS E TO THE NOTICES ISSUED, AUTHORIZED REPRESENTATIVE OF THE AS SESSEE COMPANY APPEARED AND FILED THE NECESSARY INFORMATION CALLED FOR. THE AO OBSERVED THAT THE ASSESSEE COMPANY HAS INVESTMENTS TO THE TUNE OF RS.221,98,11,300 AS ON 31.3.2014. THE LEARNED CO UNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE COMPANY HAS NO T EARNED ANY EXEMPT INCOME AND HENCE THE DISALLOWANCE OF ANY EXPENDITURE U/S 14A OF THE ACT DOES NOT ARISE. THE AO WAS, HOWEVER, NOT CONVINCED WITH THE ASSESSEES CONTENTI ONS AND MADE A DISALLOWANCE OF RS.1,86,98,114. THE AO MADE A REF ERENCE TO THE DECISION OF THE ITAT DELHI IN THE CASE OF CHEMINVES T LTD, REPORTED IN (2009) 121 ITD 0318, WHEREIN IT WAS HELD THAT EV EN IF THERE IS NO INCOME EARNED BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION, WHICH WOULD BE EXEMPT FROM TAX, A DI SALLOWANCE U/S 14A TO BE MADE. AGGRIEVED, THE ASSESSEE PREFERR ED AN APPEAL BEFORE THE CIT (A) WHO DELETED THE EXPENDITURE OF RS.1,86,98,114/- FOLLOWING THE DECISION OF THE COOR DINATE BENCH OF ITAT IN ITA NO.1302/HYD/2015 FOR THE A.Y 2011-12 . AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 3. WE FIND THAT ALL THE GROUNDS ARE IN SUPPORT OF DISALLOWANCE U/S 14A OF THE ACT. THOUGH THE LEARNED DR ITA NO 418 OF 2018 PIONEER POWER CORPORATION LTD H YDERABAD. PAGE 3 OF 3 SUPPORTED THE ORDER OF THE AO, IT IS SEEN THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HO N'BLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD VS. CIT REPORTE D IN 378 ITR 33 (DEL.) WHEREIN IT HAS BEEN HELD THAT IF THERE IS NO DIVIDEND INCOME (WHICH IS EXEMPT FROM TAX) EARNED DURING THE RELEVANT PERIOD, NO DISALLOWANCE U/S 14A CAN BE MADE. RESPEC TFULLY FOLLOWING THE SAME, WE SEE NO REASON TO INTERFERE W ITH THE ORDER OF THE CIT (A) WHO HAS FOLLOWED THE DECISION OF THE HO N'BLE DELHI HIGH COURT AND ALSO THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN ITA NO.1302/HYD/2015 FOR THE A.Y 2011-1 2.. THEREFORE, GROUNDS OF APPEALS ARE REJECTED. 4. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH AUGUST, 2018. SD/- SD/- (INTURI RAMA RAO) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 17 TH AUGUST, 2018. VINODAN/SPS COPY TO: 1 DY. CIT, CIRCLE 16(2), 2 ND FLOOR, B BLOCK, IT TOWERS, AC GUARDS, MASAB TANK, HYDERABAD 2 M/S. PIONEER POWER CORPORATION LTD, 705, LAKSHMI NIVAS, ROAD NO.3, BANJARA HILLS, HYDERABAD 500034 3 CIT (A) - 4, HYDERABAD 4 PR. CIT 4 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER