S 14A was not applicable as exempt income not claimed in relevant AY
S 14A was not applicable as exempt income not claimed in relevant AY
Escotrac Finance was into finance and investment activities. It filed its return of income which was processed u/s 143(1) (of Income Tax Act, 1961). It debited Rs 1,13,26,240 as interest paid, but no dividend income was shown in P&L account. AO disallowed total expenditure u/s 14A (of Income Tax Act, 1961) r.w. r 8D. CIT(A) restricted disallowance to Rs. 65,58,705. ITAT allowed assessee’s appeal, and held s 14A was not applicable, as assessee had not claimed exempt income in relevant AY.-501663
1. Assessee company is engaged in the business of financing and investment activities.
2. It filed its return of income of Rs 6,870 which was processed u/s 143(1) (of Income Tax Act, 1961).
3. It had debited a sum of Rs 1,13,26,240 as interest paid, but no dividend income was shown in P&L account.
4. AO disallowed the total expenditure of Rs 1,82,80,533 u/s 14A (of Income Tax Act, 1961) r.w. r 8D.
5. CIT(A) restricted the disallowance to the amount of Rs. 65,58,705.
On appeal, the ITAT held as under:
6. In view of the Order dated 02.09.2015 passed by the Hon'ble Delhi High Court in the case of Cheminvest Limited vs. Commissioner of Income Tax-VI (Supra), we are of the considered opinion that the AO has wrongly disallowed the total expenditure by applying the provisions of Section 14A (of Income Tax Act, 1961) read with Rule 8D (of Income Tax Rules, 1962) of the I.T. Act.
7. Similarly, Ld. CIT(A) has also wrongly restricted the disallowance on account of administrative expenses of Rs. 65,58,705/- in spite of the fact that assessee has not received any exempt income during the relevant previous year.
8. We allow the Appeal of the Assessee and dismiss the Appeal filed by the Revenue by holding that the provisions of Section 14A (of Income Tax Act, 1961) is not applicable in the case of the assesse, because the Assessee Company has not claimed any exempt income during the relevant assessment year and therefore, no disallowance u/s 14A (of Income Tax Act, 1961) is permissible.
Case Reference - M/s Escotrac Finance & Investments Pvt Ltd vs. Income Tax Officer.
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH 'B', NEW DELHI
BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND
SHRI H.S. SIDHU, JUDICIAL MEMBER
ITA No. 5399/Del/ 2012
(Assessment Year: 2009-10)
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