DCIT, New Delhi V. M/s. Machino Plastics Ltd., Gurgaon

ITA 5899/DEL/2013

• Counselvise Citation: 589920114 RSA 2013
• Duration Of Justice: 2 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 16-11-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 01-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Keywords: Depreciation; Rule of consistency; Earning of tax free income
• Section: 143(3); 14A; 194C

Judgement Text

DCIT V MACHINO PLASTICS LIMITED ITA NO 5899 DEL 2013 & CO 199 DEL 2013 A Y 2010 - 11 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E : NEW DELHI BEFORE SHRI H.S.SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI , ACCOUNTANT MEMBER IN ITA NO. 5899 /DEL/ 2013 (ASSESSMENT YEAR: 2010 - 11 ) DCIT, CIRLE - 6(1), ROOM NO.413, C.R. BUILDING, NEW DELHI VS. MACHINO PLASTICS LTD, PLOT NO.3, MARUTI JOINT VENTURE COMPLEX, DELHI GURGAON ROAD, GURGAON PAN:AAACM6984G (APPELLANT) (RESPONDENT) CO NO 199/DEL/2014 MACHINO PLASTICS LTD, PLOT NO.3, MARUTI JOINT VENTURE COMPLEX, DELHI GURGAON ROAD, GURGAON PAN:AAACM6984G VS DCIT, CIRLE - 6(1), ROOM NO.413, C.R. BUILDING, NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY SH.GAGAN KUMAR, ADV REVENUE BY SH. P.DAM KANUNJNA, SR. DR DATE OF HEARING 16 - 11 - 2015 DATE OF PRONOUNCEMENT 1 1 - 12 - 2015 O R D E R PER PRASHANT MAHARISHI , A . M . 1 . REVENUE HAS FILED APPEAL DIRECTED AGAINST THE ORDER OF THE LD CIT ( A) - I X , NEW DELHI DATED 28.08.2013 FOR THE ASSESSMENT YEAR 2010 - 11 AND IN THAT APPEAL ASSESSEE HAS FILED CROSS OBJECTIONS. 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN ITS APPEAL : - 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE MADE U/S 40(A)(IA) OF RS.5,96,83,010/ - FOR NON DEDUCTION OF IDS U/S 194C BY HOLDING DCIT V MACHINO PLASTICS LIMITED ITA NO 5899 DEL 2013 & CO NO 199 DEL 2013 A Y 2010 - 11 THAT THERE WAS NO LIABILITY TO DEDUCT TDS WITHOUT APPRECIATING THE FACT THAT THE POWER SHARING AGREEMENT WAS IN REALITY A CONTRACT FOR MANAGING AND OPERATING THE CAPTIVE POWER PLANT JOINTLY OWNED BY THE ASSESSEE? 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) ERR ED IN DELETING THE DISALLOWANCE MADE U/S 40(A)(IA) OF RS.5,96,83,010/ - FOR NON DEDUCTION OF TDS U/S 194C ON THE PRINCIPLE OF CONSISTENCY WITHOUT CONSIDERING THE JUDGEMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF KRISHAK BHARATI CO - OPERATIVE LTD. VS. DCIT , [2012] 23 TAXMANN. COM 265 (DELHI) WHEREIN IT WAS HELD THAT RULE OF CONSISTENCY SHOULD NOT CREATE ANOMALY? 3. THE ORDER OF THE LEARNED CIT(APPEALS) IS ERRONEOUS & CONTRARY TO FACTS & LAW. 3 . THE FACTS IN BRIEF OF THE CASE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF HEAVY DUTY INJECTION MOLDED AUTOMOTIVE AND OTHER PLASTIC COMPONENTS. THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME DECLARING TAXABLE INCOME OF RS.2,13,10,019/ - ON 23.09.2010, WHICH WAS PROCESSED U/S 143(1) OF T HE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) . THE ASSESSING OFFICER ASSESSED THE INCOME OF THE ASSESSEE AT RS.4,53,20,250/ - AND INCOME FROM CAPITAL GAIN AT RS.5,60,75,640/ - TO BE TAXED U/S 112 OF THE ACT . MAIN ADDITIONS/ DISALLOWANCES CONTESTED IN THIS AP PEAL AND CO ARE AS UNDER : - A . THE ASSESSING OFFICER MADE DISALLOWANCE U/S 14A OF THE ACT OF RS. 14,52,485/ -- IN RESPECT OF EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE ASSESSEES TOTAL INCOME . B . AO NOTICE THAT THE ASSESSEE HAD CLAIMED EXPENSES OF RS.7,84,83,193/ - ON ACCOUNT OF POWER AND FUEL UNDER SCHEDULE 11 TITLED AS MANUFACTURING EXPENSES IN THE BALANCE FOR THE YEAR ENDING 31.03.2010. THE ASSESSEE COMPANY DID NOT DEDUCT TAX AT SOURCE ON PAYMENT S MADE/ CREDITED TO M/S MSIL ON THIS ACCOUNT. THEREFORE AS PER THE PROVISIONS OF SECTION 40(A)(IA), THIS EXPENDITURE OF RS.5,96,83,010/ - IS DISALLOWED. ACCORDINGLY, AS ADDITION OF RS.5,96,83,010/ - IS MADE TO THE TOTAL INCOME OF THE ASSESSEE COMPANY. DCIT V MACHINO PLASTICS LIMITED ITA NO 5899 DEL 2013 & CO NO 199 DEL 2013 A Y 2010 - 11 4 . AGGRI EVED THE ASSESSEE FIELD AN APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS), WHO PARTLY ALLOW THE APPEAL OF THE ASSESSEE. LD CIT (A) RESTRICTED THE DISALLOWANCE U/S 14A TO RS. 13,51,985/ - U/S 14A AND DELETED THE DISALLOWANCE OF RS 5,9 6,83,010/ - U/S 40A (I) OF THE INCOME TAX ACT BASED ON HIS OWN DECISION IN AY 2009 - 10. THEREFORE REVENUE BEING AGGRIEVED WITH THE DELETION OF DISALLOWANCE OF RS 5,96,83,010/ - IS IN APPEAL BEFORE US AND ASSESSEE HAS FIELD CROSS OBJECTION CONTESTING CONFIRMATION OF DISALLOWANCE U/S 14A OF THE INCOME TAX ACT. 5 . COMING TO THE GROUND OF THE APPEAL OF THE REVENUE WHERE IN DELETION OF DISALLOWANCE OF RS 5,96,83,010/ - IS UNDER CHALLENGE , BRIEF FACTS ARE THAT ASSESSEE HAS MADE PAYMENTS TO MSIL FOR PUR CHASES OF GAS BASED CAPTIVE POWER AND FOR THIS IT HAS MADE PAYMENTS. LD AO WAS OF THE VIEW THAT TAX IS REQUIRED TO BE DEDUCTED ON THIS PAYMENT BY THE ASSESSEE U/S 194C OF THE INCOME TAX ACT ,1961. AS NO TAX IS DEDUCTED BY ASSESSEE AO HAS DISALLOWED RE JECTING THE EXPLANATION OF THE ASSESSEE THAT IT IS NOT REQUIRED TO DEDUCTED TAX AT SOURCES AS IT IS NOT A PAYMENT FOR CARRYING OUT ANY WORK BUT IT IS PURCHASE OF POWER. 6 . BEFORE US THE LD AR SUBMITTED THAT IDENTICALLY THIS ISSUE FOR AY 2009 - 10 HAS TR AVELLED TO ITAT WHERE IN THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. THEREFORE THIS ISSUE IS COVERED AND SAME SHOULD BE FOLLOWED. 7 . AGAINST THIS LD DR RELIED UP ON THE ORDER OF AO AS WELL AS SUBMITTED THAT TAX IS REQUIRED TO BE DEDUCTED BY TH E ASSESSEE AND DISALLOWANCE IS CORRECTLY MADE . HE FURTHER SUBMITTED THAT COIT (A) HAS OVERLOOKED THE DECISION OF HONOURABLE DELHI HIGH COURT IN CASE OF KRISHAK BHARTI COOPERATIVE LIMITED V DCIT 23 TAXMANN.COM 265 WHERE IN IT IS HELD THAT RULE OF CONSI STENCE SHOULD NOT CREATE ANOMALY . 8 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION . WE HAVE ALSO PERUSED THE FACTS OF THE PRESENT CASE AND ALSO THE FACTS DISCUSSED BY COORDINATE BENCH IN ITA NO 2643 DEL 2013 DATED 09/05/2014 FOR AY 2009 - 10 WHICH ARE SIMILAR . THIS WAS CONFIRMED BY BOTH THE PARTIES ALSO . IN THAT DECISION COORDINATE BENCH HAS DEALT WITH ISSUE AS UNDER : - DCIT V MACHINO PLASTICS LIMITED ITA NO 5899 DEL 2013 & CO NO 199 DEL 2013 A Y 2010 - 11 2 . THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF PLASTIC, AUTOMOTIVE COM PONENTS FOR MARUTI VEHICLES LIKE BUMPER, INSTALLATION PENAL AND GRILLS. IT HAS FILED ITS RETURN OF INCOME ON 28.9.2009 DECLARING A LOSS OF RS.1,89,45,163. ON SCRUTINY OF THE ACCOUNTS, LEARNED ASSESSING OFFICER OBSERVED THAT ASSESSEE HAD CLAIMED EXPENDITURE OF RS.5,16,82,300 ON ACCOUNT OF POWER AND FUEL UNDER SCHEDULE - II TITLED AS MANUFACTURING EXPENSES. LEARNED ASSESSING OFFICER HAS EXAMINED THE LEDGER ACCOUNT OF THE EXPENSES AND THE DETAILS OF PAYMENTS MADE TO M/S. MSIL IN RESPECT OF POWER SUPPLY. LEARNED ASSESSING OFFICER HAS REPRODUCED THE SUMMARY OF SUCH ACCOUNTS ON PAGE NOS. 5 & 6 OF THE ASSESSMENT ORDER. HE OBSERVED THAT ASSESSEE HAS CREDITED THE ACCOUNT OF MARUTI SUZUKI INDIA LTD. BY A SUM OF RS.4,80,96,613. IN THE OPINION OF THE ASSESSING OFFICER, AS SESSEE HAD PURCHASED ELECTRICITY FROM MSIL AND, THEREFORE, IT OUGHT TO HAVE DEDUCTED TDS WHILE CREDITING THE ACCOUNT OF MSIL. HE ISSUED A SHOW - CAUSE NOTICE. ASSESSEE HAD CONTENDED THAT IT HAD ENTERED INTO AN AGREEMENT WITH MSIL. THERE IS A GAS BASED CAPTIV E POWER GENERATION, WHERE ELECTRICITY CHARGES ARE TO BE ACCOUNTED ON THE BASIS OF CONSUMPTION AS WELL AS OVERHEAD EXPENSES BASIS. IT IS A POWER SHARING PROJECT WHERE EVERY CONSTITUENT HAS TO CONTRIBUTE ITS SHARE OF EXPENDITURE. THUS, ASSESSEE HAD PAID THE EXPENDITURE WHICH WERE FALLEN TO ITS ACCOUNT. IT HAS NOT PURCHASED THE POWER ON A CONTRACT. LEARNED ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. HE MADE REFERENCES TO CLAUSE NOS. 3, 4, 6,11, 12, 16 AND 17 AND OBSERVED THAT IT H AS A COLORABLE DEVICE ADOPTED BY THE ASSESSEE. THE ASSESSEE ALSO CONTENDED THAT SUCH EXPENSES WERE REIMBURSED BY IT RIGHT FROM ASSESSMENT YEAR 2002 - 03 AND ASSESSMENTS WERE MADE UNDER SEC. 143(3) IN ASSESSMENT YEARS 2002 - 03, 2004 - 05 AND 2008 - 09. NO DISALLOW ANCE WAS MADE. LEARNED ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. HE MADE THE DISALLOWANCE OF RS.4,80,96,613 UNDER SECTION 40A(4)(A)(IA) OF THE INCOME - TAX ACT, 1961 FOR NON - DEDUCTION OF TDS UNDER SECTION 194 - C. 3. ON APPE AL, LEARNED CIT(APPEALS) HAS APPRECIATED THE FACTS AND CIRCUMSTANCES AND GONE THROUGH THE CLAUSES OF AGREEMENT REFERRED BY THE ASSESSING OFFICER. LEARNED CIT(APPEALS) HAS CULLED OUT FOLLOWING POINTS: 6.4 THE CONTENTIONS OF THE APPELLANT WAS CONSIDERED. THE FOLLOWING POINTS EMERGES: 1. AFTER EXAMINING THE AGREEMENT BETWEEN M/S. MARUTI UDYOG LTD. AND THE APPELLANT COMPANY THAT WAS SIGNED IN MAY 2005 IT IS CLEAR THAT THERE DOES NOT EXIST A RELATIONSHIP OF PRINCIPAL AND CONTRACTOR BETWEEN THE TWO ENTITI ES. THE AGREEMENT CLEARLY POINTS OUT THAT IT IS A POWER SHARING AGREEMENT WHERE CERTAIN COMPANIES CONTRIBUTED CERTAIN AMOUNTS ON ACCOUNT OF COST OF THE AFORESAID CAPTIVE GENERATING PLANT AND HOW SHARE THE CAST OF RUNNING THE SAID PLANT PRIMARILY ON THE BAS IS OF CONSUMPTION. 2. THE APPELLANT HAS BEEN CLAIMING SUCH PAYMENTS, THAT ARISE ON ACCOUNT OF REIMBURSEMENTS, AS PER THE AGREEMENT OF MAY 2005, IN THE EARLIER YEAR AS WELL. NO TDS HAS EVER BEEN MADE BEFORE ON THE REIMBURSEMENTS THAT WERE MADE TO M /S. MARUTI UDYOG LTD. EVEN THOUGH NO TDS HAD BEEN DEDUCTED THE QUESTION OF DISALLOWANCE U/S. 40A(IA) WAS NEVER MADE. 3. THE APPELLANT HAS BEEN CLAIMING DEPRECIATION IN EARLIER YEAR ON THE ASSETS OF THE CAPTIVE POWER PLANT THAT IT JOINTLY OWNS WIT H M/S. MARUTI UDYOG LTD. AND ITS OTHER VENDERS ON A PROPORTIONATE BASIS. THIS SHOWS THAT THE APPELLANT IS A PART OWNER OF THE ASSETS OF THE CAPTIVE POWER PLANT. 4. PAYMENTS MADE TO M/S. MARUTI ARE ONLY REIMBURSEMENTS AS EXPLAINED ABOVE AS PER THE TERM S OF THE AGREEMENT. 5. THE CONTENTIONS OF THE APPELLANT HAVE NOT BEEN CONTROVERTED IN THE ASSESSMENT ORDER. THE A.O. HAS NOT BROUGHT OUT HOW IT HAS HELD THAT THE APPELLANT COMPANY IS NOT A CO - OWNER OF THE CAPTIVE POWER PLANT. IT HAS RELIED ON THE A RGUMENT THAT IT IS A COLORABLE DEVICE OF SUCH ARRANGEMENT FOR A CONTRACT FOR SUPPLYING POWER. DCIT V MACHINO PLASTICS LIMITED ITA NO 5899 DEL 2013 & CO NO 199 DEL 2013 A Y 2010 - 11 4. AFTER GOING THROUGH VARIOUS CLAUSES OF THE AGREEMENT, LEARNED CIT(APPEALS) HAS HELD THAT THERE IS NO RELATIONSHIP OF PRINCIPLE AND CONTRACTOR BET WEEN THE TWO ENTITIES. THE ASSESSEE HAD MADE CONTRIBUTION OF EXPENDITURE WHICH WERE ON ITS OWN ACCOUNT AS A CONSTITUENT OF CAPTIVE POWER GENERATION. LEARNED CIT(APPEALS), IN THIS WAY, DELETED THE DISALLOWANCE. 5. WITH THE ASSISTANCE OF LEARNED REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. THE ASSESSEE HAS PLACED ON RECORD COPY OF THE AGREEMENT BETWEEN THE ASSESSEE AND MSIL. IT WAS EXECUTED ON 11.5.2005. IT IS AVAILABLE ON PAGES 46 TO 60 OF THE PAPER BOOK. WE HAVE GONE THROUGH THE A GREEMENT. LEARNED ASSESSING OFFICER HAS MADE REFERENCE TO CLAUSE NO. 3. THIS CLAUSE HAS DULY BEEN NOTICED BY THE LEARNED CIT(APPEALS) ON PAGE NO. 10 OF THE IMPUGNED ORDER. AS PER THIS CLAUSE, SECOND PARTY (I.E. ASSESSEE ) AGREES TO REIMBURSEMENT OF FIXED A ND VARIABLE COST OF POWER GENERATION AND DISTRIBUTION THROUGH DEDICATED TRANSMISSION LINE. THERE IS NOTHING SIGNIFICANT IN THIS CLAUSE WHICH SUGGEST THAT IT WAS A SERVICE CONTRACT BETWEEN THE PARTIES. THE ASSESSEE HAS NOT PURCHASED ELECTRICITY FROM MSIL. A PART FROM THIS CLAUSE, LEARNED ASSESSING OFFICER MADE REFERENCE TO CLAUSE 4. ACCORDING TO THIS CLAUSE, MSIL SHALL INCUR CERTAIN MINIMUM COST ON ACCOUNT OF GENERATING ELECTRICITY FROM THE CAPTIVE GENERATING PLANT AND ASSESSEE AGREES TO REIMBURSE ITS SHARES, ON ACCOUNT OF MINIMUM MONTHLY UNIT IRRESPECTIVE OF THE FACT OF ACTUAL USER OF THE ELECTRICITY DRAWN FROM CAPTIVE POWER PLANT. LEARNED ASSESSING OFFICER DREW INFERENCE FROM THIS CLAUSE THAT ASSESSEE WOULD PAY MINIMUM MONTHLY CHARGES IRRESPECTIVE OF THE ACT UAL CONSUMPTION, SUGGESTS, THAT MSIL AND ASSESSEE ENTERED INTO A COMMERCIAL AGREEMENT SAFEGUARDING THEIR OWN INDIVIDUAL INTEREST. WE HAVE PERUSED THIS CLAUSE ON PAGE 11 OF THE LEARNED CIT(APPEALS) ORDER, FOR MAINTAINING A CAPTIVE PLAN, THE PARTIES ARE REQ UIRED TO INCUR MINIMUM EXPENSES WHICH IS TO BE SHARED BY THEM. THE ASSESSEE WAS NOT ONLY REQUIRED TO REIMBURSE PRICE OF ACTUAL ELECTRICITY CONSUMED FROM THE PLANT BUT IN ORDER TO KEEP THE PLANT INTO RUNNING CONDITION, IT HAS TO PAY SOMETHING MINIMUM WHICH ARE THE BASIC AMOUNTS. THE READING OF THE COMPLETE AGREEMENT SUGGESTS THAT IT REGULATES THE BUSINESS BETWEEN THE PARTIES OF DRAWING ELECTRICITY FROM A COMMON CAPTIVE POWER PLANT. LEARNED ASSESSING OFFICER HAS MISREAD IT. LEARNED FIRST APPELLATE AUTHORITY H AS APPRECIATED THE FACTS AND CIRCUMSTANCES IN RIGHT PERSPECTIVE AND HELD THAT ASSESSEE HAD NOT AVAILED SERVICES OF MSIL, RATHER IT IS ONE OF THE CONSTITUENTS OF POWER GENERATION PLANT. IT HAS REIMBURSED COST OF ITS SHARES. THEREFORE, WHILE REIMBURSING COST OF ITS SHARE, IT WAS NOT SUPPOSED TO DEDUCT TDS. AFTER GOING THROUGH THE ORDER OF LEARNED CIT(APPEALS), WE DO NOT FIND ANY ERROR IN IT ON THIS ISSUE. ACCORDINGLY, THE APPEAL OF THE REVENUE IS DE VOID OF ANY MERIT, IT IS DISMISSED. 9 . THEREFORE RESPECTFULLY FOLLOWING THE DECISION OF COORDINATE BENCH WE CONFIRM THE ORDER OF CIT (A) IN DELETING THE DISALLOWANCE U/S 40A (I) IN CASE OF PAYMENTS OF RS 5,96,83,010/ - MADE TO MSIL ON ACCOUNT OF POWER CHARGES. THEREFORE APPEAL OF THE REVENUE IS DISMISS ED. 10 . IN CROSS OBJECTION ASSESSEE HAS RAISED GROUND AGAINST THE DISALLOWANCE OF RS 13,51,985/ - U/S 14A OF THE INCOME TAX ACT. FACTS OF THE ISSUE IS THAT ASSESSEE HAS INVESTED IN SHARES OF CAPARO MARUTI LIMITED AMOUNTING TO R S 1,25,00,000/ - AND ASSESSEE HA S ALREADY ALLOWED 0.5 % OF THE AVERAGE INVESTMENT RS 1,00,500/ - . AO APPLYING RULE 8 D OF THE INCOME TAX RULES, 1962 COMPUTED DISALLOWANCE OF RS DCIT V MACHINO PLASTICS LIMITED ITA NO 5899 DEL 2013 & CO NO 199 DEL 2013 A Y 2010 - 11 14,52,485/ - . CIT (A) CONFIRMED THE DISALLOWANCE BUT REDUCED AN AMOUNT OF RS 1,00,500/ - ALREADY DISALLOWED BY THE ASSESSEE. BEFORE US ASSESSEE IS CONTESTING THE CONFIRMATION OF DISALLOWANCE OF RS 13,51,985/ - . HENCE ASSESSEE HAS ALREADY ACCEPTED THE DISALLOWANCE OF RS 1,00,500/ - U/S 14A OF THE INCOME TAX ACT ,1961. 11 . BEFORE US THE LD AR OF THE APPELLANT SUBMITTED THAT THERE IS NO EXEMPT INCOME IN THE HANDS OF THE ASSESSEE AND THEREFORE THERE CANNOT BE ANY DISALLOWANCE U/S 14A OF THE ACT. FOR THIS HE DREW OUR ATTENTION TO THE COMPUTATION OF TOTAL INCOME OF THE ASSESSEE WHERE THERE IS NO EXEMPT INCOME . FOR THIS PROP OSITION HE RELIED ON THE DECISION OF HONOURABLE DELHI HIGH COURT IN CASE OF CHEMINVEST LTD V CIT 61 TAXMANN.COM 118. 12 . LD DR RELIED ON THE ORDER OF AO AS WELL AS CIT . 13 . WE HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE PARTIES AND ALSO THE DOCUMENTS PRODUCED BEFORE US. ACCORDING TO THE COMPUTATION OF INCOME FILED BEFORE US PLACED AT PAGE NO 1 TO 47 OF THE PAPER BOOK THE ASSESSEE DID NOT HAVE ANY EXEMPT INCOME AS THE DIVIDEND INCOME SHOWN IN THE COMPUTATION IS NIL. HONOURABLE DELHI HIGH COURT IN CHEMINVEST LTD V CIT HAS HELD THAT EXPRESSION DOES NOT FORM PART OF THE TOTAL INCOME IN SECTION 14A ENVISAGES THAT THERE SHOULD BE AN ACTUAL RECEIPT OF INCOME WHICH IS NOT INCLUDIBLE IN THE TOTAL INCOME OF THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR FOR THE PURPOSES OF DISALLOWING ANY EXPENDITURE INCURRED IN RELATION TO THE SAID INCOME. IN OTHER WORDS IT IS HELD THAT SECTION 14A DOES NOT APPLY IF NO EXEMPT INCOME IS RECEIVED OR RECEIVABLE BY THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR. THEREFORE AS THERE IS NO RECEIPT OF ANY EXEMPT INCOME IN THE HANDS OF THE ASSESSEE DURING THE YEAR , THERE CANNOT BE ANY DISALLOWANCE U/S 14A OF THE ACT. THEREFORE FOLLOWING THE DECISION OF HONOURABLE DELHI HIGH COURT , WE REVE RSE THE ORDER OF CIT (A) CONFIRMING THE DISALLOWANCE U/S 14A OF THE INCOME DCIT V MACHINO PLASTICS LIMITED ITA NO 5899 DEL 2013 & CO NO 199 DEL 2013 A Y 2010 - 11 TAX ACT 1961 OF RS 13,51,985/ - . THEREFORE GROUND NO 1 OF THE CO IS ALLOWED. 14 . IN THE RESULT WE DISMISS THE APPEAL OF THE REVENUE AND ALLOW THE CO OF THE ASSESSEE. O RDER PRONOUNCED IN THE OPEN COURT ON 11 . 1 2 . 2015 . - SD/ - - SD/ - (H.S.SIDHU) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 11 /1 2 / 2015 A K KEOT COPY FORWARDED TO 1 . APPLICANT 2 . RESPONDENT 3 . CIT 4 . CIT (A) 5 . DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI