Addl.CIT, Special Range-3, New Delhi V. DCM Ltd., New Delhi

ITA 8137/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4289 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 21-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Notional interest; Rule 8D
• Section: 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO.8137/DEL/2018 ASSESSMENT YEAR: 2015-2016 ADDL. CIT, SPECIAL RANGE-3 NEW DELHI. VS. DCM LTD., 601, VIKRANT TOWER, RAJENDRA PLACE, NEW DELHI. TAN/PAN: AAACD1012E (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI V.P. GUPTA, ADV. RESPONDENT BY: DR. MANINDER KAUR, SR.D.R. DATE OF HEARING: 30 09 2021 DATE OF PRONOUNCEMENT: 30 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 31.10.2018, PASSED BY LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXXIV, NEW DEL HI FOR THE QUANTUM OF ASSESSMENT PASSED U/S.143(3) FOR THE ASSESSMENT YEAR 2015-16. IN THE GROUNDS OF THE APPE AL THE REVENUE HAS RAISED FOLLOWING GROUNDS:- 1. WHETHER ON FACTS AND IN CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) HAS ERRED IN DELETING THE ADDITION/ DISALLOWANCE OF INTEREST ON INTEREST FREE ADVANCE OF RS. 22,32,000/ - MADE BY THE ASSESSING OFFICER. 2. WHETHER ON FACTS AND IN CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) HAS ERRED IN DELETING THE ADDITION/ DISALLOWANCE U/S. I.T.A. NO.8137/DEL/2018 2 14A READ WITH RULE 8D OF RS. 3,09,02,000/- MADE BY THE ASSESSING OFFICER. 3. WHETHER ON FACTS AND IN CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) HAS ERRED IN DELETING THE ADJUSTMEN T MADE BY THE ASSESSING OFFICER IN BOOK PROFIT U/S 115JB ON ACCOU NT OF DISALLOWANCE U/S. 14A READ WITH RULE 8D AMOUNTING T O RS. 3,09,02,000/-. 2. AT THE OUTSET, LD. COUNSEL SUBMITTED THAT BOTH T HE ISSUES INVOLVED ARE COVERED BY THE DECISION OF THE TRIBUNA L IN ASSESSEES OWN CASE FOR THE EARLIER YEARS IN FAVOUR OF THE ASSESSEE. IN SUPPORT, HE HAS ALSO FILED THE DECISIO N OF THE TRIBUNAL FOR ASSESSMENT YEAR 2014-15 IN ITA NO.5376/DEL/2018. IN SO FAR AS ISSUE RELATING TO GR OUND NO.1 REGARDING DISALLOWANCE OF RS.22,32,000/- BEING THE NOTIONAL INTEREST WITH REFERENCE TO INTEREST FREE ADVANCE GI VEN TO DCM EMPLOYEES WELFARE TRUST. BEFORE THE LD. ASSESSING O FFICER, THE ASSESSEES SUBMISSION WAS THAT LOAN GIVEN TO THE CO MPANY WAS OUT OWN SUFFICIENT INTEREST FREE FUNDS IN FORM OF RESERVES AND SHARE CAPITALS, AND THEREFORE, IT CANNOT BE SAI D THAT LOANS HAVE BEEN GIVEN OUT OF BORROWED FUNDS. LD. ASSESSIN G OFFICER NOTED THAT SIMILAR DISALLOWANCE WAS MADE IN THE EAR LIER YEARS AND HAS SIMPLY MADE THE DISALLOWANCE ON THE GROUND THAT ITAT ORDER IN THE EARLIER YEARS IS SUBJUDICE BEFORE THE HONBLE SINCE THIS ISSUE IS COVERED BY THE ORDER OF THE TRI BUNAL, OF THE EARLIER YEARS ORDER FOR THE ASSESSMENT YEARS 2011- 12 AND 2012-13, THEREFORE, RESPECTFULLY FOLLOWING THE SAME AND CONSISTENT WITH THE VIEW TAKEN IN THE EARLIER YEARS , THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. I.T.A. NO.8137/DEL/2018 3 3. IN SO FAR AS DISALLOWANCE OF 14A, IT IS AN ADMIT TED FACT THAT THERE IS NO EXEMPT INCOME DURING THE YEAR, THE REFORE, NO DISALLOWANCE U/S.14A CAN BE MADE IN VIEW OF THE DEC ISION OF HONBLE DELHI HIGH COURT IN THE CASE OF JOINT INVESTMENT PVT. LTD. (2015) 59 TAXMANN.COM 295 . IT HAS ALSO BEEN POINTED OUT BEFORE US THAT THIS TRIBUNAL IN EARLIER YEARS HAD DELETED THE SIMILAR DISALLOWANCE MADE BY THE ASSESS ING OFFICER. EVEN THE LD. CIT(A) HAVE DELETED THE DISAL LOWANCE FOLLOWING VARIOUS JUDICIAL DECISIONS UPHOLDING THAT DISALLOWANCE U/S.14A CANNOT BE INVOLVED WHEN NO EXE MPT INCOME HAS BEEN EARNED BY THE ASSESSEE IN THE RELEV ANT ASSESSMENT YEAR. ACCORDINGLY, THIS GROUND IS ALSO D ISMISSED. 4. LASTLY, IN SO FAR AS ADJUSTMENT IN BOOK PROFIT U /S.115JB ON ACCOUNT OF DISALLOWANCE U/S.14A THEN AGAIN WHEN THERE IS NO EXEMPT INCOME, NO DISALLOWANCE IS CALLED FOR AND MOREOVER, SIMILAR ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL IN ASSESSMENT YEAR 2014-15 . ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED . 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ABOVE DECISION WAS ANNOUNCED ON CONCLUSION OF VIRTU AL HEARING IN THE PRESENCE OF BOTH THE PARTIES ON 30 TH SEPTEMBER, 2021. SD/- SD/- [PRASHANT MAHARISHI] [AMIT SHUKLA] [ACCOUNTANT MEMBER] JUDICIAL MEMBER DATED: 30/09/2021 PKK: