ACIT, Circle- 11(2), New Delhi V. Him Urja Pvt. Ltd., New Delhi

ITA 7843/DEL/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3990 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-11-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 28-12-2017
• 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 BENCHES C : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA.NO.7843/DEL./2017 ASSESSMENT YEAR 2013-2014 THE ACIT, CIRCLE-11(2), NEW DELHI [ VS. M/S. HIM URJA PVT. LTD., S-321, PANCHSHEEL PARK, NEW DELHI 110 017. PAN AAACH7036E (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI BHAGWATI CHARAN, SR. DR FOR ASSESSEE : SHRI GAUTAM JAIN, ADVOCATE DATE OF HEARING : 03 . 11 .2020 DATE OF PRONOUNCEMENT : 03 . 11 .2020 ORDER PER BHAVNESH SAINI, J.M. THIS APPEAL BY REVENUE HAS BEEN DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-35, NEW DELHI, DATED 05.10.2017, FOR THE A.Y. 2013-2014, CHALLENGING THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION OF RS.3,05,66,905/- MADE BY A.O. ON ACCOUNT OF DISALLOWANCE MADE UNDER 2 ITA.NO.7843/DEL./2017 M/S. HIM URJA PVT. LTD., NEW DELHI. SECTION 14A OF THE I.T. ACT, 1961 READ WITH RULE 8D(2)(III) OF I.T. RULES, 1962. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVE OF BOTH THE PARTIES THROUGH VIDEO CONFERENCING AND PERUSED THE MATERIAL AVAILABLE ON RECORD. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN IDENTIFYING THE LOCATION, DESIGNING, CONSTRUCTION, COMMISSIONING, GENERATION AND DISTRIBUTION OF HYDRO-ELECTRIC POWER. THE ASSESSEE FILED RETURN OF INCOME AT LOSS OF RS.5,90,06,240/-. THE A.O. NOTED THAT ASSESSEE COMPANY HAS MADE INVESTMENT OF RS.38.65 CRORES IN THE UNQUOTED SHARES OF M/S. MELKHET POWER PRIVATE LIMITED FOR EARNING OF DIVIDEND INCOME. HOWEVER, THE ASSESSEE HAS NOT RECEIVED ANY DIVIDEND INCOME DURING THE YEAR. THE A.O, HOWEVER, BY APPLYING RULE 8D OF THE I.T. RULES, 1962, MADE THE DISALLOWANCE OF THE IMPUGNED AMOUNT UNDER SECTION 14A OF THE I.T. ACT, 1961. 3.1. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LD. CIT(A). THE WRITTEN SUBMISSIONS OF THE ASSESSEE ON MERIT 3 ITA.NO.7843/DEL./2017 M/S. HIM URJA PVT. LTD., NEW DELHI. IS REPRODUCED IN THE APPELLATE ORDER. THE ASSESSEE HAS ALSO SUBMITTED BEFORE THE LD. CIT(A) THAT AS THERE WAS NO EXEMPT INCOME EARNED BY ASSESSEE DURING THE RELEVANT PREVIOUS YEAR, NO DISALLOWANCE UNDER SECTION 14A COULD BE MADE. THE ASSESSEE RELIED UPON JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CHEMNIVEST LTD., VS., CIT-IV 61 TAXMANN.COM 118 (DEL.). THE LD. CIT(A) FOLLOWING THIS DECISION OF THE HONBLE DELHI HIGH COURT DELETED THE ENTIRE ADDITION. HIS FINDINGS IN PARA 4.4.2 IS REPRODUCED AS UNDER : 4.4.2. IN VIEW OF SUBMISSIONS OF APPELLANT AND JUDICIAL PRONOUNCEMENT IT IS OBSERVED THAT THE DECISION BY THE HON'BLE ITAT DELHI HAS BEEN REVERSED BY THE HON'BLE DELHI HIGH COURT IN THE SAME CASE I.E. CHEMNIVEST LTD. VS. CIT-IV 61 TAXMANN.COM 118 (DELHI) VIDE ORDER DATED 02.09.2015 HOLDING THAT 'THE THE 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, DURING THE RELEVANT PREVIOUS YEAR FOR THE PURPOSE 4 ITA.NO.7843/DEL./2017 M/S. HIM URJA PVT. LTD., NEW DELHI. OF DISALLOWING ANY EXPENDITURE INCURRED IN RELATION TO THE SAID INCOME. IN OTHER WORDS, SECTION 14A WILL NOT APPLY IF NO EXEMPT INCOME IS RECEIVED OR RECEIVABLE DURING THE RELEVANT PREVIOUS YEAR. [PARA 23].' IN THE SAID JUDGMENT THE HON'BLE DELHI HIGH COURT FOLLOWED THE CASE OF CIT VS. HOLCIM INDIA P. LTD. 57 TAXMANN.COM 28 (2015) DELHI AND DISTINGUISHED THE DECISION OF MAXOPP INVESTMENT LTD. 347 ITR 272. APPELLANT HAS ALSO RELIED UPON VARIOUS JUDGMENTS IN HIS FAVOUR ON THE SAME LINES. SINCE, THERE IS NO CLAIM OF EXEMPT INCOME BY THE APPELLANT DURING THE YEAR, THE RATIO LAID DOWN BY HON'BLE DELHI HIGH COURT IS SQUARELY APPLICABLE IN THE CASE OF APPELLANT AND ACCORDINGLY NO ADDITIONS ARE CALLED FOR. HENCE, GROUND NOS. 1 TO 4 ARE ALLOWED. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT THE DEPARTMENTAL APPEAL HAS NO MERIT. IT IS AN UNDISPUTED FACT THAT ASSESSEE HAS NOT RECEIVED ANY DIVIDEND INCOME DURING THE YEAR WHICH FACT IS ALSO MENTIONED BY THE 5 ITA.NO.7843/DEL./2017 M/S. HIM URJA PVT. LTD., NEW DELHI. A.O. IN THE ASSESSMENT ORDER. THEREFORE, THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CHEMNIVEST LTD., VS., CIT-IV (SUPRA). THUS, DEPARTMENTAL APPEAL HAS NO MERIT AND THE SAME IS ACCORDINGLY DISMISSED. 5. IN THE RESULT, APPEAL OF THE DEPARTMENT DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (O.P. KANT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI, DATED 03 RD NOVEMBER, 2020 VBP/- COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT C BENCH, DELHI 6. GUARD FILE. // BY ORDER // ASSISTANT REGISTRAR : ITAT DELHI BENCHES : DELHI.