Bombay High Court
The Pr. Commissioner Of Income Tax 10 vs Huntsman International (India) Pvt. ... on 30 January, 2019
Author: M.S. Sanklecha
Bench: Akil Kureshi, M.S. Sanklecha
Uday S. Jagtap 1619-16-ITXA-34=.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INCOME TAX APPEAL NO. 1619 OF 2016
The Pr. Commissioner of Income Tax-10 .. Appellant
v/s.
Huntsman International (India) Pvt. Ltd. .. Respondent
Mr. Arvind Pinto a/w Mr. N.C. Ranganayakulu for the appellant Mr. Madhur Agarwal a/w Mr. Atul Jasani for the respondent CORAM : AKIL KURESHI & M.S. SANKLECHA, J.J. DATED : 30 th JANUARY, 2019 P.C.
1. The appeal is admitted for consideration on following question of law :-
(i) On the facts and in the circumstance of the case and in law, the Tribunal is not justified in holding that the distribution network, material supply contract and brand use are eligible for depreciation, it has failed to specify any reason as to how it falls within the clause "any other business or commercial rights of a similar nature" of Section 32(1)(ii) and as to how the doctrine of "ejusdem generis" is applicable in the instant case ?
2. Registry is directed to communicate a copy of this order to the Tribunal. This would enable the Tribunal to keep the papers and proceedings relating to the present appeal available, to be produced 1 of 4 ::: Uploaded on - 31/01/2019 ::: Downloaded on - 01/02/2019 00:27:36 ::: Uday S. Jagtap 1619-16-ITXA-34=.doc when sought for by the Court.
3. Learned Counsel appearing for the respondent waives service.
4. We notice that the Revenue has raised additional question, which reads as under :-
"On the facts and in the circumstance of the case and in law, the Tribunal erred in allowing 14A Rule 8D since the Revenue has not accepted the decision of Delhi High Court in the case of Chem Investment Ltd. Vs. CIT, Delhi ?"
5. This question relates to disallowance made by the Assessing Officer under Section 14A of the Income Tax Act, 1961 r/w Rule 8D of the Rules of the expenditure incurred by the assessee for earning exempt income. The Tribunal by the judgment which is impugned in this appeal held that the assessee had not earned any exempt income during the year under consideration. The Tribunal, therefore, followed the decision of Delhi High Court in case of CIT Vs. Holcim India (Pvt.) Ltd. (2014) 272 CTR 282. In such decision, the Delhi High Court ruled that when there is no exempt income earned by the assessee, no disallowance under Section 14A of the Act can be made. It is pointed out to us that this Court in Income Tax Appeal No.693 of 2015 in case 2 of 4 ::: Uploaded on - 31/01/2019 ::: Downloaded on - 01/02/2019 00:27:36 ::: Uday S. Jagtap 1619-16-ITXA-34=.doc of Principal CIT Vs. M/s. Rivian International (P) Ltd., by order dated 21.11.217, following the judgment of Delhi High Court in case of Holcim India (P) Ltd. (supra), has adopted the same principle making following observations :-
"3. We have given careful consideration to the submissions. On facts, it appears from the impugned judgment that the assessee had made investment in shares of closely held companies which did not declare any dividend. On fact, there is no dispute that the assessee has not earned any exempt income during the year under consideration. After consideration of Section 14A, the Delhi High Court followed decisions of certain other High Courts. Section 14A of the said Act provides that for the purpose of computing the total income, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under the said Act. In other words, Section 14A provides that if there is an income which does not form a part of the total income under the said Act, the expenditure which is incurred for earning the income is not an allowable deduction. Therefore, during the relevant year, if the assessee has not earned any tax free income, the corresponding expenditure incurred cannot be taken into consideration for dis-allowance.
4. We respectfully concur with the view taken by the Delhi High Court as the said view can always be taken on fair reading of Section 14A of the Said Act. A Division Bench of Allahabad High Court has also taken a similar view in the case of Commissioner of Income Tax V. Shivam Motors (P) Ltd. (supra). Hence, in our view, no fault can be found with the impugned judgment of the Appellate Tribunal whereby dis-allowance under Section 14A was ordered to be deleted. No substantial question of law arises. Appeal is, accordingly, dismissed."
6. Counsel for the assessee also brought to our notice the fact that the Supreme Court in case of CIT Vs. Chettinad Logistics (P) Ltd. 95 3 of 4 ::: Uploaded on - 31/01/2019 ::: Downloaded on - 01/02/2019 00:27:36 ::: Uday S. Jagtap 1619-16-ITXA-34=.doc taxmann.com 250 has dismissed the Revenue's SLP against the judgment of the Delhi High Court in Holcim India (P) Ltd. (supra), taking a similar view. This additional question is, therefore, not entertained.
(M.S. SANKLECHA, J.) (AKIL KURESHI, J.)
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