ACIT, New Delhi V. M/s. Samtel Machines and Projects Ltd., New Delhi

ITA 4467/DEL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3504 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2008-2009
• Appeal Filed On: 19-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES G, DELHI .. , , , ! BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI JOGINDER SINGH, JUDICIAL MEMBER, ITA NOS.4467 & 4468/DEL/2016 ASSESSMENT YEARS: 2008-09 & 2009-10 ACIT, CIRCLE-22(1), ROOM NO.226, 02 ND FLOOR, C.R. BUILDING, I.P. ESTATE, NEW DELHI / VS. M/S. SAMTEL MACHINES AND PROJECTS LTD. (EARLIER KNOWN AS M/S TELETUBE ELECTRONICS LTD.), 6 TH FLOOR, TDI CENTRE JASOLA, NEW DELHI - 110025 ( / REVENUE) ( &' /ASSESSEE) PAN. NO. AAACT626Q + / D ATE OF HEARING : 07/11 /2017 + / DATE OF ORDER: 07 / 11 /2017 / REVENUE BY SHRI S.S.RANA . DR &' / ASSESSEE BY NONE ITA NOS.4467 & 4468/DEL./2016 SAMTEL MACHINES & PROJECTS LTD. 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) BOTH THESE APPEALS ARE BY THE REVENUE AGAINST THE IMPUGNED ORDERS DATED 18/05/2016 AND 19/05/2016 OF THE LD. FIRST APPELLATE AUTHORITY, NEW DELHI, FOR ASSES SMENT YEAR 2008-09 AND 2009-10, DELETING THE ADDITION MADE BY THE ASSESSING OFFICER TO THE EXTENT OF RS.1,61,10,664/- (A. Y. 2008-09) AND RS.1,50,43,898/- (A.Y.2009-10) MADE U/ S 14A OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) R EAD WITH RULE-8D OF THE INCOME TAX RULES, 1962 (HEREINAFTER THE RULES) FOLLOWING THE DECISION IN THE CASE OF MAXOPP INVESTMENT LTD., WHICH IS PENDING DISPOSAL. 2. DURING HEARING, THE LD. CIT-DR, SHRI S.S.RANA, DEFENDED THE ADDITION MADE BY THE ASSESSING OFFICER BY ADVANCING ARGUMENTS, WHICH IS IDENTICAL TO THE GROU ND RAISED. THE LD. DR ALSO RELIED CERTAIN DECISIONS IN THE FORM OF FILING WRITTEN SUBMISSIONS, WHICH ARE KEPT ON RECOR D. ON THE OTHER HAND, NONE WAS PRESENT FOR THE ASSESSEE, IN S PITE OF ISSUANCE OF REGISTERED AD NOTICE ON 03/11/2017. THE ASSESSEE NEITHER PRESENTED ITSELF NOR MOVED ANY ADJ OURNMENT ITA NOS.4467 & 4468/DEL./2016 SAMTEL MACHINES & PROJECTS LTD. 3 PETITION. IT SEEMS THAT THE ASSESSEE HAS NOTHING TO SAY, THEREFORE, WE HAVE NO OPTION BUT TO PROCEED EX-PART E, QUA THE ASSESSEE AND TEND TO DISPOSE OF THESE APPEALS ON TH E BASIS OF MATERIAL AVAILABLE ON RECORD. 2.1. WE HAVE CONSIDERED THE SUBMISSIONS OF LD. DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE F ACTS, IN BRIEF, ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSI NESS OF MANUFACTURING OF MONO-CHROME CATHODE RAY TUBES OF VARIOUS SIZES AND MACHINE MANUFACTURING BUSINESS, D ECLARED INCOME OF RS.1,62,17,948/- (AY 2008-09) AND RS.2,36,15,448/- (A.Y. 2009-10). THE ASSESSMENT WA S COMPLETED U/S 143(3) OF THE ACT VIDE ORDER DATED 26 /12/2011 (AY 2008-09) AT AN INCOME OF RS.1,69,74,003/- . THE LD. CIT(A) ENHANCED THE INCOME OF THE ASSESSEE BY MAKIN G DISALLOWANCE U/S 14A OF THE ACT R.W.R 8D. IT IS NO TED THAT THE LD. CIT(A) CONSIDERED THE DECISION FROM HONBLE APE X COURT IN THE CASE OF CIT VS WALFART SHARES AND STOCK BROK ERS PVT. LTD. AND ALSO THE DECISION OF PUNJAB AND HARYANA HI GH COURT IN THE WINDSOME TEXTILES INDUSTRIES LTD. TO THE EFF ECT THAT WHEN THERE IS NO EXEMPT INCOME, THERE IS NO APPLICA TION OF ITA NOS.4467 & 4468/DEL./2016 SAMTEL MACHINES & PROJECTS LTD. 4 SECTION 14A OF THE ACT. IN PARA-20 OF THE IMPUGNED ORDER, THERE IS OBSERVATION MADE BY THE LD. CIT(A) THAT TH E ASSESSEE COMPANY HAS NOT EARNED ANY DIVIDEND INCOME DURING T HE YEAR UNDER CONSIDERATION. ADMITTEDLY, THERE ARE VAR IOUS DECISIONS FROM HONBLE HIGH COURTS AND ALSO FROM HO NBLE APEX COURT THAT IF NO EXEMPT INCOME IS RECEIVED/REC EIVABLE OR EARNED BY THE ASSESSEE THEN THERE CAN BE NO DISALLO WANCE. IT IS ALSO NOTED THAT HONBLE JURISDICTIONAL HIGH COUR T IN THE CASE OF CIT VS HOLCIM INDIA PVT. LTD. (ITA NO.486 & 299 OF 2014), SIMILARLY, DECIDED THE ISSUE AGAINST THE REV ENUE, REFERRING TO THE DECISION PUNJAB & HARYANA HIGH COU RT IN THE CASE OF CIT VS LAKHANI MARKETING (ITA NO.970/2008) ORDER DATED 02/04/2014. IDENTICALLY, HONBLE GUJARAT HIGH COURT IN CIT VS CORRTECH ENERGY PVT. LTD. (2014) 223 TAXM AN 130 (GUJ.) AND ALLAHABAD HIGH COURT IN CIT VS SHIVAM MO TORS PVT. LTD. (ITA NO.88 OF 2014) HELD THAT IN THE ABSE NCE OF ANY TAX FREE INCOME IN THE HANDS OF THE ASSESSEE, NO DI SALLOWANCE CAN BE MADE U/S 14A OF THE ACT. IDENTICALLY WAS HEL D IN CHEM INVEST. LTD. VS CIT (2015) 61 TAXMAN.COM 118 ( DEL.). ITA NOS.4467 & 4468/DEL./2016 SAMTEL MACHINES & PROJECTS LTD. 5 SO FAR AS, THE DECISIONS RELIED UPON BY LD. CIT -DR LIKE INDIA BULLS FINANCIAL SERVICES LTD. VS DCIT (2016) 76 TAXMAN.COM 268 (DEL.), GODREJ & BOYCE MFG. CO. LTD. VS DCIT (2017) 394 ITR 449 (SC), NAHAR SPINNING MILLS LTD. VS CIT (2017) 82 TAXMAN.COM 154 (P & H), DCIT VS VIRAJ PRO FILES LTD. 156 ITD 72 (MUM. TRIB.), ETC. ARE CONCERNED, W E NOTE THAT THESE DECISION WERE TAKEN TO THE PECULIAR FACT S AND CIRCUMSTANCES INVOLVED IN THOSE CASES. THE AFOREMEN TIONED CITED CASES ARE GOOD LAWS BUT THE FACTS IN THE PRES ENT APPEALS ARE DIFFERENT. MUCH WATER HAS FLOWN ON THE ISSUE A ND NOW IT IS SETTLED BY HONBLE JURISDICTIONAL HIGH COURT AND ALSO BY HONBLE APEX COURT THAT IF NO EXEMPT INCOME IS EARNED/RECEIVED BY THE ASSESSEE DURING THE YEAR UND ER CONSIDERATION THEN NO DISALLOWANCE U/S 14A OF THE A CT CAN BE MADE. THE HONBLE DELHI HIGH COURT IN MAXOPP INVEST MENT LTD. VS CIT (347 ITR 272) (DEL.) HAS EXTENSIVELY DE ALT WITH THE ISSUE, CONSIDERING VARIOUS JUDICIAL PRONOUNCEMENTS AND UNDER THE FACTS AND CIRCUMSTANCES OF THAT CASE CLEA RLY HELD THAT SECTION 14A WILL NOT APPLY, IF NO EXEMPT INCOM E IS RECEIVED OR RECEIVABLE OR EARNED DURING THE RELEVAN T PREVIOUS YEAR. RESPECTFULLY FOLLOWING THE AFORESAID DECISION S AND MORE ITA NOS.4467 & 4468/DEL./2016 SAMTEL MACHINES & PROJECTS LTD. 6 SPECIFICALLY HONBLE JURISDICTIONAL HIGH COURT, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) AS NO CONT RARY FACTS WERE BROUGHT TO OUR NOTICE BY THE REVENUE, THEREFOR E, THE GROUND RAISED BY THE REVENUE ARE HAVING NO MERIT. SO FAR AS, THE CONTENTION OF THE LD. CIT-DR THAT THE ISSUE IS PENDING BEFORE HONBLE APEX COURT, IS CONCERNED, WE ARE OF THE VIEW THAT THE OUTCOME FROM HONBLE APEX COURT WILL BE BI NDING ON EACH PARTY AND AS ON DATE, THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT FAVOURS THE CASE OF THE A SSESSEE, RESULTANTLY, THE APPEALS OF THE REVENUE ARE DISMISS ED. FINALLY, THE APPEALS OF THE REVENUE ARE DISMISS ED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF THE LD. CIT-DR AT THE CONCLUSION OF THE HEARING ON 07/11/2017. SD/- SD /- (N. K. SAINI) (JOGINDER SINGH) ' / ACCOUNTANT MEMBER # ' /JUDICIAL MEMBER DELHI; DATED : 07/11/2017 F{X~{T? P.S/. .. $#&' (' / COPY OF THE ORDER FORWARDED TO : 1. / / THE APPELLANT 2. 01/ / THE RESPONDENT. 3. 3 ( ) / THE CIT, NEW DELHI. ITA NOS.4467 & 4468/DEL./2016 SAMTEL MACHINES & PROJECTS LTD. 7 4. 3 / CIT(A)- , DELHI 5. 5 0 , , / DR, ITAT, DELHI 6. & / GUARD FILE. / BY ORDER, 15 0 //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, DELHI ITA NOS.4467 & 4468/DEL./2016 SAMTEL MACHINES & PROJECTS LTD. 8 THIS ORDER WAS DIRECTLY DICTATED TO THE SR.PS/PS ON COMPUTER 1. DRAFT DICTATED ON 07/11/17 SR.PS /PS 2. DRAFT PLACED BEFORE AUTHOR 07/11/17 SR.PS /PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 07/11/17 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS /PS 6. DATE OF PRONOUNCEMENT/ORDER SR.PS /PS 7. FILE SENT TO THE BENCH CLERK SR.PS /PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER