Prime Suitings Private Limited, Bhilwara V. ITO, Ward-4, Bhilwara

ITA 440/JODH/2018

AI Insights

The case involves an appeal by M/s Prime Suitings Pvt. Ltd. against the order of the Commissioner of Income Tax (Appeals), Ajmer, which confirmed an addition of Rs. 1,63,315 under section 14A read with Rule 8D of the Income Tax Act, 1961. The addition was initially made by the Income Tax Officer, Ward-4, Bhilwara, in the assessment order dated 30.11.2017. The primary contention of the assessee was that no exempt income was earned during the year, and thus, no expenditure should be disallowed under section 14A. The Tribunal, referencing decisions from the Bombay and Delhi High Courts, agreed with the assessee's position, leading to the allowance of the first ground of the appeal. The second ground, concerning the penalty under section 271(1)(C), was dismissed without detailed discussion as it was considered consequential to the first ground.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 122774 (ITAT-JODHPUR)
• Duration Of Justice: 4 year(s) 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-08-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 16-08-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 06-09-2018
• Other Referred Cases: PCIT vs. Ballarpur Industries Ltd., Cheminvest Ltd. vs. CIT
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income
• Section: 271(1)(c); 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER ITA No.440/JODH/2018 Assessment Year : 2015-16 M/s Prime Suitings Pvt. Ltd., D- 5-6, Bhilwara Textile Market, Pur Road, Bhilwara PAN: AAACP8447P vs Income Tax Officer, Ward-4, Bhilwara Appellant / Assessee Respondent / Revenue Assessee by None Revenue by Ms. Prerana Choudhary-JCIT-DR Date of hearing 17.08.2023 Date of pronouncement 17.08.2023 ORDER PER DR. DIPAK P. RIPOTE, AM: This is an appeal filed by the assessee against the order of ld. Commissioner of Income Tax (Appeals), Ajmer dated 06 th June, 2018 emanating from assessment order under section 143(3) passed by ITO, Ward-4, Bhilwara on 30.11.2017. The assessee has raised the following grounds of appeal:- “1. On the facts and in the circumstances of the case and in law, the Hon'ble CIT (A) erred in confirming the addition of Rs. 1,63,315/- by invoking the provisions of Section 14A read with Rule SD of the Income Tax Act 1961 without appreciating the fact that the assessee company has not earned any exempt income during the year under consideration and has not brought out any evidences on record which substantiates that it has incurred any expenditure for earning any exempt income. 2. Penalty U/s 271(1)(C) of IT Act1961 so proposed by A.O. is unlawful and unjustified as additions made are not based on the basis of the facts and hence should not be imposed. The assessee has consciously not made any ITA No.440 /JODH/2020 Prime Suitings Pvt. Ltd. 2 concealment and furnished inaccurate particulars and has no mensrea” 2. None appeared for the assessee. However, the assessee has filed a written submission and requested to consider the written submission. 3. Ld. DR supported the order of the Lower Authorities. Findings & Analysis 4. In this case, the only issue involved is disallowance under section 14A r.w.r. 8D of the Act. It has been submitted by the assessee in written submission that during the year there was no exempt income earned by the assessee. The said fact is mentioned in the assessment order also. Thus, it is an admitted fact that assessee has not earned any exempt income during the year. The Hon’ble Bombay High Court in the case of PCIT vs. Ballarpur Industries Ltd., in ITA No. 51 of 2016 has held that in absence of exempt income, disallowance under section 14A cannot be made. The Hon’ble Delhi High Court in the case of Cheminvest Ltd. vs. CIT 378 ITR 33 (Del) has also held that section 14A will not apply when exempt income was not earned during the year. 5. In the case under consideration, it is an admitted fact that no exempt income was earned by the assessee during the year. Therefore, respectfully following the Hon’ble High Courts (supra), it is held that disallowance under section 14A is unwarranted. ITA No.440 /JODH/2020 Prime Suitings Pvt. Ltd. 3 Accordingly, Ground No. 1 is allowed. 6. Ground no. 2 is consequential in nature and needs no adjudication. Accordingly, Ground No. 2 is dismissed. 7. In the result, the appeal of the assessee is partly allowed. Order pronounced on 17 th August, 2023. Sd/- Sd/- (PAVAN KUMAR GADALE) (DR. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 17/08/2023 Sh. Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) Asstt. Registrar 5. The DR 6. Guard File Jodhpur Bench