UNIPRES INDIA PVT. LTD., KANCHEEPURAM v. ITO, CORPORATE WARD - 3 (2),, CHENNAI

ITA 1851/CHNY/2019 | 2014-2015
Pronouncement Date: 26-11-2019 | Result: Allowed

Appeal Details

RSA Number 185121714 RSA 2019
Assessee PAN AAACU9830B
Bench Chennai
Appeal Number ITA 1851/CHNY/2019
Duration Of Justice 5 month(s) 7 day(s)
Appellant UNIPRES INDIA PVT. LTD., KANCHEEPURAM
Respondent ITO, CORPORATE WARD - 3 (2),, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 26-11-2019
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 26-11-2019
Last Hearing Date 30-09-2019
First Hearing Date 30-09-2019
Assessment Year 2014-2015
Appeal Filed On 18-06-2019
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: CHENNAI . . . ! & BEFORE SHRI N.R.S. GANESAN JUDICIAL MEMBER AND SHRI RAMIT KOCHAR ACCOUNTANT MEMBER ITA NO.1851/CHNY/2019 ' ' /ASSESSMENT YEAR: 2014-15 M/S.UNIPRES INDIA PVT. LTD. RNS-6 SIPCOT INDUSTRIAL GROWTH CENTRE ORAGADAM VADAKUPATTU POST SRIPERUMBUDUR TALUK KANCHEEPURAM DISTRICT TAMIL NADU-603 204. V . THE INCOME TAX OFFICER CORPORATE WARD-3(2) NUNGAMBAKKAM CHENNAI-600 034. [PAN: AAACU 9830 B ] ( * /APPELLANT) ( + * /RESPONDENT) * - / APPELLANT BY : MR. SP.CHIDAMBARAM ADVOCATE + * - /RESPONDENT BY : MR. J.PAVITHRAN KUMAR JCIT - /DATE OF HEARING : 30.09.2019 - /DATE OF PRONOUNCEMENT : 26.11.2019 / O R D E R PER RAMIT KOCHAR ACCOUNTANT MEMBER : THIS APPEAL FILED BY ASSESSEE IS DIRECTED AGAINST APPELLATE ORDER DATED 25.11.2018 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-11 CHENNAI (HEREINAFTER CALLED THE CIT( A)) IN ITA NO.205/16- 17 FOR ASSESSMENT YEAR (AY) 2014-15 THE APPELLATE PROCEEDINGS BEFORE LEARNED CIT(A) HAD ARISEN FROM ASSESSMENT ORDER DAT ED 25.11.2016 ITA NO.1851/CHNY/2019 :- 2 -: PASSED BY LEARNED ASSESSING OFFICER (HEREINAFTER CA LLED THE AO) U/S.143(3) OF THE INCOME-TAX ACT 1961 (HEREINAFTER CALLED THE ACT). 2. THE GROUNDS OF APPEAL RAISED BY ASSESSEE IN MEM O OF APPEAL FILED WITH INCOME-TAX APPELLATE TRIBUNAL CHENNAI (HEREIN AFTER CALLED THE TRIBUNAL) READ AS UNDER:- 1. THE ORDER OF THE COMMISSIONER OF INCOME TA X (APPEALS) ['CIT (A)'] IS CONTRARY TO THE LAW FACTS AND CIRCUMSTANCES OF THE CASE. UNDER NORMAL PROVISIONS OF THE ACT 2. DISALLOWANCE UNDER SECTION 14A OF THE INCOM E TAX ACT ('THE ACT') 2.1 THE CIT (A) HAS ERRED IN CONFIRMING THE DISA LLOWANCE MADE BY THE ASSESSING OFFICER ('AO) OF INR 15 01 125 AS EXPENDITURE INCURRED FOR EARNING THE EXEMPT DIVIDEND INCOME UNDER SECTION 14A OF THE ACT. 2.2 THE CTT (A) OUGHT TO HAVE APPRECIATED THAT DI SALLOWANCE UNDER SECTION 14A OF THE ACT IS NOT WARRANTED WHEN THE APPELLANT HAS NOT EAR NED ANY EXEMPT DIVIDEND INCOME DURING THE SUBJECT ASSESSMENT YEAR. 2.3 THE CIT (A) OUGHT TO HAVE APPRECIATED THAT TH E APPELLANT HAS NOT INCURRED ANY EXPENDITURE AN AS SUCH DISALLOWANCE UNDER SECTION 1 4A OF THE ACT IS UNCALLED FOR. 2.4 THE CIT (A) AND THE AO OUGHT TO HAVE APPRECIA TED THAT PROVISIONS OF SECTION 14A OF THE A ARE NOT APPLICABLE IN CASE OF STRATEGIC INVES TMENTS MADE FOR THE PURPOSE OF ACQUIRING CONTROLLING INTEREST. 2.5 THE CIT (A) OUGHT TO HAVE APPRECIATED THAT TH E APPELLANT HAD TAKEN A BUSINESS DECISION TO INVEST IN A JOINT VENTURE ENTITY AND IT DID NOT MAKE THE INVESTMENTS WITH A VIEW TO EARN EXEMPT INCOME AND AS SUCH NOTIONAL ATTRIBUT ION OF EXPENSES IS UNSUSTAINABLE. 2.6 THE CIT (A) HAS FAILED TO APPRECIATE THAT TH E APPELLANT HAS MADE INVESTMENTS OUT OF ITS SURPLUS FUNDS AND NO BORROWED FUNDS WERE UTILIS ED FOR THE INVESTMENTS. 2.7 THE CIT (A) HAS ERRED IN REJECTING THE CLAIM OF THE APPELLANT THAT AO HAS NOT FORMED AN OPINION REGARDING THE NECESSITY OF INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT. 2.8 WITHOUT PREJUDICE TO THE ABOVE THE CIT (A) /AO ERRED IN CONSIDERING AVERAGE VALUE OF INVESTMENTS WHICH DID NOT YIELD EXEMPT DIVIDEND INC OME WHILE COMPUTING THE DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D OF THE INCOME T AX RULES (THE RULES). 2.9 WITHOUT PREJUDICE TO THE ABOVE THE CIT(A) ER RED IN CONFIRMING THE ACTION OF THE AO IN CONSIDERING INTEREST PAID ON LONG TERM LOANS WHILE COMPUTING THE QUANTUM OF DISALLOWANCE UNDER CLAUSE (II) OF RULE 8D(2) OF THE RULES. 2.10 WITHOUT PREJUDICE TO THE ABOVE THE CIT (A) AN D THE AO HAVE ERRED IN LAW AND IN FACTS IN RIOT APPRECIATING THAT THE FORMULA UNDER CLAUSE (II) TO SUB-RULE (2) TO RULE 8D OF THE RULES DOES NOT APPLY TO THE APPELLANT AS THERE IS NO INTE REST ATTRIBUTABLE TO EARNING THE DIVIDEND INCOME. UNDER SECTION 115JB OF THE ACT ITA NO.1851/CHNY/2019 :- 3 -: 3. DISALLOWANCE UNDER SECTION 14A 3.1 THE LEARNED CIT (A) AND THE AO HAVE ERRED IN IM PORTING AND ADOPTING THE PROVISIONS OF SECTION 14A AND RULE 8D WHILE COMPUTING BOOK PRO FITS UNDER SECTION 115JB OF THE ACT. 3.2 THE CTT (A) HAS FAILED TO APPRECIATE THAT EXPE NSES WHICH ARE NOT DEBITED TO THE PROFIT AND LOSS ACCOUNT CANNOT BE ADDED BACK TO NET PROFIT S UNDER THE PROVISIONS OF SECTION 115JB OF THE ACT. 3.3 THE CIT (A) HAS FAILED TO APPRECIATE THAT DI SALLOWANCE UNDER SECTION 14A IS ATTRACTED ONLY WHILE COMPUTING THE TOTAL INCOME UNDER THE NOR MAL PROVISIONS OF THE ACT AND NOT FOR THE PURPOSE OF SECTION 115JB OF THE ACT. 4. THE APPELLANT CRAVES LEAVE TO ADD ALTER A MEND SUBSTITUTE MODIFY AND/OR WITHDRAW IN ANY MANNER WHATSOEVER ALL OR ANY OF THE FOREGOIN G GROUNDS OF APPEAL AT OR BEFORE THE HEARING OF THE APPEAL. 3. AT THE OUTSET IT IS BROUGHT TO THE NOTICE OF B ENCH THAT THIS APPEAL IS FILED WITH TRIBUNAL WITH DELAY OF 133 DAYS BEYOND T IME STIPULATED U/S 253(3) OF THE 1961 ACT FOR FILING OF AN APPEAL WITH TRIBUNAL. THE LD.COUNSEL FOR ASSESSEE BROUGHT TO NOTICE OF THE BE NCH AFFIDAVIT DATED 27.09.2019 FILED BY MANAGING DIRECTOR OF THE ASSESS EE COMPANY WHICH IS PLACED ON RECORD IN FILE. THE ASSESSEE HAS EXPLAIN ED IN THE SAID AFFIDAVIT THAT THERE WAS A CHANGE OF OFFICER WHO WAS LOOKING AFTER TAXATION MATTER AND DUE TO THIS CHANGE OVER OF RELEVANT OFFICER INC HARGE IT COULD NOT FILE ITS APPEAL IN TIME WITH TRIBUNAL AS THERE WAS NOT P ROPER HANDOVER BY OUTGOING OFFICER LOOKING AFTER TAXATION MATTER TO A NEW OFFICER INCHARGE OF TAXATION MATTER. IT WAS EXPLAINED THAT ON SIMILAR F ACTS LEARNED CIT(A) ALLOWED APPEAL OF THE ASSESSEE FOR AY: 2013-14 ON M ERITS WHILE FOR YEAR UNDER CONSIDERATION VIZ. AY: 2015-16 THE APPEAL IS DECIDED BY LEARNED CIT(A) AGAINST ASSESSEE. IT WAS EXPLAINED IN AFFIDA VIT THAT WHEN STATUTORY AUDITORS WERE REVIEWING CONTINGENT LIABILITIES OF T HE ASSESSEE FOR YEAR ENDED 31 ST MARCH 2019 THEN THIS FACT OF NON FILING OF AN APP EAL WITH TRIBUNAL CAME TO NOTICE AND STEPS WERE TAKEN TO FIL E THIS APPEAL WITH ITA NO.1851/CHNY/2019 :- 4 -: TRIBUNAL. IT IS ALSO EXPLAINED IN THE AFORESAID AFF IDAVIT THAT MANAGING DIRECTOR OF ASSESSEE COMPANY WAS NOT IN INDIA AND A FTER COMING BACK TO INDIA STEPS WERE TAKEN TO FILE THIS APPEAL WITH T RIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE PRAYED THAT THIS DELAY OF 133 DAYS IN FILING THIS APPEAL LATE WITH TRIBUNAL BE CONDONED AND THIS APPE AL BE ADJUDICATED ON MERITS IN ACCORDANCE WITH LAW. THE SUM AND SUBSTANC E OF AFFIDAVIT AND PRAYERS FOR CONDONATION OF DELAY IS THAT THERE IS N O MALAFIDE IN FILING THIS APPEAL LATE WITH TRIBUNAL AND THERE WAS A SUFFICIEN T CAUSE SHOWN FOR FILING THIS APPEAL LATE WITH TRIBUNAL. THE LD.DR ON THE OTHER HAND FAIRLY STATED THAT IT IS LEFT TO DISCRETION OF THE BENCH TO TAKE A DECISION SO FAR AS CONDONATION OF DELAY IN ADMITTING THIS APPEAL IS CO NCERNED. IN OUR CONSIDERED VIEW BASED ON AVERMENTS MADE IN AFFIDAVI T AS WELL CONTENTIONS ADVANCED BY LEARNED COUNSEL FOR THE ASSESSEE THE A SSESSEE HAS SHOWN SUFFICIENT CAUSE IN FILING THIS APPEAL LATE WITH TR IBUNAL WITH A DELAY OF 133 DAYS BEYOND TIME PRESCRIBED U/S 253(3) OF THE 1961 ACT AND IT IS NOW A WELL SETTLED POSITION OF LAW THAT IF TECHNICALITI ES ARE PITTED AGAINST SUBSTANTIAL JUSTICE THE COURT WILL LEAN TOWARDS SU BSTANTIAL JUSTICE AND IN OUR CONSIDERED VIEW THE ASSESSEE HAS SHOWN SUFFICIE NT CAUSE IN EXPLAINING DELAY OF 133 DAYS IN FILING OF THIS APPEAL WITH TRI BUNAL BEYOND TIME PRESCRIBED U/S 253(3) OF THE 1961 ACT AND HENCE KEE PING IN VIEW INTEREST OF SUBSTANTIAL JUSTICE WE ARE INCLINED TO CONDONE THIS DELAY OF 133 DAYS IN FILING OF THIS APPEAL LATE BY ASSESSEE BEYOND TIME PRESCRIBED U/S 253(3) OF THE 1961 ACT BY INVOKING OUR POWERS U/S 253(5) OF THE 1961 ACT AND ADMIT THIS APPEAL TO BE ADJUDICATED ON MERITS IN AC CORDANCE WITH LAW. IT IS ITA NO.1851/CHNY/2019 :- 5 -: PERTINENT TO MENTION THAT NO AVERMENTS ARE MADE BY REVENUE NOR THERE IS ANY MATERIAL ON RECORD TO SHOW THAT THERE IS AN MAL AFIDE ON PART OF ASSESSEE IN FILING THIS APPEAL LATE WITH TRIBUNAL A ND RATHER IT IS CONTENDED THAT LEARNED CIT(A) DECIDED THE APPEAL OF ASSESSEE FOR IMMEDIATELY PRECEDING YEAR VIZ. AY: 2013-14 IN FAVOUR OF ASSESS EE AND ON SAME SETS OF FACTS HAS DECIDED ASSESSEES APPEAL FOR THIS YEAR V IZ. AY: 2014-15 AGAINST ASSESSEE ON SAME SET OF FACTS AND INFACT IT WILL B E TRAVERSITY OF JUSTICE IF THIS APPEAL WILL NOT BE ALLOWED TO BE ADMITTED FOR REASONS OF DELAY AND IS THROWN OUT AT THRESHOLD ON GROUND OF AFORESAID DELA Y IN FILING THIS APPEAL LATE WITH TRIBUNAL BEYOND TIME PRESCRIBED U/S 253(3 ) OF THE 1961 ACT . WE CONDONE AFORESAID DELAY AND ADMIT THIS APPEAL. WE O RDER ACCORDINGLY 4 BRIEFLY STATED FACTS OF CASE ARE THAT ASSESSEE I S ENGAGED IN BUSINESS OF MANUFACTURING AND SUPPLYING AUTOMOTIVE ANCILLARY PA RTS. IT WAS OBSERVED BY AO FROM BALANCE SHEET OF THE ASSESSEE THAT ASSES SEE HAS MADE INVESTMENTS TO THE TUNE OF ` 5 17 44 000/- IN EQUITY SHARE OF GROUP COMPANY NAMELY M/S.KANAECH INDIA PVT. LTD. AS ON 3 1.03.2014. ADMITTEDLY ASSESSEE DID NOT EARN ANY DIVIDEND INCO ME DURING YEAR UNDER CONSIDERATION AND HENCE NO EXEMPT INCOME WAS CLAIME D BY ASSESSEE IN RETURN OF INCOME FILED WITH REVENUE. THE AO INVOKE D PROVISIONS OF SEC.14A OF THE 1961 ACT R.W.R.8D OF THE INCOME-TAX RULES 1962 TO MAKE FOLLOWING DISALLOWANCE VIDE ASSESSMENT ORDER DAT ED 25.11.2016 PASSED BY AO U/S 143(3) OF THE 1961 ACT:- ITA NO.1851/CHNY/2019 :- 6 -: EXEMPTED INCOME - 0 (I) THE AMOUNT OF EXPENDITURE DIRECTLY RELATING TO I NCOME WHICH DOES NOT FORM PART OF TOTAL INCOME 0 (II) A. AMOUNT OF EXPENDITURE BY WAY OF INTEREST OTH ER THAN THE AMOUNT OF INTEREST INCLUDED IN CLAUSE (I) INCURRED DURING THE PREVIOUS YEAR RS.10 17 46 593/- B. THE AVERAGE VALUE OF INVESTMENT INCOME FROM WHI CH DOES NOT OR SHALL NOT FORM PART OF THE TOTAL INCOME AS APPEARI NG IN THE BALANCE SHEET OF THE ASSESSEE ON THE FIRST DAY AND THE LAS T DAY OF THE PREVIOUS YEAR RS.4 64 52 000/- VALUE OF INVESTMENT ON THE FIRST DAY OF THE P REVIOUS YEAR RS.4 11 60 000/- VALUE OF INVESTMENT ON THE LAST DAY OF T HE PREVIOUS YEAR RS. 5 17 44 000/- C. THE AVERAGE OF TOTAL ASSETS AS APPEARING IN THE BALANCE SHEET OF THE ASSESSEE ON THE FIRST DAY AND THE LAST DAY OF THE PREVIOUS YEAR. RS.3 72 48 49 292/- INCREASE ON ACCOUNT OF REVALUATION OF ASSETS IN THE PREVIOUS FINANCIAL YEAR 0 INCREASE ON ACCOUNT OF REVALUATION OF ASSETS IN THE CURRENT FINANCIAL YEAR 0 TOTAL ASSETS ON THE FIRST DAY OF THE PREVIOUS YEAR RS.3 87 19 81 741/- TOTAL ASSETS ON THE LAST DAY OF THE PREVIOUS YEAR R S.3 57 77 16 843/- A X B/C RS.12 68 865/- (III) ONE HALF PER CENT OF AVERAGE VALUE OF INVESTMENT INCOME FROM WHICH DOES NOT OR SHALL NOT FORM PART O F THE TOTAL INCOME AS APPEARING IN THE BALANCE SHEET OF THE AS SESSEE ON THE FIRST DAY AND THE LAST DAY OF THE PREVIOUS YEAR RS.2 32 260/- DISALLOWANCE UNDER SECTION 14A R.W.RULE 8D RS.15 01 125/- THE ASSESSEE HAD CLAIMED BEFORE AO THAT IT HAS NOT INCURRED ANY EXPENDITURE IN RESPECT OF THE AFORESAID INVESTMENTS MADE BY IT. 5. AGGRIEVED BY AN ASSESSMENT FRAMED BY THE AO U/S 143(3) OF THE 1961 ACT THE ASSESSEE FILED FIRST APPEAL BEFORE LEARNED CIR(A) BUT SAME WAS DISMISSED BY LD.CIT(A) VIDE APPELLATE ORDER DATED 25.11.2018 PASSED BY LEARNED CIT(A). THE ASSESSEE HOWEVER CLAIMED BEF ORE LEARNED CIT(A) THAT IT HAS NOT INCURRED ANY EXPENDITURE IN RESPECT OF INVESTMENTS MADE BY IT AND ALSO THAT NO EXEMPT INCOME WAS RECEIVED B Y IT DURING PREVIOUS YEAR UNDER CONSIDERATION . 6. AGGRIEVED BY AN APPELLATE ORDER DATED 25.11.201 8 PASSED BY LEARNED CIT(A) THE ASSESSEE HAS FILED AN APPEAL BEFORE TR IBUNAL. AT OUTSET LD.COUNSEL FOR ASSESSEE SUBMITTED BEFORE THE BENCH THAT ASSESSEE HAS NOT ITA NO.1851/CHNY/2019 :- 7 -: EARNED ANY DIVIDEND INCOME DURING THE YEAR UNDER CO NSIDERATION AND HENCE NO EXEMPT INCOME WAS CLAIMED BY IT IN RETURN OF INCOME FILED WITH REVENUE . THE LEARNED COUNSEL FOR ASSESSEE WOULD S UBMIT THAT IN VIEW OF NO EXEMPT INCOME EARNED BY ASSESSEE NO DISALLOWANC E OF EXPENDITURE IS WARRANTED U/S.14A OF 1961 ACT. THE ASSESSEE HAS RE LIED UPON DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT V. C HETTINAD LOGISTICS (P.) LTD. REPORTED IN [2017] 80 TAXMANN.COM 221 (MADRAS ) WHEREIN HONBLE MADRAS HIGH COURT HAS HELD THAT NO DISALLOWANCE OF EXPENDITURE CAN BE MADE BY INVOKING PROVISIONS OF SECTION 14A OF THE 1 961 ACT WHEN THERE IS NO EXEMPT INCOME EARNED BY TAXPAYER. THE SLP FI LED BY REVENUE BEFORE HONBLE SUPREME COURT IN CIT V. CHETTINAD LO GISTICS (P.) LTD. REPORTED IN [2018] 95 TAXMANN.COM 250 (SC) HAS SI NCE BEEN DISMISSED BY HONBLE SUPREME COURT. SIMILARLY IT WAS SUBMIT TED THAT NO ADDITION CAN BE MADE TO BOOK PROFIT U/S.115JB AS THE ASSESSE E HAS NOT INCURRED ANY EXPENDITURE IN RELATION TO EARNING OF AN EXEMPT INCOME. IT IS CLAIMED THAT NO EXPENDITURE HAS BEEN INCURRED AND DEBITED T O P&L A/C WHICH IS INCURRED IN RELATION TO EARNING OF AN EXEMPT INCOME . ON MERITS LD.DR SUBMITTED THAT DISALLOWANCE OF EXPENDITURE U/S.14A IS TO BE MADE EVEN IF NO EXEMPT INCOME IS EARNED BY THE ASSESSEE. THE LEA RNED DR WOULD RELY ON ORDERS OF AUTHORITIES BELOW. 7. WE HAVE CONSIDERED RIVAL CONTENTIONS AND PERUSED MATERIAL ON RECORD INCLUDING CITED CASE LAWS. WE HAVE OBSERVED THAT AS SESSEE IS ENGAGED IN BUSINESS OF MANUFACTURING AND SUPPLYING OF AUTOMOTI VE ANCILLARY PARTS. THE ASSESSEE HAS MADE INVESTMENTS TO THE TUNE OF ` 5 17 44 000/- IN ITA NO.1851/CHNY/2019 :- 8 -: EQUITY SHARES OF GROUP COMPANY NAMELY M/S.KANAECH I NDIA PVT. LTD. AS ON 31.03.2014. ADMITTEDLY ASSESSEE DID NOT EARN A NY DIVIDEND INCOME DURING THE YEAR UNDER CONSIDERATION AND HENCE NO EX EMPT INCOME WAS CLAIMED BY ASSESSEE IN RETURN OF INCOME FILED WITH REVENUE . THE AO INVOKED PROVISIONS OF SEC.14A OF THE 1961 ACT R.W.R .8D OF THE INCOME-TAX RULES 1962 TO MAKE DISALLOWANCE OF EXPENDITURE TO THE TUNE OF ` 15 01 125/- WHICH WAS CONFIRMED BY LEARNED CIT(A) . NOW IT IS A WELL SETTLED PROPOSITION THAT IN CASE NO EXEMPT INCOME IS RECEIVED DURING YEAR UNDER CONSIDERATION NO DISALLOWANCE OF EXPENDITUR E CAN BE MADE BY INVOKING PROVISIONS OF SECTION 14A OF THE 1961 ACT. THE ASSESSEE HAS ALSO CONSISTENTLY CLAIMED THAT NO EXPENDITURE WAS INCURR ED BY ASSESSEE IN RELATION TO EARNING OF AN EXEMPT INCOME WHEREIN IT IS MATTER OF FACT THAT THE ASSESSEE EARNED NO EXEMPT INCOME DURING THE YEA R UNDER CONSIDERATION . FURTHER IT IS OBSERVED THAT AO HAS NOT RECORDED ANY SATISFACTION BEFORE INVOKING RULE 8D OF THE 1962 RU LES AND HAS SIMPLY INVOKED PROVISIONS OF SECTION 14A OF THE 1961 ACT R .W.R. 8D OF THE 1962 RULES. THE AO HAS NOT ANALYZED MODUS OPERANDI FOLLO WED BY ASSESSEEIN MAKING INVESTMENTS PERSONNEL DEPLOYED NOR HAS LOOK ED INTO BOOKS OF ACCOUNTS OF THE ASSESSEE TO REBUT CONTENTION OF THE ASSESSEE THAT NO EXPENDITURE WAS INCURRED BY IT IN RELATION TO EARNI NG OF AN EXEMPT INCOME. THE ASSESSEE IS CONSISTENTLY CLAIMING BEFORE AUTHOR ITIES BELOW THAT NO EXPENDITURE WAS INCURRED BY IT RELATABLE TO EARNIN G OF AN EXEMPT INCOME . WE HAVE OBSERVED THAT HONBLE MADRAS HIGH COURT HAS IN THE CASE OF CHETTINAD LOGISTICS PRIVATE LIMITED(SUPRA) HAS HELD THAT NO DISALLOWANCE OF ITA NO.1851/CHNY/2019 :- 9 -: EXPENDITURE U/S 14A CAN BE MADE WHEN NO EXEMPT INCO ME IS EARNED BY TAXPAYER. THE SLP FILED BY REVENUE AGAINST DECISION OF HONBLE MADRAS HIGH COURT DECISION IN CASE OF CHETTINAD LOGSITICS PRIVATE LIMITED(SUPRA) HAS BEEN DISMISSED BY HONBLE SUPREME COURT. IT IS ALSO RELEVANT HERE TO MENTION DECISION OF HONBLE MADRAS HIGH COURT IN CA SE OF REDINGTON(INDIA) LIMITED V. ADDL. CIT REPORTED IN (2017) 392 ITR 633 (MAD.) WHEREIN SIMILAR VIEW IS TAKEN AND INFACT HONBLE MADRAS HIGH COURT IN CASE OF CHETTINAD LOGISTICS PRIVATE LIMITED(SUPRA) RELIED UPON THIS D ECISION OF HONBLE MADRAS HIGH COURT IN CASE OF REDINGTON INDIA(SUPRA) TO HOL D AND DECIDE THE ISSUE IN FAVOUR OF TAX-PAYER. THE DECISION OF HONBLE DE LHI HIGH COURT IN CASE OF CHEMINVEST LIMITED V. CIT REPORTED IN (2015) 378 IT R 33(DELHI) IS RELEVANT. THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF PCIT V. BALLARPUR INDUSTRIES LIMITED ITA NO. 51 OF 2016 VIDE JUDGMENT DATED 13.10.2016 HAS ALSO HELD THAT WHEN NO EXEMPT INCOME IS EARNED BY TAX- PAYER NO DISALLOWANCES OF EXPENDITURE U/S 14A ARE WARRANTED. THUS KEEPING IN VIEW DECISION OF HONBLE JURISDICTIONAL HIGH COURT CITED ABOVE WE ARE OF CONSIDERED VIEW THAT NO DISALLOWANCE OF E XPENDITURE BY INVOKING PROVISIONS OF SECTION 14A OF THE 1961 ACT IS WARRAN TED AS ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME DURING THE YEAR UNDER CONSIDERATION AND HENCE WE HEREBY ORDER DELETION OF DISALLOWANCES OF EXPENDITURE MADE BY AO BY INVOKING PROVISIONS OF SECTION 14A OF THE 196 1 ACT READ WITH RULE 8D OF THE 1962 RULES WHICH ADDITIONS WERE LATER CO NFIRMED BY LD.CIT(A). OUR ABOVE DECISIONS SHALL ALSO APPLY MUTATIS MUTAND IS WHILE MAKING DISALLOWANCE OF EXPENDITURE INCURRED FOR EARNING OF EXEMPT INCOME WHILE ITA NO.1851/CHNY/2019 :- 10 -: COMPUTING BOOK PROFITS U/S 115JB OF THE 1961 ACT. T HE DECISION OF HONBLE SPECIAL BENCH OF DELHI-TRIBUNAL IN THE CASE OF ACIT V. VIREET INVESTMENT PRIVATE LIMITED REPORTED IN (2017) 165ITD 27(DELH-T RIB.)(SB) IS RELEVANT WHEREIN IT IS HELD AT PARA 6.22 THAT COMPUTATION UN DER CLAUSE (F) OF EXPLANATION 1 TO SECTION 115JB(2) IS TO BE MADE WIT HOUT RESORTING TO THE COMPUTATION AS CONTEMPLATED U/S 14A READ WITH RULE 8D OF THE 1962 RULES. WE ORDER ACCORDINGLY. 8. IN RESULT APPEAL FILED BY ASSESSEE IN ITA NO.18 51 /CHNY/2019 FOR AY: 2014-15 IS ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED ON THE 26 TH DAY OF NOVEMBER 2019 IN CHENNAI. SD/- SD/- ( . . . ) ( N.R.S. GANESAN ) /JUDICIAL MEMBER ( ! ) ( RAMIT KOCHAR ) /ACCOUNTANT MEMBER /CHENNAI 1 /DATED: 26 TH NOVEMBER 2019. TLN - +!2 3 2 /COPY TO: 1. * /APPELLANT 4. 4 /CIT 2. + * /RESPONDENT 5. 2 + /DR 3. 4 ( ) /CIT(A) 6. ' /GF