Pawan Kumar Bansil, Delhi V. ACIT, Circle- 62(1), New Delhi

ITA 5261/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5402 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2014-2015
• Appeal Filed On: 06-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Rule 8D; Set aside
• Section: 143(3); 14A

Judgement Text

ITA NO.-5261/DEL/2018 SHRI PAWAN KUMAR BANSIL. PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: F: NEW DELHI) (THROUGH VIDEO CONFERENCING) BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER ITA NO:- 5261/DEL/2018 ( ASSESSMENT YEAR: 2014-15) SHRI PAWAN KUMAR BANSIL, DELHI. VS. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-62(1), NEW DELHI. APPELLANT RESPONDENT PAN NO: AGJPB8455F ASSESSEE BY : NONE REVENUE BY : SHRI AVIKAL MANU, SR. DR PER ANADEE NATH MISSHRA, AM (A) THIS APPEAL BY ASSESSEE IS FILED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL)-20, NEW DELHI, DATED 31.03.2018 FOR ASSESSMENT YEAR 2014-15. GROUNDS TAKEN IN THIS APPEAL OF ASSESSEE ARE AS UNDER: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (A) IS ARBITRARY, AGAINST LAW AND FACTS ON RECORDS. 2. THE LEARNED COMMISSIONER OF INCOME TAX (A) HAS ERRED IN CONFIRMING ADDITION OF RS. 26,61,443/- U/S 14A OF THE INCOME TAX ACT, 1961 WITHOUT GOING THROUGH THE FACTS OF THE CASE, STATUTORY PROVISIONS AS WELL AS SUBMISSION FILED DURING THE COURSE OF PROCEEDINGS. ITA NO.-5261/DEL/2018 SHRI PAWAN KUMAR BANSIL. PAGE 2 OF 7 3. THE APPELLANT MAY BE PERMITTED TO ADD, ALTER OR AMEND ANY OF THE FOREGOING GROUNDS OF APPEAL. (B) THE ONLY ISSUE IN THIS APPEAL IS REGARDING THE DISALLOWANCE AMOUNTING TO RS. 26,61,443/- MADE UNDER SECTION 14A OF INCOME TAX ACT, (I.T. ACT, FOR SHORT) BY THE ASSESSING OFFICER VIDE ASSESSMENT ORDER DATED 5/12/16 PASSED UNDER SECTION 143(3) OF I.T. ACT. THIS DISALLOWANCE WAS CONFIRMED BY THE LD. CIT(A) VIDE HER IMPUGNED APPELLATE ORDER DATED 31.03.2018. THE ASSESSING OFFICER HAS OBSERVED IN PARAGRAPH 3.1 OF THE AFORESAID ASSESSMENT ORDER DATED 5/12/16 THAT THE ASSESSEE HAS SHOWN INVESTMENT IN EQUITY SHARES, AMOUNTING TO RS. 11,31,00,000/-, IN TECHNO AUTOMOBILES; IN VIEW WHEREOF, THE ASSESSEE WAS ASKED BY THE ASSESSING OFFICER TO SHOW CAUSE WHY PROVISION OF SECTION 14A OF I.T. ACT SHOULD NOT BE INVOKED READ WITH RULE 8D OF INCOME TAX RULES, 1962 (I.T RULES, FOR SHORT). THE ASSESSEE SUBMITTED HIS REPLY ON 05.12.2016, RELEVANT PORTION OF WHICH IS REPRODUCED AS UNDER: 3.2 THE ASSESSEE SUBMITTED HIS REPLY ON 05.12.2016 RELEVANT PARA OF WHICH ARE REPRODUCED AS UNDER: WITH REFERENCE TO YOUR QUERY TO GIVE THE WORKING OF EXPENSES AS PER SEC. 14A OF THE INCOME TAX ACT WE WOULD LIKE TO DRAW YOU KIND ATTENTION THAT SECTION 14A OF THE INCOME TAX DEALS WITH THE EXPENDITURE INCURRED IN RELATION TO INCOME NOT INCLUDING IN TOTAL INCOME. HOWEVER, DURING THE YEAR UNDER ASSESSMENT ASSESSEE HAS NOT EARNED ANY INCOME WHICH HAS BEEN CLAIMED AS EXEMPT AND AS SUCH THERE IS NOT SUCH EXPENSES INCURRED ON EARNING EXEMPT INCOME. FURTHER WE WOULD LIKE TO DRAW YOU KIND ATTENTION THAT THE INVESTMENT SHOWN IN THE BALANCE SHEET IS IN RESPECT OF INVESTMENT OF EQUITY SHARES OF UNQUOTED SHARES AND THE PROFIT OF SALE OF THESE SHARES ARE TAXABLE AND IS NOT EXEMPT. AS SUCH PROVISION OF SECTION 14A OF THE ACT IS NOT APPLICABLE. . ITA NO.-5261/DEL/2018 SHRI PAWAN KUMAR BANSIL. PAGE 3 OF 7 (B.1) HOWEVER, THE ASSESSING OFFICER REJECTED THIS EXPLANATION OF THE ASSESSEE, HOLDING THAT THE DISALLOWANCE UNDER SECTION 14A OF I.T. ACT IS TO BE MADE IRRESPECTIVE OF WHETHER ANY EXEMPT INCOME HAD BEEN EARNED DURING THE FINANCIAL YEAR OR NOT; AND FURTHER THAT IT WAS NOT MATERIAL THAT ASSESSEE SHOULD HAVE EARNED SUCH EXEMPT INCOME DURING THE FINANCIAL YEAR UNDER CONSIDERATION. TO QUOTE THE ASSESSING OFFICER, HIS OBSERVATION IN PARAGRAPH 3.3 OF THE ASSESSMENT ORDER IS REPRODUCED AS UNDER: 3.3 THE REPLY OF THE ASSESSEE HAS BEEN CONSIDERED BUT NOT FOUND ACCEPTABLE. THE BASIC OBJECT OF SECTION 14A IS TO ALLOW ONLY THAT EXPENDITURE WHICH IS RELATABLE TO EARNING OF INCOME AND IT THEREFORE FOLLOWS THAT THE EXPENSES WHICH ARE RELATABLE TO EARNING OF EXEMPT INCOME HAVE TO BE CONSIDERED FOR DISALLOWANCE, IRRESPECTIVE OF THE FACT WHETHER ANY SUCH INCOME HAS BEEN EARNED DURING THE FINANCIAL YEAR OR NOT. FOR INVOKING DISALLOWANCE UNDER SEC 14A IT IS NOT MATERIAL THAT ASSESSEE SHOULD HAVE EARNED SUCH EXEMPT INCOME DURING THE FINANCIAL YEAR UNDER CONSIDERATION. (B.1.1) THE ASSESSING OFFICER WENT AHEAD WITH THE DISALLOWANCE UNDER SECTION 14A OF I.T. ACT, AND COMPUTED THE DISALLOWANCE OF RS. 26,61,443/- UNDER RULE 8D OF I.T. RULES. (C) AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). IN THE APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A), VIDE WRITTEN SUBMISSIONS DATED 19.03.2018, THE ASSESSEE ONCE AGAIN CONTENDED THAT NO DISALLOWANCE CAN BE MADE UNDER SECTION 14A OF I.T. ACT AS THE ASSESSEE HAD NOT EARNED ANY DIVIDEND INCOME / EXEMPT INCOME. THE RELEVANT PORTION OF THE WRITTEN SUBMISSION IS REPRODUCED AS UNDER: 3.2 IN THIS REGARD WE WOULD LIKE TO DRAW YOU KIND ATTENTION TO COMPUTATION OF INCOME FOR AY 2014-15 (THE COPY OF COMPUTATION OF INCOME IS ENCLOSED AND FORMS PART OF PAPER BOOK AT (PAGE NO 7 TO 8) AS PER WHICH THE ASSESSEE HAS NOT EARNED ANY DIVIDEND OR EXEMPT INCOME. AS THE ITA NO.-5261/DEL/2018 SHRI PAWAN KUMAR BANSIL. PAGE 4 OF 7 ASSESSEE HAS NOT EARNED ANY DIVIDEND INCOME / EXEMPT INCOME AND AS SUCH NO DISALLOWANCE CAN BE MADE U/S 14A OF THE INCOME TAX ACT. THERE ARE VARIOUS JUDICIAL RULING IN THIS REGARD IN WHICH IT HAS BEEN HELD THAT WHERE THE ASSESSEE HAS NOT MADE ANY CLAIM FOR EXEMPTION NO DISALLOWANCE CAN BE MADE U/S 14A OF THE INCOME TAX ACT. THE VARIOUS JUDICIAL RULING WHICH SUPPORT THE CONTENTION OF THE ASSESSEE IS GIVEN BELOW:- I. CHEMINVEST LTD VS. ACIT 378 ITR 33 (DELHI) II. CIT VS HOLCIM INDIA PVT. LTD. ITA NO. 486 AND 299/ 2014 (DELHI HIGH COURT) III. COMMISSIONER OF INCOME TAX VS CORRTECH ENERGY PVT LTD 2015 372 ITR 98 (GUJ) IV. CIT VS SHIVAM MOTORS PVT LTD ITA NO 88/2014 V. CIT VS CORRETCH ENERGY PVT. LTD. ITA NO. 239/2014 IN VIEW OF THE ABOVE DISALLOWANCE OF RS. 26,61,443/- MADE U/S 14A OF THE INCOME TAX ACT MAY PLEASE BE DELETED. (C.1) THE LD. CIT(A) REJECTED THE CONTENTION OF THE ASSESSEE AND CONFIRMED THE AFORESAID DISALLOWANCE AMOUNTING TO RS. 26,61,443/- MADE BY THE ASSESSING OFFICER UNDER SECTION 14A OF I.T. ACT READ WITH RULE, 8D OF I.T. RULES. AGGRIEVED AGAIN, THE ASSESSEE HAS FILED THIS APPEAL IN INCOME TAX APPELLATE TRIBUNAL (ITAT, FOR SHORT) AGAINST THE AFORESAID IMPUGNED APPELLATE ORDER DATED 31.03.2018 OF THE LD. CIT(A). AT THE TIME OF HEARING, IN THE ABSENCE OF ANY REPRESENTATION FROM THE ASSESSEES SIDE, WE HAVE HEARD LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE (LD. SR. DR, FOR SHORT) FOR REVENUE. THE LD. SR. DR RELIED ON THE AFORESAID ORDERS DATED 5/12/16 AND 31.03.2018 OF ASSESSING OFFICER AND LD. CIT(A) RESPECTIVELY. (D) WE HAVE HEARD LD. SR. DR. WE HAVE CAREFULLY PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE SPECIFICALLY CONTENDED BEFORE THE ASSESSING OFFICER ITA NO.-5261/DEL/2018 SHRI PAWAN KUMAR BANSIL. PAGE 5 OF 7 THAT THE ASSESSEE HAD NOT EARNED ANY INCOME CLAIMED AS EXEMPT. THIS CONTENTION WAS ONCE AGAIN RAISED BY THE ASSESSEE BEFORE THE LD. CIT(A). NEITHER THE ASSESSING OFFICE NOR THE LD. CIT(A) HAS DISPUTED THE CLAIM OF THE ASSESSEE THAT NO EXEMPT INCOME WAS EARNED BY THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR CORRESPONDING TO ASSESSMENT YEAR 2014-15, TO WHICH THIS PRESENT APPEAL PERTAINS. ON PERUSAL OF THE MATERIALS ON RECORD, WE FIND NOTHING CONTRARY TO CLAIM OF THE ASSESSEE THAT THE ASSESSEE HAD NOT EARNED ANY EXEMPT INCOME DURING THE YEAR. IT CAN THEREFORE BE INFERRED THAT THE ASSESSEE HAD NOT EARNED ANY EXEMPT INCOME DURING THE YEAR. IN THESE FACTS AND CIRCUMSTANCES, THE ISSUE IN DISPUTE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY ORDERS OF HONBLE DELHI HIGH COURT IN THE CASES OF CIT VS. HOLCIM INDIA PVT. LTD. (2014) 90CCH 0081 (DEL) AND CHEMINVEST LTD. VS. ACIT 378 ITR 33 (DELHI). IN THESE ORDERS OF HONBLE JURISDICTIONAL HIGH COURT, IT HAS BEEN HELD THAT NO DISALLOWANCE UNDER SECTION 14A OF I.T. ACT IS ATTRACTED IF THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME DURING THE YEAR. RESPECTFULLY FOLLOWING THE AFORESAID ORDERS OF HONBLE DELHI HIGH COURT IN THE CASES OF CIT VS. HOLCIM INDIA PVT. LTD. (SUPRA) AND CHEMINVEST LTD. VS. ACIT (SUPRA), WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE AFORESAID DISALLOWANCE AMOUNTING TO RS. 26,61,443/- MADE UNDER SECTION 14A READ WITH RULE 8D OF INCOME TAX RULES. (E) BY WAY OF ABUNDANT CAUTION, WE HEREBY CLARIFY THAT IF IT IS FOUND BY REVENUE THAT ANY EXEMPT INCOME WAS EARNED BY THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2014-15, THEN REVENUE CAN APPROACH ITAT FOR RECALL OF THIS ORDER AND ITA NO.-5261/DEL/2018 SHRI PAWAN KUMAR BANSIL. PAGE 6 OF 7 FOR RESTORATION OF THE APPEAL. IF SUCH A REQUEST IS RECEIVED FROM REVENUE, IT WILL BE CONSIDERED IN ACCORDANCE WITH LAW. (F) IN THE RESULT, THIS APPEAL BY ASSESSEE IS ALLOWED. THIS ORDER WAS ORALLY PRONOUNCED ON 20 TH SEPTEMBER, 2021 IN OPEN COURT, IN THE PRESENCE OF SR. DR FOR REVENUE, AFTER CONCLUSION OF THE HEARING. NOW THIS ORDER IN WRITING IS SIGNED TODAY ON 23/09/2021 . SD/- SD/- (AMIT SHUKLA) (ANADEE NATH MISSHRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 23/09/2021 (POOJA) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI ITA NO.-5261/DEL/2018 SHRI PAWAN KUMAR BANSIL. PAGE 7 OF 7 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER