Hydel Construction Pvt. Ltd., New Delhi v. DCIT, Circle-11(2), New Delhi

ITA 200/DEL/2018 | 2013-2014
Pronouncement Date: 28-05-2021 | Result: Allowed

Appeal Details

RSA Number 20020114 RSA 2018
Assessee PAN AAACH3012Q
Bench Delhi
Appeal Number ITA 200/DEL/2018
Duration Of Justice 3 year(s) 4 month(s) 20 day(s)
Appellant Hydel Construction Pvt. Ltd., New Delhi
Respondent DCIT, Circle-11(2), New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 28-05-2021
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 28-05-2021
Assessment Year 2013-2014
Appeal Filed On 08-01-2018
Judgment Text
1 | P A GE THE INCOME TAX APPELLATE TRIBUNAL DELHI C BENCH: NEW DELHI (THROUGH VIDEO CONFERENCING ) BEFORE SHRI G.S. PANNU VICE PRESIDENT AND SHRI KUL BHARAT JUDICIAL MEMBER ITA NO.200/DEL/2018 ASSESSMENT YEAR : 2013-14 HYDEL CONSTRUCTION PVT.LTD. C-287 DEFENCE COLONY NEW DELHI-110024. PAN-AAACH3012Q VS DCIT CIRCLE-11(2) NEW DELHI. APPELLANT RESPONDENT APPELLANT BY SH. ALOKE PERIWAL CA. RESPONDENT BY MS. SUNITA SINGH CIT DR DATE OF HEARING 13.04.2021 DATE OF PRONOUNCEMENT 2 8 .05.2021 ORDER PER KUL BHARAT JM : THIS APPEAL FILED BY THE ASSESSEE FOR THE ASSESSM ENT YEAR 2013-14 IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-22 NE W DELHI DATED 13.10.2017. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL :- 1. ACTION OF COMMISSIONER OF INCOME TAX(A) IN UPHO LDING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF EXPENSES U/S. 14 A RS.8 88 582/- BY DEPUTY COMMISSIONER OF INCOME TAX TO THE RETURNED I NCOME IS UNJUST ILLEGAL ARBITRARY AND AGAINST THE FACTS AND CIRCUM STANCES OF THE CASE. 2. THE APPELLANT CRAVES LEAVE TO ADD ALTER AMEND OR DELETE THE ABOVE GROUNDS OF APPEAL AT THE TIME OF HEARING. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSEE IN THIS APPEAL IS AGAINST THE SUSTAINING OF ADDITION MADE ON ACCOUNT OF DISAL LOWANCE OF EXPENSES U/S 14A OF THE INCOME TAX ACT 1961 (THE ACT). 2 | P A GE 3. FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSES SMENT U/S 143(3) OF THE ACT WAS FRAMED VIDE ORDER DATED 07.03.2016. WHILE FRAMING THE ASSESSMENT THE ASSESSING OFFICER MADE TWO DISALLOWANCES ON ACC OUNT OF DEPRECIATION AMOUNTING TO RS.1 10 11 470/- AND DISALLOWANCE MADE U/S 14A OF THE ACT OF RS.8 88 582/-. 4. AGGRIEVED AGAINST THIS THE ASSESSEE PREFERRED A PPEAL BEFORE LD.CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS PARTLY ALLOW ED THE APPEAL. 5. LD.CIT(A) FOLLOWING THE DECISIONS PERTAINING TO ASSESSMENT YEAR 2011-12 DELETED THE DISALLOWANCES MADE ON ACCOUNT OF DEPREC IATION AND SUSTAINED THE DISALLOWANCE MADE U/S 14A OF THE ACT. 6. AGGRIEVED AGAINST THIS THE ASSESSEE IS IN APPEA L BEFORE THIS TRIBUNAL. 7. LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED T HAT AUTHORITIES BELOW WERE NOT JUSTIFIED IN MAKING THE DISALLOWANCE AS TH E ASSESSEE HAS NOT INCURRED ANY EXPENDITURE IN RESPECT OF ADMINISTRATION INTER EST FOR EARNING OF SUCH INCOME. HE CONTENDED THAT IN THE YEAR UNDER CONSID ERATION NO EXEMPT INCOME HAS BEEN RECEIVED. THEREFORE HE CONTENDED THAT TH E DISALLOWANCE CAN BE MADE BY INVOKING SECTION 14A OF THE ACT R.W.RULE 8D OF I NCOME TAX RULES 1962. TO BUTTRESS THIS CONTENTION LD. COUNSEL FOR THE ASSE SSEE RELIED ON THE JUDGEMENT OF HONBLE DELHI HIGH COURT RENDERED IN THE CASE OF CHEMINVEST LTD. VS CIT [2015] 378 ITR 33 (DELHI). 3 | P A GE 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. LD.CIT(A) SUSTAINED ADDITION BY OBSERVIN G AS UNDER:- 8. IN THIS CASE THE DISALLOWANCE U/S 14A OF THE A CT R.W.RULE 8D OF RS.8 88 582/- HAS BEEN CONTESTED BY THE APPELLANT. THE A.O. HAD MADE THE DISALLOWANCE U/S 14A OF THE ACT READ WITH RULE 8D ON THE BASIS OF CBDT CIRCULAR NO.5/2014 DATED 11.02.2014. THE A.O. HAS WORKED OUT DISALLOWANCE UNDER 8D (II) AND 8D (III) OF THE RULE S. TOTAL DISALLOWANCE MADE BY THE A.O IS RS.8 88 582/-. 8.1. I HAVE CAREFULLY CONSIDERED SUBMISSION OF THE APPELLANT AND PERUSED THE ORDER OF THE A.O THE ARGUMENT THE LD. AR THAT THE APPELLANT HAS NOT INCURRED ANY EXPENDITURE TO EARN EXEMPT INCOME IS REJECTED. THE APPELLANT HAS EARNED DIVIDEND INCOME OF RS.38 42 693/- FROM T HE INVESTMENT. THE AO IN HIS ORDER HAS DISCUSSED THIS ISSUE IN DETAIL AND HAS MADE OUT CASE FOR INCURRING THE EXPENDITURE BY THE APPELLANT FOR EARNING FOR EXEMPT INCOME. THE APPELLANT HAS NOT MADE ANY SUO MOTO DIS ALLOWANCE OF EXPENDITURE FOR EARNING THIS EXEMPT INCOME. THE PRO VISION OF RULE 8D IS VERY CLEAR AND AN UNAMBIGUOUS. AFTER THE INTRODUCTI ON OF SUB SECTION 2 & 3 OF SECTION 14A W.E.F 01.04.2007 AND RULE 8D THE DI SALLOWANCE HAS TO BE COMPUTED BY THE ONLY METHOD AVAILABLE FOR APPORTION MENT OF EXPENDITURE. NO OTHER METHOD OF APPORTIONMENT IS PERMISSIBLE EXC EPT THAT PROVIDED IN RULE 8D. IN VIEW OF THIS THE ADDITION ON ACCOUNT O F SECTION 14A R.W.R 8D OF RS. 8 88 582/- IS CONFIRMED. THE DECISION OF GROUND NUMBER 2 IS DECIDED AGAINST THE APPELLANT. 8.1. THE HONBLE JURISDICTIONAL HIGH COURT IN THE C ASE OF CHEMINVEST LTD. VS CIT (SUPRA) HAS HELD AS UNDER:- 23. IN THE CONTEXT OF THE FACTS ENUMERATED HEREINB EFORE THE COURT ANSWERS THE QUESTION FRAMED BY HOLDING THAT THE EXP RESSION DOES NOT FORM PART OF THE TOTAL INCOME IN SECTION 14A OF TH E ACT ENVISAGES THAT THERE SHOULD BE AN ACTUAL RECEIPT OF INCOME WHICH IS NOT INCLUDIBLE IN THE TOTAL 4 | P A GE INCOME DURING THE RELEVANT PREVIOUS YEAR FOR THE P URPOSE OF DISALLOWING ANY EXPENDITURE INCURRED IN RELATION TO THE SAID IN COME. IN OTHER WORDS SECTION 14A WILL NOT APPLY IF NO EXEMPT INCOME IS R ECEIVED OR RECEIVABLE DURING THE RELEVANT PREVIOUS YEAR. 9. THEREFORE RESPECTFULLY FOLLOWING THE JUDGEMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD. VS CIT (SUPRA) WE HEREBY DIRECT THE ASSESSING OFFICER TO DELETE THE DISALLOWANCE. THUS GROUND NO.1 RAISED BY THE ASSESSEE IN THIS APPEAL IS ALLOWED. 10. GROUND NO.2 RAISED BY THE ASSESSEE IS GENERAL IN NA TURE NEEDS NO SEPARATE ADJUDICATION. 11. IN THE RESULT THE APPEAL OF THE ASSESSEE IS A LLOWED. ABOVE DECISION WAS PRONOUNCED ON CONCLUSION OF VIR TUAL HEARING IN THE PRESENCE OF BOTH THE PARTIES ON 28 TH MAY 2021. SD/- SD/- (G.S. PANNU) (KUL BHARA T) VICE PRESIDENT JUDICIA L MEMBER * AMIT KUMAR * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI