Deputy Commissioner of Income-tax, Anand Circle, Anand v. Anupam Industries Limited
[Citation -2019-LL-0919-9]

Citation 2019-LL-0919-9
Appellant Name Deputy Commissioner of Income-tax, Anand Circle, Anand
Respondent Name Anupam Industries Limited
Court ITAT-Ahmedabad
Relevant Act Income-tax
Date of Order 19/09/2019
Assessment Year 2015-16
Judgment View Judgment
Keyword Tags disallowance of expenditure • exempt income • penalty order
Bot Summary: As per its grounds of appeal, the Revenue has challenged the action of the CIT(A) for granting relief out of disallowance of expenses under s.14A read with Rule 8D of the Income Tax Rules. Various Courts have held that Section 14A of the Act disallowance cannot be kicked when there was no exempt income earned by the assessee as is the case in the present appeals. Hon ble Delhi High Court in PCIT vs ILFS Energy Development Company Ltd. 84 Taxman.com 186(Delhi) and the Hon ble Madras High Court in CIT v. Chettinad Logistics Limited 80 taxmann.com 221(Madras) have expressed a clear disagreement with CBDT Circular and held that where there is no exempt income in relevant year there cannot be a disallowance of expenditure under s.14A of the Act. Similar proposition has been laid down by the Hon ble Gujarat High Court in the case of Corrtech Energy Ltd 45 taxmann.com. The aforesaid judicial fiat was reiterated by the Hon ble Delhi High Court in the case of Joint Investments Pvt. Ltd. vs. CIT reported in 372 ITR 692 wherein Hon ble Delhi High Court has categorically ruled that disallowance under s.14A of the Act cannot exceed the amount of tax exempt income. Notably, the SLP filed against the decision of Hon ble Madras High Court in Chettinad I T A N o. 1 5 0 4 / Ah d / 1 8 M / s. An u p a m I n d u s t r i e s L t d. V s. D C I T A. Y. 2 0 1 5 - 1 6 - 3 - Logistics has been dismissed by Hon ble Supreme Court in CIT vs. Chettinad Logistics Ltd. 95 taxmann.com 250. In conformity with the judicial precedents, we find substantial merit in the conclusion drawn by the CIT(A) which essentially holds that Section 14A of the Act can be triggered only if assessee seeks to square off expenditure against the income which does not form part of total income under the Act and Section 14A of the Act cannot be invoked where no exempt income was earned in the relevant assessment years.


IN INCOME TAX APPELLATE TRIBUNAL BENCH, AHMEDABAD BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER I.T.A. No. 1504/Ahd/2018 (Assessment Year 2015-16) Deputy Commissioner of M/s. Anupam Industries Income-tax Limited rd Vs. Anand Circle, 204, 3 138, GIDC Estate, Vithal Floor, S. P. Patel Udyognagar, Anand- Complex, Near Old C. K. 388121 Hall, May fair Road, Anand - 388001 PAN/GIR No. AABCA9602Q (Appellant) (Respondent) Appellant by Shri Satish Solanki, Sr.D.R. Respondent by Shri M. K. Patel, A.R. Date of 19/09/2019 Hearing Date of 19/09/2019 Pronouncement ORDER PER PRADIP KUMAR KEDIA - AM captioned appeal has been filed at instance of Revenue against order of Commissioner of Income Tax (Appeals)-4, Vadodara (CIT(A) in short), dated 09.03.2018 arising in penalty order dated 18.12.2017 passed by Assessing Officer I T N o . 1 5 0 4 / Ah d / 1 8 [ M / s . u p m I n d u s t r i e s L t d . V s . D C I T ] A. Y . 2 0 1 5 - 1 6 - 2 - (AO) under s. 143(3) of Income Tax Act, 1961 (the Act); concerning A.Y. 2015-16. 2. As per its grounds of appeal, Revenue has challenged action of CIT(A) for granting relief out of disallowance of expenses under s.14A read with Rule 8D of Income Tax Rules. 3. We have heard rival submission on issue. It was pointed out on behalf of assessee that assessee has not earned any exempt income during year under review. It is case of assessee that in absence of any exempt income provisions of Section 14A of Act could not be invoked. We find merit in aforesaid plea of assessee. Various Courts have held that Section 14A of Act disallowance cannot be kicked when there was no exempt income earned by assessee as is case in present appeals. Hon ble Delhi High Court in PCIT vs IL&FS Energy Development Company Ltd. (2017) 84 Taxman.com 186(Delhi) and Hon ble Madras High Court in CIT v. Chettinad Logistics (P.) Limited (2017) 80 taxmann.com 221(Madras) have expressed clear disagreement with CBDT Circular and held that where there is no exempt income in relevant year there cannot be disallowance of expenditure under s.14A of Act. Similar proposition has been laid down by Hon ble Gujarat High Court in case of Corrtech Energy (P.) Ltd (2014) 45 taxmann.com. 116 (Guj) and Pr.CIT vs. India Gelatine and Chemicals Ltd. (2016) 66 taxmann.com 356 (Guj). aforesaid judicial fiat was reiterated by Hon ble Delhi High Court in case of Joint Investments Pvt. Ltd. vs. CIT reported in 372 ITR 692 (Delhi) wherein Hon ble Delhi High Court has categorically ruled that disallowance under s.14A of Act cannot exceed amount of tax exempt income. Notably, SLP filed against decision of Hon ble Madras High Court in Chettinad I T N o . 1 5 0 4 / Ah d / 1 8 [ M / s . u p m I n d u s t r i e s L t d . V s . D C I T ] A. Y . 2 0 1 5 - 1 6 - 3 - Logistics (supra) has been dismissed by Hon ble Supreme Court in CIT vs. Chettinad Logistics (P.) Ltd. (2018) 95 taxmann.com 250 (SC). Hence, in conformity with judicial precedents, we find substantial merit in conclusion drawn by CIT(A) which essentially holds that Section 14A of Act can be triggered only if assessee seeks to square off expenditure against income which does not form part of total income under Act and Section 14A of Act cannot be invoked where no exempt income was earned in relevant assessment years. Thus, without going into other aspect of contentions, in consonance with judicial precedents, we do not see any infirmity in conclusion drawn by CIT(A) for non- applicability of Section 14A of Act in facts of case. 4. In result, appeal of Revenue is dismissed. This Order pronounced in Open Court on 19/09/2019 Sd/- Sd/- (KUL BHARAT) (PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ah med ab ad Da ted 1 9 / 0 9 /2 0 1 9 True Copy S. K. SINHA Copy of Order Forwarded to 1. Revenue 2. Assessee 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. 9 Guard file. By order Deputy Commissioner of Income-tax, Anand Circle, Anand v. Anupam Industries Limited
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