DCIT, New Delhi V. M/s. Parsvnath Developers Ltd., New Delhi

ITA 6869/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3521 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2008-2009
• Appeal Filed On: 19-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARAMITA TRIPATHY
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SHRI. AMIT SHUKLA, JUDICIAL MEMBER & SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO.6868, 6869 & 6871/DEL/2014 ASSESSMENT YEAR:2007-08, 2008-09 & 2011-12 DCIT CENTRAL CIRCLE 31 NEW DELHI V. PARSVNATH DEVELOPERS LTD. PARSVNATH METRO TOWER NEAR SHAHDARA METRO STATION SAHDARA, NEW DELHI TAN/PAN:AAACP0743J (APPELLANT) (RESPONDENT) APPELLANT BY: SMT. PARAMITA TRIPATHY, CIT (DR) RESPONDENT BY: SHRI AKSHAT JAIN, ADVOCATE DATE OF HEARING: 31 10 2017 DATE OF PRONOUNCEMENT: 07 11 2017 O R D E R PER AMIT SHUKLA, J.M.: THE AFORESAID APPEALS HAVE BEEN FILED BY THE REVENU E AGAINST COMMON ORDER DATED 1/8/2014, PASSED BY THE LD . CIT (APPEALS)-XXXIII, NEW DELHI FOR QUANTUM OF ASSESSMEN T PASSED UNDER SECTION 153A/143(3) FOR ASSESSMENT YEARS 2007-0 8, 2008- 09 AND 2011-12. 2. COMMON ISSUE RAISED IN ALL THE APPEALS RELATES TO THE DISALLOWANCE UNDER SECTION 14A R.W. RULE 8D WHICH AR E ARISING OUT OF IDENTICAL SET OF FACTS, THEREFORE, SAME WERE HEAR D TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER. I.T.A. NO.6868, 6869 & 6871/DEL/2014 2 3. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT SO FAR AS DISALLOWANCE UNDER SECTION 14A FOR ASSE SSMENT YEARS 2007-08 AND 2011-12 ARE CONCERNED, I.E., FOR THE AMOUNT OF RS.22,71,940/- AND RS.40,85,760/- RESPECTIVELY, THE A CCEPTED FACT IS THAT THE ASSESSEE HAS NOT EARNED ANY EXEMPT IN COME AND ONCE THERE IS NO EXEMPT INCOME, THEN NO DISALLOWANCE UNDER SECTION 14A CAN BE MADE IN VIEW OF THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD. VS. CIT REPORTED IN 61 TAXMANN.COM 118 (DEL). APART FROM THAT, HE SUBMITTED THAT BOTH THE ASSESSMENT YEARS WERE UNABATED AT TH E TIME OF SEARCH AND WITHOUT THERE BEING ANY INCRIMINATIN G MATERIAL QUA THE ISSUE OF DISALLOWANCE UNDER SECTION 14A, NO ADDITION COULD HAVE BEEN MADE IN VIEW OF THE PRINCIPL E LAID DOWN BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWLA REPORTED IN [2015] 61 TAXMANN.COM 412 (DELHI ). 4. ON THE OTHER HAND, THE LD. CIT (DR) RELIED UPON THE ORDERS OF THE LD. CIT (A). 5. HERE IN THIS CASE, SO FAR AS ASSESSMENT YEAR 2007-08 IS CONCERNED, IT IS AN ADMITTED FACT THAT NO EXEMPT INCOME HA S BEEN EARNED BY THE ASSESSEE AND, THEREFORE, DISALLOWANCE U NDER SECTION 14A CANNOT BE TRIGGERED IN VIEW OF THE LAW LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CHEMINVEST LTD. VS. CIT (SUPRA), WHEREIN THE HON'BLE HIGH COURT HAS HELD THAT PROVISIONS OF SECTION 14A WILL NOT APPLY IF NO EXE MPT INCOME IS RECEIVABLE DURING THE RELEVANT PREVIOUS YEAR. ACC ORDINGLY, DISALLOWANCE MADE BY THE AO U/S 14A CANNOT BE SUSTAINE D. I.T.A. NO.6868, 6869 & 6871/DEL/2014 3 6. SO FAR AS ASSESSMENT YEAR 2008-09 IS CONCERNED, WE F IND THAT ASSESSEE HAS MADE SUO-MOTO DISALLOWANCE OF RS.12,61,260/-. HOWEVER, THE ASSESSING OFFICER, AS NOTED BY THE LD. CI T (A), HAS NEITHER GIVEN ANY OPPORTUNITY NOR RAISED ANY QUERY TO THE ASSESSEE ON THE DISALLOWANCE UNDER SECTION 14A BEFORE MAKING THE DISALLOWANCE. THE ASSESSING OFFICER, BEFORE PROC EEDING TO MAKE DISALLOWANCE, HAS TO FIRST EXAMINE THE NATURE OF A CCOUNTS MAINTAINED BY THE ASSESSEE AND ALSO THE EXPENDITURE DE BITED AND THEN ONLY AFTER HAVING BEING SATISFIED THAT THE EXPENDITU RE INCURRED ARE ATTRIBUTABLE FOR EARNING OF EXEMPT INCOME, THEN ONLY HE CAN PROCEED TO MAKE DISALLOWANCE IN TERMS OF RULE 8D. WITHOUT COMPLYING WITH THE MANDATORY REQUIREMENT AS LAI D DOWN IN SECTION 14(2) SUCH A MECHANICAL APPLICATION OF RUL E 8D CANNOT BE UPHELD. THE ASSESSING OFFICER HAS NOT EVEN MENTIO NED AS TO WHETHER ANY EXEMPT INCOME HAS BEEN EARNED BY THE ASSES SEE OR NOT IN THIS YEAR. ACCORDINGLY, THE FINDING OF THE LD. CIT(A) THAT THE ASSESSING OFFICER HAS NOT ARRIVED AT HIS SATISFACTION ON THE ASSESSEES CLAIM OF ATTRIBUTION OF EXPENSE, CANNOT ATTR IBUTE FURTHER DISALLOWANCE BY APPLYING RULE 8D. ACCORDINGL Y, WE HOLD THAT THE ADDITION MADE OVER AND ABOVE THE AMOUNT OFFERED BY THE ASSESSEE CANNOT BE ADDED AND IS THUS, DIRECTED TO BE D ELETED. 7. AGAIN IN THE ASSESSMENT YEAR 2011-12, THE ASSESSING OFFICER, WITHOUT EXAMINING AS TO WHETHER ASSESSEE HAS EARNED ANY EXEMPT INCOME OR NOT; AND WITHOUT EXAMINING THE NATU RE OF ACCOUNTS MAINTAINED OR EXAMINING THE EXPENDITURE DEBITE D, HAS PROCEEDED TO MECHANICALLY APPLY RULE 8D AND THEREBY M AKING HUGE DISALLOWANCE OF RS.1,62,22,105/-. IN THIS YEAR ALSO, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT NO EXEMPT INCOME HAS BEEN EARNED BY THE ASSESSEE, WHICH IS EVIDENT FROM THE I.T.A. NO.6868, 6869 & 6871/DEL/2014 4 SCHEDULES FORMING PART OF THE PROFIT & LOSS ACCOUNT A ND, THEREFORE, NO DISALLOWANCE UNDER SECTION 14A CAN BE M ADE IN VIEW OF THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN TH E CASE OF CHEMINVEST LTD. VS. CIT (SUPRA). 8. ON PERUSAL OF THE AUDITED BALANCE SHEET AND PROFIT & LO SS ACCOUNT, WE FIND THAT UNDER THE HEAD OTHER INCOME AS GIVEN IN SCHEDULE O, NO EXEMPT INCOME HAS BEEN SHOWN BY THE ASSESSEE AND ONCE THAT IS SO, THEN NO DISALLOWANCE UNDER SECTION 14A CAN BE MADE. ACCORDINGLY, APPLYING THE RATIO LAID DOWN BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD. VS. CIT (SUPRA), WE HOLD THAT NO DISALLOWANCE CAN BE MADE BY THE ASSESSING OFFICER U/S 14A IN THIS YEAR AND SAME HAS RIGHTLY BEEN DELETED BY CIT (A). THUS, REVENUES APPEALS FOR ALL THE ASSESSMENT YEARS ARE DISMISSED. 9. IN THE RESULT, ALL THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH NOVEMBER, 2017. SD/- SD/- [PRASHANT MAHARISHI] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 7 TH NOVEMBER, 2017 JJ:0111 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR I.T.A. NO.6868, 6869 & 6871/DEL/2014 5 DATE 1. DRAFT DICTATED ON 2. DRAFT PLACED BEFORE AUTHOR 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 5. APPROVED DRAFT COMES TO THE SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 7. FILE COMES BACK TO PS/SR. PS 8. UPLOADED ON 9. FILE SENT TO THE BENCH CLERK 10. DATE ON WHICH FILE GOES TO THE AR 11. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 12. DATE OF DISPATCH OF ORDER.