ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, Kota V. M/S MITTAL PIGMENTS PVT. LTD., Kota

ITA 679/JPR/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1974 (ITAT-JAIPUR)
• Duration Of Justice: 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 31-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Keywords: Earning of tax free income
• Section: 14A; 6

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH HKKXPAN] YS[KK LNL; ,OA JH DQY HKKJR ] U;KF;D LNL; DS LE{K BEFORE: SHRI BHAGCHAND, AM & SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 679/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, KOTA CUKE VS. M/S MITTAL PIGMENTS PVT. LTD., A-203, I.P.I.A. ROAD NO. 5, KOTA. PAN NO.: AABCM 1418 N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA (ADDL.CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : NONE LQUOKBZ DH RKJH[K@ DATE OF HEARING : 05/10/2017 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 09/10/2017 VKNS'K@ ORDER PER: BHAGCHAND, A.M. THIS IS THE APPEAL FILED BY THE REVENUE EMANATES FR OM THE ORDER OF THE LD. CIT(A), KOTA DATED 26/06/2017 FOR THE A.Y. 2012-13, WHEREIN THE REVENUE HAS TAKEN SOLE EFFECTIVE GROUND OF APPEAL, WHICH IS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN: (I) DELETING THE ADDITION OF RS. 17,388/- MADE BY T HE A.O. U/S 14A OF THE I.T. ACT, 1961 R.W.R. 8D OF THE I.T. RULES, 1962 AND IN VIEW OF CBDT CIRCULAR NO. 05/2014. 2. THE ONLY ISSUE INVOLVED IN THE APPEAL IS AGAINST DELETING THE ADDITION OF RS. 83,336/- MADE U/S 14A OF THE INCOME TAX ACT, 1961 (IN SHORT THE ITA 679/JP/2017 ACIT VS. MITTAL PIGMENTS PVT. LTD. 2 ACT) READ WITH RULE 8D OF THE INCOME TAX RULES, 1962 (IN SHORT THE RULES AND IN VIEW OF THE CBDT CIRCULAR NO. 05/2014. 3. THE LD. CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE BY HOLDING AS UNDER:- I HAVE GONE THROUGH ASSESSEES SUBMISSION AND AOS FINDINGS. AS REGARDS GROUND OF APPEAL NO 1, VIDE APPEAL NO.27/14-15 FOR A.Y 2011- 12 (DATE OF ORDER: 09/03/2017) I HAVE DECIDED THIS ISSUE IN FAVOUR OF THE APPELLANT. SINCE THE FACTS INVOLVED IN THE ADDITION REMAIN THE SAME IN THIS APPEAL AS WELL, 1 SEE NO REASON TO DEVIATE FROM THE EARLIER LINE OF DECISION. THE A.O HAS NOT BROUGHT OUT ANY ACTUAL EXEMPT INCOM E CLAIMED BY THE APPELLANT. THE DELHI HIGH COURT IN THE RECENT CASE OF CHEMINVEST LTD. V. C1T 120151 378 1TR 33/234 TAXMAN 761/61 TAXMAN.COM 118 HELD TH AT THERE SHOULD BE AN ACTUAL RECEIPT OF EXEMPT INCOME DURING THE RE LEVANT YEAR FOR THE PURPOSE OF DISALLOWANCE OF ANY EXPENDITURE INCURRED IN RELATION TO SUCH INCOME. OVERRULING ITAT SPECIAL BENCH'S (SB) RULING IN THIS CASE, AND FOLLOWING ITS OWN PRIOR RULING IN THE CASE OF CIT V. HOLCIM INDIA (P.) LTD. [2015] 57 TAIXMANN.COM 28 (DELHI), THE DELHI HC HEL D THAT THERE CAN BE NO DISALLOWANCE OF EXPENSE IF NO EXEMPT INCOME IS ACTU ALLY EARNED DURING THE RELEVANT TAX YEAR. HIGH COURT OF MADRAS IN REDINGTON (INDIA) LTD. V. ADDITIONAL COMMISSIONER OF INCOME-TAX, CO. RANGE-V, CHENNAI 77 TAXMANN.COM 257 (MADRAS) HAS RECENTLY HELD VIDE ORDER DATED DECEMBER 23, 201 6 THAT- SECTION 14A OF THE INCOME-TAX ACT, 1961, READ WITH RULE 8D OF THE INCOME- TAX RULES, 1962 - EXPENDITURE INCURRED IN RELATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME (CONDITION PRECEDENT) - ASSESSMENT YEAR 2007-08 - WHETHER PROVISION OF SECTION 14A IS RELATABLE TO EA RNING OF ACTUAL INCOME ITA 679/JP/2017 ACIT VS. MITTAL PIGMENTS PVT. LTD. 3 AND NOT NOTIONAL OR ANTICIPATED INCOME, HENCE, WHER E THERE IS NO EXEMPT INCOME IN A YEAR, THERE CANNOT BE A DISALLOWANCE OF EXPENDITURE IN RELATION TO AN ASSUMED INCOME HELD YES THUS THE DISALLOWANCE OF RS. 17,388/- MADE BY THE A .O. IS NOT HELD TO BE JUSTIFIED AND IS TO BE DELETED. 4. NOW THE REVENUE IS IN APPEAL BEFORE THE ITAT. NON E ATTENDED ON BEHALF OF THE ASSESSEE. 5. WE HAVE HEARD THE REVENUE. THE LD DR WAS NOT ABLE TO CONTROVERT THE FINDINGS AS RECORDED BY THE LD. CIT(A) IN HIS O RDER ON FACTS AS WELL AS ON LAW. THEREFORE, WE FIND NO REASON TO INTERFERE IN T HE ORDER OF THE LD. CIT(A) AND THE SAME STANDS UPHOLD. 6. IN THE RESULT, APPEAL OF THE REVENUE STANDS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09/10/2017. SD/- SD/- DQY HKKJR HKKXPAN (KUL BHARAT) (BHAGCHAND) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 09 TH OCTOBER, 2017 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE ACIT, CIRCLE-1, KOTA 2. IZR;FKHZ @ THE RESPONDENT- M/S MITTAL PIGMENTS PVT. LTD., KOTA. ITA 679/JP/2017 ACIT VS. MITTAL PIGMENTS PVT. LTD. 4 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 679/JP/2017) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR