Indian Kanoon - Search engine for Indian Law

Income Tax Appellate Tribunal - Bangalore

Deputy Commissioner Of Income Tax ... vs M/S Aditya Auto Products & Engineering ... on 1 June, 2018

                IN THE INCOME TAX APPELLATE TRIBUNAL
                         "A" BENCH : BANGALORE


         BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER
        AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER


                          ITA No.163/Bang/2018
                         Assessment year : 2009-10


The Deputy Commissioner of            Vs.   M/s. Aditya Auto Products &
Income Tax,                                 Engineering India Pvt. Ltd.,
Circle 1(1)(1),                             Plot No.13E, KIADB Industrial
Bangalore.                                  Area, Doddaballapura,
                                            Bangalore - 562 103.
                                            PAN: AABCA 7045H
          APPELLANT                                  RESPONDENT


Appellant by      : Shri B.R. Ramesh, Jt. CIT(DR)(ITAT), Bengaluru.
Respondent by     : Ms. Tanmayee Rajkumar, Advocate


                 Date of hearing       : 14.05.2018
                 Date of Pronouncement : 01.06.2018

                                 ORDER

    Per N.V. Vasudevan, Judicial Member

This is an appeal by the Revenue against the order of the CIT(Appeals)-1, Bengaluru dated 31.08.2017 relating to assessment year 2009-10.

2. The grounds of appeal raised by the Revenue reads thus:

"1. The order of the Learned CIT (Appeals), in so far as it is prejudicial to the interest of revenue, is opposed to law and the facts and circumstances of the case.

2. The Ld. CIT (A) erred in deleting the additions made u/s 14A by the AO by relying on the Delhi High Court's judgment in the case of Cheminvest Limited Vs CIT 2015, 378 ITR 33(Delhi), even though the issue has not reached finality as the revenue's SLPs are pending before the Hon'ble Apex Court on the said issue.

3. The Ld. CIT (A) erred in deleting the addition made on account of belated remittance of PF/ESI by the assessee on the basis of jurisdictional High Court's judgment in the case CIT Vs Sabri Enterprises, even though the issue has not reached finality as the revenue's SLPs are pending before the Hon'ble Apex Court on the said issue.

4. For these and such other grounds that may be urged at the time of hearing, it is humbly prayed that the order of the Ld. CIT (A) be reversed and that of the Assessing Officer be restored."

3. As far as Gr.No.3 is concerned, it was brought to our notice that in AY 2009-10 no such issue was decided by the CIT(A) and therefore Gr.No.3 does not arise out of the order of the CIT(A) and hence dismissed.

4. The only other ground of appeal is with regard to disallowance u/s.14A of the Income Tax Act, 1961 ( the Act). At the time of hearing of this appeal, it was brought to our notice by the ld. counsel for the assessee that the admitted factual position in the present case is that there was no dividend income or other exempt income earned by the assessee during ITA No.163/Bang/2018 Page 3 of 5 the relevant previous year. The ld. counsel for the assessee drew our attention to the decision of the Bangalore Bench of ITAT in the case of M/s UB Infrastructure Projects Ltd., Vs. DCIT, ITA No. 2098/Bang/2016 (asst.

year 2012-13) order dated 22/12/2017, wherein this Tribunal took the view that there can be no disallowance of expenses u/s 14A of the Act, if there is no exempt income earned during the relevant previous year. The following are the relevant observations of the Tribunal in this regard.

"3. Having carefully examined the orders of authorities below, we find that undisputedly the assessee has not earned any exempted income. Now it is settled position of law that whenever assessee did not earn any exempt income, no disallowance could be made u/s. 14A of the Act. The Hon'ble Delhi High Court in the case of Cheminvest Ltd. v. CIT, 378 ITR 33 (Del) has categorically held that section 14A envisages that there should be actual receipt of income which was not includible in the total income during the relevant previous year for the purpose of disallowing any expenditure in relation to the said income. Wherever there is no exempt income includible in the total income of the assessee, the provisions of section 14A cannot be invoked. The relevant observations of the judgment of the Hon'ble Delhi High Court are extracted hereunder:-

"15. Turning to the central question that arises for consideration, the court finds that the complete answer is provided by the decision of this court in CIT v. Hololcim India (P) Ltd. (decision dated 5th September 2014, in I.T. A. No. 486 of 2014). In that case, a similar question arose, viz., whether the Income-tax Appellate Tribunal was justified in deleting the disallowance under section 14A of the Act when no dividend income had been earned by the assessee in the relevant assessment year ? The court referred to the decision of this court in Maxopp Investment Ltd. (supra) and to the decision of the Special Bench of the Income-tax Appellate Tribunal in this very case, i.e., Cheminvest Ltd. v. CIT [2009] 317 !TR (AT) 86 (Delhi) [SB]. The court also referred to three decisions of ITA No.163/Bang/2018 Page 4 of 5 different High Courts which have decided the issue against Revenue. The first was the decision in CIT v.

Lakhani Marketing Incl. (decision dated April 2, 2014, of the High Court of Punjab and Haryana in I. T. A. No. 970 of 2008)--since reported in [2015] 4 ITR-OL 246 (P&H)-- which in turn referred to two earlier decisions of the same court in CIT v. Hero Cycles Ltd. [2010] 323 ITR 518 (P&H) and CIT v. Winsome Textile Industries Ltd. [2009] 319 ITR 204 (P&H). The second was of the Gujarat High Court in CIT v. Corrtech Energy (P.) Ltd. [2014] 223 Taxmann 130 (Guj) ; [2015] 372 1TR 97 (Guj) and the third of the Allahabad High Court in CIT v. Shivam Motors (P) Ltd. (decision dated 5th May, 2014, in T.A. No. 88 of ITA No.1 1071Bang12016 2014). These three decisions reiterated the position that when an assessee had not earned any taxable income in the relevant assessment year in question "corresponding expenditure could not be worked out for disallowance."

4. This was also examined by the Tribunal in the assessee's own case for assessment year 2010-11 and held that when there is no exempt income, provision of section 14 of the Act cannot be applied.

5. In the light of the aforesaid judgment, the provisions of section 14A cannot be invoked as there is no exempt income in the hands of the assessee. Accordingly, we find no infirmity in the order of the CIT(Appeals) who has rightly deleted the addition."

5. In view of the aforesaid decision of the Tribunal, we are of the view that the disallowance of expenditure u/s 14A of the Act was rightly deleted by the CIT(A). We find no grounds to interfere with the order of the CIT(A).

Consequently, Gr.No.2 raised by the Revenue is dismissed. The other grounds of appeal are general and academic calling for no specific adjudication.

6. In the result, appeal of the Revenue is dismissed.

Pronounced in the open court on this 1st day of June, 2018.

                Sd/-                                         Sd/-

     ( INTURI RAMA RAO )                           ( N.V. VASUDEVAN)
       Accountant Member                               Judicial Member


Bangalore,
Dated, the 1st June, 2018.

/ Desai Smurthy /

Copy to:

1.    Appellant
2.    Respondent
3.    CIT
4.    CIT(A)
5.    DR, ITAT, Bangalore.
6.    Guard file



                                                By order



                                           Senior Private Secretary
                                             ITAT, Bangalore.