ACIT, Circle-17(1), New Delhi V. Modern Info Technology Pvt. Ltd., New Delhi

ITA 6511/DEL/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4261 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2014-2015
• Appeal Filed On: 27-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER I.T.A. NO.6511/DEL/2017 ASSESSMENT YEAR: 2014-2015 ACIT, CIRCLE-17(1), NEW DELHI. VS. MODERN INFO TECHNOLOGY PVT. LTD., 305, 3 RD FLOOR, BHANOT CORNER, PAMPOSH ENCLAVE, GREATER KAILASH-I, NEW DELHI. TAN/PAN: AAECM3601J (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI M.P. RASTOGI, ADV. RESPONDENT BY: NONE DATE OF HEARING: 30 06 2021 DATE OF PRONOUNCEMENT: 27 09 2021 O R D E R PER AMIT SHUKLA, JM THE AFORESAID APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE IMPUGNED ORDER DATED 25.08.2017, PASSED BY LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXVIII, NEW DE LHI FOR THE QUANTUM OF ASSESSMENT PASSED U/S.143(3) FOR THE ASSESSMENT YEAR 2014-15. IN VARIOUS GROUNDS OF APPE AL, THE REVENUE HAS CHALLENGED THE DELETION OF DISALLOWANCE OF RS.3,12,87,693/- MADE U/S.14A. 2. THE FACTS IN BRIEF ARE THAT ASSESSING OFFICER HA S NOTED THAT THE ASSESSEE HAS DONE INVESTMENT IN EQUITIES, HOWEVER, NO EXPENSES UNDER THE PROVISION OF SECTION 14A READ WITH I.T.A. NO.6511/DEL/2017 2 RULE 8D HAVE BEEN ADDED BACK IN THE COMPUTATION OF INCOME. ONE VERY IMPORTANT FACT NOTED BY THE ASSESSING OFFI CER THAT ASSESSEE IN REPLY FILED BEFORE THE ASSESSING OFFICE R HAD CATEGORICALLY STATED THAT COMPANY HAD NOT CLAIMED A NY EXEMPT INCOME, THEREFORE, THERE IS NO QUESTION OF A NY DISALLOWANCE U/S.14A. HOWEVER, LD. ASSESSING OFFICE R MECHANICALLY PROCEEDED TO MAKE THE DISALLOWANCE U/S .14A READ WITH RULE 8D AND WORKED OUT THE DISALLOWANCE A T RS.3,12,87,693/-. 3. LD. CIT(A) AFTER REFERRING TO THE VARIOUS JUDGME NTS OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD. VS. CIT, 378 ITR 333 AND CATENA OF OTHER JUDGMENTS HELD THAT NO DISALLOWANCE CAN BE MADE WHEN THERE IS NO EXEMPT INCOME AND FURTHER ASSESSING OFFICER HAS NOT BEEN ABLE TO ESTABLISH ANY NEXUS BETWEEN THE EXEMPT INCOME IF AT ALL EARNE D BY THE APPELLANT AND ANY EXPENDITURE INCURRED TO EARN THIS INCOME. 4. AFTER CONSIDERING THE SUBMISSIONS MADE BY THE PA RTIES AND ON PERUSAL OF THE FINDING GIVEN IN THE IMPUGNED ORDER, WE FIND FROM THE COMPUTATION OF INCOME FILED IN THE PA PER BOOK THAT NO EXEMPT INCOME HAS BEEN CLAIMED BY THE ASSES SEE EITHER IN THE RETURN OF INCOME OR IN THE COMPUTATIO N OF INCOME. THIS FACT HAS ALSO BEEN NOTED BY THE LD. AS SESSING OFFICER, AT THE FIRST PAGE OF THE ORDER. ONCE THERE IS NO EXEMPT INCOME, THEN THERE IS NO QUESTION OF ANY DISALLOWAN CE U/S.14A, AND THEREFORE, IN THE LIGHT OF THE PRINCIP LE LAID DOWN I.T.A. NO.6511/DEL/2017 3 BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD. VS. CIT (SUPRA), NO DISALLOWANCE CAN BE MADE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ABOVE DECISION WAS ANNOUNCED ON CONCLUSION OF VIRTU AL HEARING IN THE PRESENCE OF BOTH THE PARTIES ON 27 TH SEPTEMBER, 2021 SD/- SD/- [DR. B.R.R. KUMAR] [AMIT SHUKLA] [ACCOUNTANT MEMBER] JUDICIAL MEMBER DATED: 27/09/2021 PKK: