DEPUTY COMMISSIONER OF INCOME TAX-14(2)(1), MUMBAI V. HDIL INFRA PROJECTS PRIVATE LIMITED, MUMBAI

ITA 4514/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8845 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 19-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ' SMC ' BENCH, MUMBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 4514 /MUM/ 2017 (ASSESSMENT YEAR: 2012 - 13 ) D C I T - 14|(2)(1) VS. M/S. H D IL INFRA PROJECTS P. LT D. ROOM NO. 432, 4TH FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400020 9TH FLOOR, HDIL TOWERS ANANT KANEKAR MARG BANDRA (E), MUMHAI 400051 PAN AABCH9573R APPELLANT RESPONDENT APPELLANT BY: SMT. N. HEMALATHA RESPONDENT BY: SHRI SASHANK DUNDU DATE OF HEARING: 24.10.2017 DATE OF PRONOUNCEMENT: 28 . 10.2017 O R D E R PER R.C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) FOR A.Y. 2012 - 13. 2. IN THIS APPEAL REVENUE IS AGGRIEVED FOR DELETING THE DISALLOWANCE MADE UNDER SECTION 14A. 3. AT THE OUTSET THE LEARNED A.R. OF THE ASSESSEE, SHRI SASHANK DUNDU, INVITED OUR ATTENTION TO THE FACT THAT THERE IS NO EXEMPT INCOME DURING YEAR UNDER CONSIDERATION, THEREFORE, THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE UNDER SECTION 14A. RELIANCE WAS ALSO PLACED ON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF IL & FS ENERGY DEVELOPMENT COMPANY LTD. 84 TAXMANN.COM 186 AND THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF REDINGTON (INDIA) LTD. 392 ITR 633 IN SUPPORT OF THE PROPOSITION THAT NO DI SALLOWANCE CAN BE MADE WHEN THERE IS NO EXEMPT INCOME. ITA NO. 4514/MUM/2017 M/S. H D IL INFRA PROJECTS P. LTD. 2 4. THE LEARNED D.R. FAIRLY AGREED THAT THERE WAS NO EXEMPT INCOME AS PER THE FINDINGS RECORDED BY THE CIT(A). 5. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW AND ALSO DELIBERATED ON THE JUDICIAL PRONOUNCEMENTS CITED BY THE LEARNED A.R., SHRI SASHANK AND ALSO REFERRED BY THE LOWER AUTHORITIES IN THEIR RESPECTIVE ORDERS. THE FINDINGS RECORDED BY THE CIT(A) FOR DELETING THE DISALLOWANCE READS AS UNDER: - 5.3 I HAVE CONSIDERED THE FACTS OF THE CASE AND THE APPELLANT 'S SUBMISSIONS. PERUSAL OF THE APPELLANT'S PROFIT & LOSS ACCOUNT SHOWS THAT NO DIVIDEND INCOME HAS BEEN EARNED DURING THE YEAR UNDER CONSID ERATION. IT IS ALSO SEEN FROM THE COMPUTATION OF INCOME THAT NO EXEMPT INCOME HAS BEEN CLAIMED. IT HAS BEEN HELD BY THE VARIOUS COURTS THAT SECTION 14A CANNOT BE INVOKED WHEN NO EXEMPT INCOME WAS EARNED. THE HON'BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS LAKHANI MARKETING (ITA NO.970/2008), THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V. DELITE ENTERPRISES - (INCOME TAX APPEAL NO. 110 OF 2009), HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS CORTECH ENERGY (P) LTD. [2014] 223 TAXMANN 130(GUJ) AND THE ALLAHABAD HIGH COURT IN THE CASE OF C IT VS SHIVAM MOTORS (P) LTD.(ITA NO. 88/2014) HAVE ALL HELD THAT SECTION 14A CANNOT BE INVOKED WHEN NO EXEMPT IN COME WAS EARNED. THE HON'BLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD. VS. CIT 37 8 ITR 33 (DEL) HAD ALSO HELD AS UNDER: '23. IN THE CONTE XT OF THE FACTS ENUMERATED HERE INBEFORE THE COURT ANSWERS THE QUESTION FRAMED BY HOLDING THAT THE EXPRESSION '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 INCOME. IN OTHER WORDS, SECTION 14A WILL NOT APPLY IF NO EXEMPT INCOME IS RECEIVED OR RECEIVABLE DURING THE RELEVANT PREV IOUS YEAR.' IN VIEW OF THE LEGAL POSITION ON THE ISSUE AS DISCUSSED ABOVE, THE DISALLOWANCE OF RS.5,14,16,633 / - U/S 14A MADE BY THE ASSE SSING OFFICER IS DELETED. THE A APPELLANT'S GROUND OF APPEAL IS ALLOWED. 6. NOTHING WAS BROUGHT ON RECORD BY THE LEARNED D .R. TO CONTROVERT THE FINDING OF THE CIT(A) THAT THE ASSESSEE WAS NOT HAVING ANY EXEMPT INCOME IN THE YEAR UNDER CONSIDERATION. ACCORDINGLY I DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE CIT(A) DELETING THE DISALLOWANCE MADE UNDER SECTION 14A. ITA NO. 4514/MUM/2017 M/S. H D IL INFRA PROJECTS P. LTD. 3 7. I N THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH OCTOBER, 2017 . SD/ - ( R.C. SHARMA ) ACCOUNTANT MEMBER MUMBAI, DATED: 28 TH OCTOBER, 2017 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) - 22 , MUMBAI 4. THE CIT - 14 , MUMBAI 5. THE DR, SMC BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.