M/s. Green Meadows Pvt. Ltd., Delhi V. ITO, New Delhi

ITA 4395/DEL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7494 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 21-07-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 18-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRIT LAL
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C: NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER, AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER ITA NO. 4395/DEL /2013 ASSESSMENT YEAR: 2009-10 M/S GREEN MEADOWS P LTD VS. THE I.T.O A-5, SWASTHIYA VIHAR WARD -12(2) NEW DELHI NEW DELHI PAN : AAACG 0641 C [APPELLANT] [RESPONDENT] DATE OF HEARING : 21.07.2016 DATE OF PRONOUNCEMENT : 03.08.2016 APPELLANT BY : SHRI P.C. YADAV RESPONDENT BY : SHRI AMRIT LAL, SR. DR ORDER PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE CIT(A)-XV, NEW DELHI, DATED 28/05/2013 FOR A.Y 2009-10 PASSED IN FIRST APPEAL NO. 181/2011-12/CIT( A)-XV. 2. THE MAIN GRIEVANCE OF THE ASSESSEE IS THAT THE A .O CANNOT MAKE ANY DISALLOWANCE U/S 14A OF THE INCOME-TAX ACT, 196 1 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT] R.W.R 8D OF THE INCOME-TAX RULES, 1962 [HEREINAFTER REFERRED TO AS 'THE RULES' FOR SH ORT] WHEN NO EXEMPT INCOME HAS BEEN RECEIVED BY THE ASSESSEE DURING THE RELEVANT 2 ITA NO. 4395/ DEL/2013 2 FINANCIAL PERIOD. TO SUPPORT THIS CONTENTION, THE LD. AR PLACED RELIANCE ON THE DECISION OF THE JURISDICTIONAL HIGH COURT OF DELHI DATED 20.9.2015 IN THE CASE OF CHEMINVEST LTD VS. C IT IN ITA NO. 749/2015 AND VEHEMENTLY SUBMITTED THAT THE A.O AS W ELL AS THE LD. CIT(A) NOTED THIS FACT THAT DURING THE RELEVANT PER IOD THE ASSESSEE DID NOT EARN AND CLAIM ANY EXEMPT INCOME THUS NO DISALL OWANCE CAN BE MADE U/S 14A OF THE ACT R.W.R 8D OF THE RULES. 3. PER CONTRA, THE LD. COUNSEL OF THE REVENUE STRO NGLY SUPPORTED THE ACTION OF THE A.O AND IMPUGNED ORDER. HOWEVER, HE COULD NOT CONTROVERT THIS FACTUAL POSITION THAT THE ASSESSEE HAS NOT CLAIMED ANY EXEMPT INCOME AND AS PER THE DECISION OF THE HON'BL E HIGH COURT OF DELHI [SUPRA] NO DISALLOWANCE CAN BE MADE. 4. ON CAREFUL CONSIDERATION OF THE ABOVE AND ON CAR EFUL PERUSAL OF THE HIGH COURT ORDER [SUPRA] AND FROM TH E OPERATIVE PARA 23 OF THE ORDER [SUPRA], WE FIND THAT THEIR LO RDSHIPS HAVE HELD AS UNDER: 23. IN THE CONTEXT OF THE FACTS ENUMERATED HEREINB EFORE THE COURT ANSWERS THE QUESTION FRAMED BY HOLDING THAT THE EXP RESSION DOES NOT FORM PART OF THE TOTAL INCOME IN SECTION 14A OF THE ENVISAGES THAT THERE SHOULD BE AN ACTUAL RECEIPT OF INCOME, WHICH IS NOT INCLUDIBLE IN THE TOTAL INCOME, DURING THE RELEVANT PREVIOUS YEAR FOR THE PURPOSE OF DISALLOWING ANY EXPENDITURE INCURRED IN RELATION TO THE SAID 3 ITA NO. 4395/ DEL/2013 3 INCOME. IN OTHER WORDS, SECTION 14A WILL NOT APPLY IF NO EXEMPT INCOME IS RECEIVED OR RECEIVABLE DURING THE RELEVAN T PREVIOUS YEAR. 5. IN VIEW OF THE ABOVE, WE NOTE THAT WHEN THE ASSE SSEE HAS NOT EARNED EXEMPT INCOME, AS ALSO NOTED BY THE AO A T PAGE 2 PARA 5 [ITALIC PORTION], THEN NO DISALLOWANCE U/S 1 4A OF THE ACT, R.W.R. 8D OF THE RULES CANNOT BE MADE AS PER PROPOS ITION LAID DOWN BY THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF CHEMINVEST LTD [SUPRA]. CONSEQUENTLY, ORDER OF THE AO AS WELL AS THAT OF THE CIT(A) ARE SET ASIDE AND THE AO IS DIRE CTED TO DELETE THE ENTIRE IMPUGNED ADDITION. ACCORDINGLY, THE SOL E GROUND OF THE ASSESSEE IS ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 03.08. 2016. SD/- SD/- (S.V. MEHROTRA) (C.M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 03 RD AUGUST, 2016 VL/ 4 ITA NO. 4395/ DEL/2013 4 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI