Innovative B2B Logistics Solutions P.Ltd, New Delhi V. Addl.CIT, Special Range-4, New Delhi

ITA 4997/DEL/2018

AI Insights

This case involves cross appeals by the Revenue and the assessee, Innovative B2B Logistics Solutions P. Ltd., against the order of the CIT (Appeals)-35, New Delhi, pertaining to the assessment year 2015-16. The primary issues in the appeals were the disallowance made under section 14A of the Income-tax Act, 1961, and the percentage of disallowance of interest applied by the AO. The CIT (A) had deleted the disallowance under section 14A, relying on precedents from the Delhi High Court, which was contested by the Revenue. Additionally, the CIT (A) reduced the interest disallowance percentage from 12% to 6%, which was also contested by the assessee. The ITAT upheld the CIT (A)'s decision on the section 14A disallowance but remitted the interest disallowance issue back to the AO for a detailed examination.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 113780 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: C
• Next Hearing Date: 09-10-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 15-07-2018
• Other Referred Cases: Cheminvest Ltd. vs. CIT, CIT vs. Holcim India P. Ltd.
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘C’ : NEW DELHI) SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER and SHRI YOGESH KUMAR US, JUDICIAL MEMBER ITA No.4823/Del./2018 (ASSESSMENT YEAR : 2015-16) Addl.CIT, Spl. Range 4, vs. Innovative B2B Logistics New Delhi. Solutions P. Ltd., Level-4, Rectangle 1, Commercial Complex, D-4, Saket, New Delhi – 110 017. (PAN : AABCI5215M) ITA No.4997/Del./2018 (ASSESSMENT YEAR : 2015-16) Innovative B2B Logistics vs. Addl.CIT, Spl. Range 4, Solutions P. Ltd., New Delhi. Level-4, Rectangle 1, Commercial Complex, D-4, Saket, New Delhi – 110 017. (PAN : AABCI5215M) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Nageshwar Rao, Advocate Shri Akshay Uppal, Advocate REVENUE BY : Shri Sandip Kumar Mishra, Sr. DR Date of Hearing : 10.10.2023 Date of Order : 12.10.2023 ORDER PER SHAMIM YAHYA, ACCOUNTANT MEMBER : ITA No.4823 & 4997/Del./2018 2 These cross appeals filed by the Revenue and assessee are directed against the order of ld. CIT (Appeals)-35, New Delhi dated 26.04.2018 pertaining to assessment year 2015-16. 2. At the outset, in this case, ld. Counsel for the assessee contended that the issue involved in both the appeals is duly covered in favour of the assessee in assessee’s own case for AY 2014-15 order dated 14.07.2023. 3. In this background, we have heard both the parties and perused the records. 4. The first issue raised by the Revenue is that ld. CIT (A) erred in deleting the disallowance of Rs.2,65,12,507/- made by the AO under section 14A of the Income-tax Act, 1961 (for short 'the Act'). 5. Brief facts of the issue are that AO noted from the balance sheet that the assessee had made investment of Rs.2,65,12,507/- in the shares of M/s. Noble Tradecon Private Limited and M/s. B2B Forwarding Agent Ltd. AO noted that assessee has not made any disallowance u/s 14A of the Act. The assessee was asked to explain and the assessee stated that it has not received any exempt income during the year. But the AO did not accept the plea and made the disallowance. 5. Against this order, assessee appealed before the ld. CIT (A). Ld. CIT (A) granted relief by placing reliance on the decisions of Hon’ble ITA No.4823 & 4997/Del./2018 3 Delhi High Court in Cheminvest Ltd. vs. CIT 61 taxmann.com 118 (Delhi) and CIT vs. Holcim India P. Ltd. 57 taxmann.com 28 (Delhi) 6. Against this order, Revenue is in appeal before us. We have heard both the parties and perused the records. 7. Upon careful consideration, we find that this issue is squarely covered in favour of the assessee by the decisions of Hon’ble Delhi High Court as referred above. Moreover, the same decisions have been followed by the ITAT in assessee’s own case for AY 2014-15 (supra). Accordingly, this ground of the Revenue is dismissed. 8. Another issue raised by the Revenue is that the ld. CIT (A) erred in applying percentage of 6% against 12% applied by the AO in respect of disallowance of interest. On the same issue, assessee is also aggrieved that the ld. CIT (A) has reduced the percentage to 6% whereas the assessee has given interest free loan to subsidiary company and the assessee is in possession of substantial own funds and interest free unsecured loan. 9. We have heard both the parties and perused the records. The facts of the case are that somewhat similar issue is decided by the ITAT in the assessee’s own case in AY 2014-15 (supra). ITAT in assessee’s own case in AY 2014-15 on finding that assessee owned interest free funds were more than the interest free loan, has granted the complete relief to the ITA No.4823 & 4997/Del./2018 4 assessee. However, before us in the present assessment year, there is no clear finding that interest free funds are more than the investment made. Hence, in the interest of justice, we remit this issue to the file of AO. AO shall decide the issue afresh and if the interest free funds are more than the investment done, then no disallowance is to be made in line with the order of the ITAT as above. 10. In the result, the appeals filed by the Revenue and assessee are partly allowed for statistical purposes. Order pronounced in the open court on this 12 th day of October, 2023. Sd/- sd/- (YOGESH KUMAR US) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated the 12 th day of October, 2023 TS Copy forwarded to: 1.Appellant 2.Respondent 3.CIT 4.CIT (A)-35, New Delhi. 5.CIT(ITAT), New Delhi. AR, ITAT NEW DELHI.