DCIT Central-2 , Indore V. M/s. Keti-Kj Construction (India) Ltd., , Indore

ITA 874/Ind/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6992 (ITAT-INDORE)
• Duration Of Justice: 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 29-07-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 14-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R P MOURYA
• Assessee Lawyers: SHRI
• Keywords: Earning of tax free income; Set aside
• Section: 142(1); 14A; 143(1); 144

Judgement Text

KETI-KJ CONSTRUCTION (INDIA) LTD ITA NO.874/IND/2018 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HON'BLE KUL BHARAT, JUDICIAL MEMBER AND HON'BLE MANISH BORAD, ACCOUNTANT MEMBER ITA NO.874/IND/2018 ASSESSMENT YEAR 2013-14 DCIT-(CENTRAL)-2, V/S M/S. KETI-KJ CONSTR UCTION INDORE (INDIA) LTD, 31/6, VATSALYA CHAMBERS, SNEH NAGAR, INDORE (REVENUE) (RESPONDENT ) PAN AAECK0182G REVENU E BY S HRI R.P. MOURYA , SR.DR ASSESSEE BY S HRI PANKAJ SHAH , CA DATE OF HEARING 2 9 .0 7 . 201 9 DATE OF PRONOUNCEMENT 31 .0 7 . 201 9 O R D E R PER MANISH BORAD, AM. THE ABOVE CAPTIONED APPEAL AT THE INSTANCE OF REVEN UE PERTAINING TO ASSESSMENT YEAR 2013-14 IS DIRECTED A GAINST THE ORDERS OF LD. COMMISSIONER OF INCOME TAX (APPEALS)- III, INDORE (IN SHORT CIT(A)), DATED 23.08.2018, WHICH IS ARISING OUT OF ORDER U/S 144 OF THE INCOME TAX ACT (IN SHORT THE ACT) DATE D 01.03.2016 FRAMED BY ACIT-(CENTRAL)-2, INDORE. KETI-KJ CONSTRUCTION (INDIA) LTD ITA NO.874/IND/2018 2 2. BRIEF FACTS OF THE CASE AS CULLED OUT FROM THE R ECORDS ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS O F VARIOUS CIVIL CONSTRUCTION ACTIVITIES VIZ. ROAD BUILDING, WATER S UPPLY WORK ETC. THE ASSESSEE COMPANY FILED ITS RETURN DECLARING TOT AL LOSS OF RS. 2,13,74,983/- ON 30.09.2013. THE RETURN PROCESSED U /S 143(1) OF THE ACT. THE CASE WAS MANUALLY SELECTED FOR SCRUTI NY. NOTICE U/S 143(2) OF THE ACT WAS SERVED UPON THE ASSESSEE ON 1 1.09.2014. THEREAFTER A NOTICE U/S 142(1) OF THE ACT ALONG WIT H QUESTIONNAIRE WERE ISSUED ON 07.09.2015. AS THE ASSESSEE COMPANY DID NOT COMPLIED TO THE NOTICES/QUESTIONNAIRE ISSUED BY THE LD. A.O, THE INCOME OF THE ASSESSEE WAS ASSESSED EX-PARTE U/S 14 4. INCOME ASSESSED AT RS. (-) 35,87,790/- AFTER DISALLOWING R S.1,55,20,966/- U/S 14A OF THE ACT AND ALSO MAKING ADHOC DISALLOWAN CE AT RS.22,66,225/- OUT OF THE EXPENSES. AGGRIEVED ASS ESSEE PREFERRED APPEAL BEFORE LD. CIT(A) CHALLENGING THE ADDITIONS. LD. CIT(A) DELETED THE ADDITION OF RS.1,55,20,966/- MAD E U/S 14A AND PARTLY ALLOWED THE ADHOC DISALLOWANCE OF RS.22,66,2 25/-. 3. NOW THE REVENUE IS IN APPEAL CHALLENGING THE D ELETION OF DISALLOWANCE OF RS.1,55,20,966/- RAISING FOLLOWING GROUNDS OF APPEAL; KETI-KJ CONSTRUCTION (INDIA) LTD ITA NO.874/IND/2018 3 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS) ERRED IN LAW IN DELETING THE DISALLOWANCE OF EXPEND ITURE OF RS.1,55,20,966/- MADE BY THE ASSESSING OFFICER U/S 14A R.W.R 8D WITHOUT APPRECIATING THE FACTS AND EVIDENCES MENTIONED IN T HE ASSESSMENT ORDER BY THE ASSESSING OFFICER. 4. LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGUE D AND SUPPORTED THE ORDER OF LD. A.O. 5. PER CONTRA LD. COUNSEL FOR THE ASSESSEE SUBMITTE D THAT NO EXEMPT INCOME HAS BEEN EARNED BY THE ASSESSEE AND T HEREFORE IN VIEW OF THE FOLLOWING JUDGMENTS NO DISALLOWANCE U/S 14A OF THE ACT IS CALLED FOR; (I) HON'BLE SUPREME COURT OF INDIA IN THE CASE OF P CIT VS GVK PROJECT AND TECHNICAL SERVICES LTD (2019) 106 TAXMA N.COM 181(SC) (II) CO-ORDINATE BENCH OF INDORE IN THE CASE OF ACI T V/S RAVI SEEDS AND RESEARCH PVT. LTD ITA NOS. 976 & 978/IND/ 2016 ORDER DATED 18.7.2018. (III) HON'BLE HIGH COURT OF DELHI IN THE CASE OF CH EMINVEST V/S CIT (2015) 61 TAXMANN.COM 118 (DEL). 6. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. REVENUE IS AGGRIEVED WITH THE FIN DING OF LD. CIT(A) KETI-KJ CONSTRUCTION (INDIA) LTD ITA NO.874/IND/2018 4 DELETING THE DISALLOWANCE U/S 14A OF THE ACT AT RS. 1,55,20,966/-. THERE IS NO DISPUTE TO THE FACT THAT NO EXEMPT INC OME HAS BEEN EARNED BY THE ASSESSEE DURING THE YEAR. HON'BLE HI GH COURT OF DELHI IN THE CASE OF CHEMINVEST V/S CIT (2015) 61 TAXMANN.COM 118 (DEL) (SUPRA) HAS LAID DOWN THE RATIO THAT SECTION 14A OF THE AC T WILL NOT APPLY IF NO EXEMPT INCOME IS RECEIVED OR R ECEIVABLE DURING THE YEAR. WE OBSERVE THAT SAME ISSUE WAS RAISED IN THE CASE OF ACIT V/S RAVI SEEDS AND RESEARCH PVT. LTD (SUPRA) W HICH WAS AUTHORED BY US AND SIMILAR VIEW WAS TAKEN BY US OBS ERVING AS FOLLOWS; 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AFTER GOING THROUGH THE JUDGMENT OF THE HO N'BLE HIGH COURT OF DELHI IN THE CASE OF CHEMINVEST LIMITED (SUPRA), WE FIND THAT THE HON'BLE HIGH COURT HAS CATEGORICALLY HELD THAT THE EXPRESSION DOES NOT FORM PART OF THE TOTAL INCOME IN SECTION14A OF THE ACT ENVISAGES TH AT THERE SHOULD BE AN ACTUAL RECEIPT OF INCOME, WHICH IS NOT INCLUDIBLE I N THE TOTAL INCOME, DURING THE RELEVANT PREVIOUS YEAR FOR THE PURPOSE OF DISAL LOWING ANY EXPENDITURE INCURRED IN RELATION TO THE SAID INCOME. IN OTHER WORDS, SECTION 14A WILL NOT APPLY IF NO EXEMPT INCOME IS RECEIVED OR RECEIV ABLE DURING THE RELEVANT PREVIOUS YEAR. WE, THEREFORE, RESPECTFULLY FOLLOW ING THE JUDGMENT OF THE HON'BLE HIGH COURT OF DELHI(SUPRA) HOLD THAT SINCE DURING THE YEAR, UNDER CONSIDERATION, NO EXEMPT INCOME HAS BEEN EARNED BY THE ASSESSEE, NO DISALLOWANCE U/S 14A OF THE ACT WAS CALLED FOR. IN THIS VIEW OF THE MATTER, THE ORDERS OF THE AUTHORITIES BELOW ARE SET ASIDE A ND THE GROUND OF APPEAL TAKEN BY THE ASSESSEE IS ALLOWED KETI-KJ CONSTRUCTION (INDIA) LTD ITA NO.874/IND/2018 5 7. WE THEREFORE RESPECTFULLY FOLLOWING THE JUDGMENT OF HON'BLE HIGH COURT IN THE CASE OF CHEMINVEST V/S CIT (2015) 61 TAXMANN.COM 118 (DEL) (SUPRA) ARE OF THE CONSIDERED VIEW THAT LD. CIT(A) HAS RIGHTLY DELETED THE DISALLOWANCE U/S 14A AND THEREFORE NO INTERFERENCE IS CALLED FOR IN THE FINDING OF LD . CIT(A). SOLE GROUND RAISED BY THE REVENUE IS DISMISSED. 8. IN THE RESULT THE APPEAL OF THE REVENUE STANDS D ISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 3 1.0 7 .2019. SD/- SD/- ( KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 31 JULY, 2019 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER ASSISTANT REGISTRAR, ITAT, INDORE