USHDEV POWER HOLDINGS PRIVATE LIMITED , MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE, MUMBAI

ITA 4634/MUM/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8141 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2013-2014
• Appeal Filed On: 28-06-2017
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI N.K. PRADHAN , ACCOUNTANT MEMBER ITA NO. 4634 / MUM . /2017 ( ASSESSMENT YEAR : 20 13 14 ) USHDEV POWER HOLDINGS PVT. LTD. 6 TH FLOOR, NEW HARILEELA HOUSE MINT ROAD, FORT, MUMBAI 400 001 PAN AABCU1454A . APPELLANT V/S DY. COMMISSIONER OF INCOME TAX CIRCLE 1(3)(2), MUMBAI . RESPONDENT ASSESSEE BY : SHRI MAYANK CHAUHAN REVENUE BY : SHRI RAJIV GUBGOTRA DATE OF HEARING 26 . 1 1 .2018 DATE OF ORDER 26.12.2018 O R D E R PER SAKTIJIT DEY, J.M. AFORESAID APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER DATED 24.04.2017 OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 3, MUMBAI FOR THE ASSESSMENT YEAR 2013 - 14. 2 . THE ONLY ISSUE IN DISPUTE IN THE PRESENT APPEAL IS RELATING TO DISALLOWANCE MADE UNDER SECTION 14A OF THE INCOME TAX ACT, 1961 (ACT), READ WITH RULE RULE 8D OF THE RULES. 2 USHDEV POWER HOLDINGS PVT. LTD. 3 . BRIEFLY THE FACTS ARE, THE ASSESSEE, A COMPANY, IS ENGAGED IN THE BUSINESS OR POWER GENERATION THROUGH WINDMILL AND MANAGEMENT CONSULTANCY. FOR THE ASSESSMENT YEAR UNDER DISPUTE ASSESSEE FILED ITS RETURN OF INCOME ON 27.09.2013 DECLARING TOTAL INCOME OF ` 1,25,12,791. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICING THAT THE ASSESSEE HAS MADE INVESTMENTS IN UNQUOTED EQUITY SHARES OF DOMESTIC COMPANIES VALUED AT ` 79,65,60,000 AS ON 31.03.2013 AND ` 3,84,50,000 AS ON 31.03.2012 CALLED UPON THE ASSESSEE TO EXPLAIN WHY DISALLOWANCE OF EXPENDITURE UNDER SECTION 14 A R/W RULE 8D SHOULD NOT BE M ADE. IN RESPONSE, IT WAS SUBMITTED BY THE ASSESSEE THAT IT HAS NOT RECEIVED ANY EXEMPT INCOME DURING THE RELEVANT PREVIOUS YEAR. FURTHER, THE ASSESSEE SUBMITTED, NO PART OF THE EXPENSES CAN BE ATTRIBUTED TOWARDS EARNING OF EXEMPT INCOME WHICH IN ANY CASE W AS NOT EARNED DURING THE YEAR. THE ASSESSEE SUBMITTED, DESPITE THE FACT THAT IT HAS NOT EARNED ANY EXEMPT INCOME DURING THE RELEVANT PREVIOUS YEAR, HOWEVER, IT HAS DISALLOWED AN AMOUNT OF ` 1,24,520 UNDER SECTION 14 A OF THE ACT. THE ASSESSING OFFICER, HOW EVER, WAS NOT CONVINCED WITH THE EXPLANATION OF THE ASSESSEE. HE OBSERVED, THE DISALLOWANCE MADE BY THE ASSESSEE IS NOT IN CONFORMITY WITH RULE 8D OF THE RULES. ACCORDINGLY, HE PROCEEDED TO COMPUTE DISALLOWANCE UNDER RULE 8D(2)(III) AT ` 20,87,525. SINCE, THE ASSESSEE HAS ALREADY MADE DISALLOWANCE OF ` 1,24,520 THE ASSESSING OFFICER 3 USHDEV POWER HOLDINGS PVT. LTD. MADE A FURTHER DISALLOWANCE OF ` 19,62,997 UNDER SECTION 14A OF THE ACT. THE ASSESSEE CHALLENGED THE AFORESAID DISALLOWANCE BY FILING AN APPEAL BEFORE THE LEARNED COMMISSIONER (APPEALS). HOWEVER, LEARNED COMMISSIONER (APPEALS) SUSTAINED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 4 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD. THE PRIMARY AND FUNDAMENTAL GROUND ON WHICH THE ASSESSEE CONTESTS THE DISALLOWANCE OF EXPENDITURE UNDER SECTION 14A R/W RULE 8D IS, IN THE RELEVANT PREVIOUS YEAR ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME. THEREFORE, NO DISALLOWANCE UNDER SECTION 14 A READ WITH RULE 8D CAN BE MADE. AS COULD BE SEEN FROM THE MATERIAL ON RECORD, FROM THE ASSESSMENT STAGE ITSELF THE ASSESSEE HAS CONSISTENTLY SUBMITTED THAT IN THE RELEVANT PREVIOUS YEAR IT HAS NO T EARNED ANY EXEMPT INCOME. THIS FACT HAS NEITHER BEEN CONTROVERTED BY THE ASSESSING OFFICER NOR BY THE LEARNED COMMISSIONER (APPEALS). EVEN BEFORE US ALSO LEARNED DEPARTMENTAL REPRESENTATIVE HAS NOT CONTROVERTED THE AFORESAID FACTUAL POSITION. THEREFORE, WHEN THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER DISPUTE, NO DISALLOWANCE UNDER SECTION 14 A RED WITH RULE 8D CAN BE MADE. IN SUPPORT OF OUR AFORESAID VIEW WE RELY UPON THE DECISION OF THE HON'B LE DELHI HIGH COURT IN CASE OF CHEMINVEST V/S CIT 378 ITR 33 (DELHI) AND THE DECISION OF THE 4 USHDEV POWER HOLDINGS PVT. LTD. HON'BLE BOMBAY HIGH COURT IN CASE OF PCIT V/S M/S BALLARPUR INDUSTRIES LTD., INCOME TAX APPEAL NO. 51 OF 2016 DATED 13.10. 2016. ACCORDINGLY, WE DELETE THE DISALLO WANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 14A OF THE ACT. 5 . IN RESULT, ASSESSEE'S APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.12.2018 SD/ - N.K. PRADHAN ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 26.12.2018 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. PRIVATE SECRETARY) ITAT, MUMBAI