WIND WORLD WIND FARMS (SAI) P LIMITED,MUMBAI V. DCIT, CIRCLE-(3)(3)(1), MUMBAI, AAYAKAR BHAWAN,MUMBAI

ITA 4875/MUM/2024

AI Insights

The case involves Wind World Wind Farms (Sai) P Limited, which appealed against the order of the Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre, Delhi, concerning the Assessment Year 2018-19. The primary issue was the addition made under Section 14A of the Income Tax Act, 1961, which pertains to disallowances related to expenses incurred in earning exempt income. The assessee had not earned any exempt income during the year but had voluntarily disallowed a sum of Rs. 1,13,000. The Assessing Officer (AO) added an additional Rs. 1,13,000 to the income, calculating disallowance at 1% of the investment in a subsidiary company. Both the AO and the CIT(A) upheld this addition. However, the Tribunal, referencing decisions from the Madras High Court and its own earlier rulings, found that the addition was not justified as no exempt income was earned.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 474398 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 12-11-2024
• Assessment Year: 2018-2019
• Appeal Filed On: 21-09-2024
• Other Referred Cases: Prime Property Development Corporation Ltd. vs. ACIT [2024] (159 taxmann.com 1581) (Mumbai \\u2013 Trib.), CIT vs. Chettinad Logistics (P.) Ltd., (2017) [80 taxmann.com 221]
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UMESH CHANDRA SINHA
• Assessee Lawyers: SIMRAN DHAWAN
• Keywords: Set aside; Earning of tax free income

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI “SMC” BENCH : MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI RAJ KUMAR CHAUHAN, JUDICIAL MEMBER ITA No. 4875/Mum/2024 Assessment Year 2018-19 Wind World Wind Farms (Sai) P Limited, A-9, Wind World Tower, Veera Desai Road, Andheri (W), Mumbai PAN : AABCE5227D vs. DCIT, Circle–3(3)(1), Aayakar Bhavan, M.K. Road, Mumbai (Appellant) (Respondent) Assessee by : MS. Simran Dhawan Revenue by : Shri Umesh Chandra Sinha Date of Hearing : 12/11/2024 Date of Pronouncement : 14/11/2024 PER B.R. BASKARAN, A.M : The assessee has filed this appeal challenging the order dt.24-07-2024 passed by the Ld. Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi [„Ld.CIT(A)‟] and it relates to AY. 2018-19. The only issue urged in this appeal relates to addition made by the AOu/s.14A of the Income Tax Act, 1961 („the Act‟). 2 ITA No. 4875/Mum/2024 2. The assessee is engaged in the business of generation of wind energy and dealing in power generation equipment. During the year under consideration, the assessee did not earn any exempt income. However, it has voluntarily disallowed a sum of Rs.1,13,000/- u/s.14A of the Act. The AO noticed that the assessee has made investment in his subsidiary-company to the tune of Rs. 2,26,00,000/-. Accordingly, he computed disallowanceu/s.14A of the Act @1% of the value of the investment, which worked out to Rs. 2,26,000/-. Accordingly, the AO made addition of the difference amount of Rs. 1,13,000/- [i.e., Rs. 2,26,000/- (-) Rs. 1,13,000/-]to the total income of the assessee. The Ld.CIT(A) also confirmed the same. 3. The Ld.AR placed reliance on the decision rendered by theCo- ordinate Bench of the Tribunalin the case of Prime Property Development Corporation Ltd., vs. ACIT [2024] (159 taxmann.com 1581) (Mumbai – Trib.) and submitted that the disallowanceu/s.14A of the Act is not required to be made when the assessee has not earned any exempt income. Accordingly, the Ld.ARsubmitted that the additionof Rs. 1,13,000/- made by the AO may kindly be deleted. 4. We heard the Ld.DR and perused the record.The undisputed fact would remain that the assessee has not earned any exempt income. The Hon‟ble Madras High Court in the case of CIT vs. Chettinad Logistics (P.) Ltd., (2017) [80 taxmann.com 221] has held that the disallowanceu/s.14A of the Actcannot be made when the assessee has not earned any exempt income. The above said decision was followed by the Co-ordinate Bench of the Tribunalin the case ofPrime Property Development Corporation Ltd., (supra). Accordingly, we find merit in the contentions of the Ld.AR. Accordingly, we set aside the order 3 ITA No. 4875/Mum/2024 passed by the Ld.CIT(A) and direct the AO to delete the addition of Rs. 1,13,000/- made by the AO u/s.14A of the Act. 5. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 14-11-2024 Sd/- Sd/- [RAJ KUMAR CHAUHAN] [B.R. BASKARAN] JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated: 14-11-2024 TNMM Copy to : 1) The Appellant 2) The Respondent 3) The CIT concerned 4) The D.R, “SMC” Bench, Mumbai 5) Guard file By Order Dy./Asst. Registrar I.T.A.T, Mumbai "