JCIT, SPECIAL RANGE- 1, NEW DELHI V. AXISCADES ENGINEERING TECHNOLOGIES LTD., NEW DELHI

ITA 4799/DEL/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3434 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 27-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJEEV GOEL
• Keywords: Earning of tax free income; Rule 8D
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER I.T.A. NO. 4799/DEL/2017 AY: 2014-15 JCIT, SEPCIAL RANGE-1, NEW DELHI ROOM NO. 159A, 1 ST FLOOR, C.R. BUILDING, NEW DELHI 110 002 VS. M/S AXISCADES ENGINEERING TECHNOLOGIES LTD., A-264, 2 ND FLOOR, DEFENCE COLONY, NEW DELHI 24 (PAN : AAACI2831G) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. SANJEEV GOEL, CIT(DR) ASSESSEE BY : NONE ORDER PER H.S. SIDHU, JM REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 15.5.2017 PASSED BY THE LD. CIT(A)-32, NEW D ELHI RELATING TO ASSESSMENT YEAR 2014-15 ON THE FOLLOWING GROUNDS:- 1. LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELETING AD DITION OF RS. 2,28,62,725/- MADE ON ACCOUNT OF DISALLOWANCE U/S. 14A R.W.S. 8D OF INCOME TAX RULES. 2. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIGHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEA L AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 2. THE FACTS RELATING TO ISSUE IN DISPUTE ARE THAT DURING THE ASSESSMENT PROCEEDINGS THE AO OBSERVED THAT THE ASSESSEE COMP ANY HAD MADE INVESTMENT IN SHARES OF OTHER COMPANIES. THE TOTAL INVESTMENT AS ON 31.3.2014 BY THE COMPANY AMOUNTING TO RS. 23.25 COR ES. HOWEVER, IN 2 THE COMPUTATION OF INCOME, NO DISALLOWANCE U/S. 14A OF THE INCOME TAX ACT, 1961 (IN SHORT ACT), READ WITH RULE 8D HAD BEEN MADE ON ACCOUNT OF EXPENDITURE INCURRED IN RELATION TO EXEMPT INCOM E. HENCE, THE AO ASKED THE ASSESSEE REGARDING APPLICABILITY OF SECTI ON 14A OF THE ACT READ WITH RULE 8D OF I.T. RULES IN HIS CASE. IN RESPONS E TO THIS, THE ASSESSEE REPLIED THAT NO EXEMPT INCOME HAD BEEN EARNED BY I T DURING THE RELEVANT YEAR. HENCE, AO OBSERVED THAT THERE IS NO DISALLOWA BILTY U/S. 14A OF THE ACT. THE REPLY FILED BY THE ASSESSEE WAS CONSIDERE D BY THE AO, BUT THE AO WAS NOT SATISFIED WITH THE SAME. AFTER RECORDI NG HIS REASONS IN DETAIL, THE AO PROCEEDED TO COMPUTE THE DISALLOWAN CES U/S. 14A, IN ACCORDANCE WITH RULE 8D OF I.T. RULES AND ACCORDING LY MADE THE TOTAL DISALLOWANCE OF RS. 2,28,62,725/- U/S. 14A OF THE A CT VIDE ORDER DATED 28.12.2016 PASSED U/S. 143(3) OF THE ACT BY ASSESS ING THE INCOME AT RS. 12,55,30,790/-. AGAINST THE ASSESSMENT ORDER DA TED 28.12.2016, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE H IS IMPUGNED ORDER DATED 15.5.2017 HAS PARTLY ALLOWED THE APPEAL OF TH E ASSESSEE BY DELETING THE DISALLOWANCE MADE BY THE AO U/S. 14A OF THE AC T. AGGRIEVED WITH THE IMPUGNED ORDER DATED 15.5.2017, THE REVENUE IS IN A PPEAL BEFORE THE TRIBUNAL. 3. AT THE TIME OF HEARING, LD. CIT(DR) RELIED UPON ORDER PASSED BY THE AO AND THE REITERATED THE CONTENTION RAISED IN THE GROUNDS OF APPEAL OF THE REVENUE AND REQUESTED THAT APPEAL OF THE REVENU E MAY BE ALLOWED. 4. IN THIS CASE, NOTICE OF HEARING TO THE ASSESSEE WAS SENT BY THE REGISTERED AD POST, IN SPITE OF THE SAME, ASSESSEE, NOR ITS AUTHORIZED REPRESENTATIVE APPEARED TO PROSECUTE THE MATTER IN DISPUTE, NOR FILED ANY APPLICATION FOR ADJOURNMENT. KEEPING IN VIEW THE F ACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE ISSUE INV OLVED IN THE PRESENT APPEAL, WE ARE OF THE VIEW THAT NO USEFUL PURPOSE W OULD BE SERVED TO ISSUE NOTICE AGAIN AND AGAIN TO THE ASSESSEE, THERE FORE, WE ARE DECIDING THE PRESENT APPEAL EXPARTE QUA ASSESSEE, AFTER HEAR ING THE LD. CIT(DR) AND PERUSING THE RECORDS. 3 5. WE HAVE HEARD THE LD. CIT(DR) AND PERUSED THE O RDERS OF THE AUTHORITIES BELOW, ESPECIALLY THE IMPUGNED ORDER PA SSED BY THE LD. CIT(A). WE FIND THAT LD. CIT(A) HAS DISCUSSED THE I SSUE IN DISPUTE VIDE PARA NO. 5.7 TO 5.8 AT PAGE NO. 4 OF THE IMPUGNED O RDER WHICH ARE REPRODUCED AS UNDER:- 5.7 I HAVE CAREFULLY CONSIDERED THE ARGUMENTS RAIS ED BY THE APPELLANT AND THE DECISIONS RELIED UPON HIM. I FIND THAT NO EXEMPT INCOME HAD BEEN EARNED BY THE APPELLANT I N THE RELEVANT YEAR. THE HONBLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD. VS. CIT DECIEED ON 02.09.20 15 (ITA NO. 749/2014) 61 TAXMANN.COM 118 (DELHI)/ 378 ITR 33 HAS HELD AS UNDER:- IN THE CONTEXT OF THE FACTS ENUMERATED HEREINBEFORE 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 AS RECEIVABLE DURING THE RELEVANT PREVIOUS YEAR. 5.8 AS THE APPELLANT COMPANY HAS NOT EARNED ANY EXEMPT INCOME DURING THE YEAR, RESPECTFULLY FOLLOWI NG THE DECISION OF THE JURISDICTIONAL HIGH COURT, THE DISALLOWANCE MADE BY THE AO U/S. 14A IS DELETED. 5.2 AFTER PERUSING THE AFORESAID FINDING OF THE LD . CIT(A), AS REPRODUCED ABOVE, WE ARE OF THE CONSIDERED VIEW THA T LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION IN DISPUTE BY HOLDING THAT NO EXEMPT INCOME HAD BEEN EARNED BY THE ASSESSEE IN THE RELEVANT YEA R, WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE ACTION OF THE LD. 4 CIT(A) ON THE ISSUE IN DISPUTE AND ACCORDINGLY, REJ ECT THE GROUNDS RAISED BY THE REVENUE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED ON 06.03.2020. SD/- SD/- [N.K. BILLAIYA] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER SRB DATE: 06.03.2020 COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES