Sh. Naresh Malhotra, Ludhiana V. ACIT, Ludhiana

ITA 828/CHANDI/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90163 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 01-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 08-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMARVEER SINGH
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI. BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R. SOOD, ACCOUNTANT MEMBER ITA NO. 828/CHD/2012 ASSESSMENT YEAR: 2008-09 SHRI NARESH MALHOTRA, VS. THE ACIT, CIRCLE V, LUDHIANA LUDHIANA PAN NO.AFMPN4448M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHWANI KUMAR RESPONDENT BY : SHRI AMARVEER SINGH DATE OF HEARING : 01/06/2015 DATE OF PRONOUNCEMENT : 05/06/2015 ORDER PER T.R.SOOD, A.M. THE APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 27.06.2012 PASSED BY CIT(A)-II, LUDHIANA. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLO WING GROUND:- THAT ORDER PASSED U/S 250(6) OF THE INCOME-TAX ACT, 1961 BY THE LD. CIT(A)-II, LUDHIANA IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH HE WAS NOT JUSTIFIED TO ARBITRARILY UPHOLD A DISALLOWA NCE OF RS. 3,13,512/- OUT OF TOTAL DISALLOWANCE OF RS. 4,80,04 0/- BY RESORT TO PROVISIONS OF SECTION14A. 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT DURI NG ASSESSMENT PROCEEDINGS IT WAS NOTICED THAT ASSESSEE HAD MADE CERTAIN INVES TMENTS, THEREFORE, PROVISIONS OF SECTION 14A READ WITH RULE 8D WERE INVOKED AND D ISALLOWANCE OF RS. 4,80,040/- WAS MADE. 4. ON APPEAL, ACTION OF THE ASSESSING OFFICER WAS C ONFIRMED BY LD. CIT(A). 5. BEFORE US LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT SINCE THERE WAS NO EXEMPT INCOME, THEREFORE, NO DISALLOWANCE COULD BE MADE. HE FURTHER POINTED OUT THAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2009-10 IN ITA NO. 846/CHD/2013, SIMILAR ISSUE WAS SET ASIDE AND, THER EFORE, SAME ORDER MAY BE FOLLOWED. 4. ON THE OTHER HAND LD. DR SUPPORTED THE ORDER OF THE LD. CIT(A). 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT NO DISALLOWANCE CAN BE MADE U/S 14A IF THERE IS NO EXEMPT INCOME. THIS POSITION IS ON THE BASIS OF DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. LAKHANI MARKETING IN ITA NO. 970 OF 2008. HOWEVER, THE FACT WHETHER THERE IS ANY EXEMPT INCOME OR NOT IS NOT RECORDED IN THE ASS ESSMENT ORDER OR IMPUGNED APPELLATE ORDER. THIS ISSUE WAS DECIDED IN EARLIER YEAR FOR ASSESSMENT YEAR 20090-10 VIDE PARA 7, WHICH READS AS UNDER:- 7. AFTER CONSIDERING THE SUBMISSIONS OF LD. DR WE FIND THAT HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CA SE OF CIT V LAKHANI MARKETING LTD ITA NO. 970 OF 2008 HAS CLEARLY HELD THAT IF THERE IS NO EXEMPT INCOME THEN SECTION 14A IS NOT ATTRACTED. SINCE ASSESSEE HAS PLEADED BEFORE ASSES SING OFFICER AS WELL AS CIT(A) THAT THERE WAS NO EXEMPT INCOME, THEREFORE, WE SET ASIDE THE ORDER OF LD. CIT AND RE MIT THE MATTER BACK TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION TO VERIFY THAT IF THERE IS NO EXEMPT INCOME DURING THE YEAR THEN NO DISALLOWANCE SHOULD BE MADE OTHERWISE THE ISSUE CAN BE DECIDED IN ACCORDANCE WITH THE DIRECTION OF LD. CIT(A). 6. FOLLOWING THE ABOVE ORDER WE SET ASIDE THE ORDER OF LD. CIT(A) AND REMIT THIS MATTER BACK TO THE FILE OF ASSESSING OFFICER W ITH A DIRECTION THAT IF THERE IS NO EXEMPT INCOME DURING THE YEAR THEN NO DISALLOWAN CE SHOULD BE MADE. HOWEVER, IF THERE IS ANY EXEMPT INCOME THEN ISSUE M AY BE DECIDED IN ACCORDANCE WITH LAW. 7. IN THE RESULT, APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 05.06.2015. SD/- SD/- (BHAVNESH SAINI) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 5 TH JUNE, 2015 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR