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2018 (9) TMI 1230 - AT - Income TaxAddition u/s 14A - Held that - CIT(A) was justified in deleting the addition made u/s 14A on the ground that in the absence of any exempt income, resort cannot be made to the provisions of section 14A.
Issues:
1. Correctness of deleting addition made u/s 14A based on Delhi High Court order. 2. Any other grounds for appeal. Issue 1: Correctness of deleting addition made u/s 14A based on Delhi High Court order The appeal was filed by the revenue against the order of the Commissioner of Income-tax (Appeals) for the assessment year 2014-15. The respondent-assessee, a company engaged in the business of manufacturing power and energy, filed a return of income declaring a loss of ?91,76,153. The Assessing Officer completed the assessment at a total income of ?3,03,98,848, making a disallowance of ?43,95,75,001 u/s 14A of the Income-tax Act, 1961. The assessee contended that in the absence of any exempt income, no disallowance u/s 14A could be made. The AO rejected this argument and also the claim that the investments were strategic. An appeal was made before the CIT(A) who held that no disallowance u/s 14A could be made in the absence of exempt income, relying on Delhi High Court decisions. The revenue challenged this decision, questioning the correctness of relying on the Delhi High Court order when the matter was pending before the Supreme Court and there was a relevant circular. Issue 2: Any other grounds for appeal The only issue in the appeal was whether the CIT(A) was justified in deleting the addition made u/s 14A in the absence of exempt income. The Tribunal observed that the decisions of the Delhi High Court still held, and there was no evidence of reversal by the Supreme Court. Consequently, the Tribunal found no error in the CIT(A)'s reasoning and dismissed the revenue's appeal. The appeal was ultimately dismissed, affirming the decision of the CIT(A) regarding the deletion of the addition made u/s 14A. In conclusion, the Tribunal upheld the decision of the CIT(A) to delete the addition made u/s 14A, emphasizing the continued validity of the Delhi High Court decisions and the absence of any reversal by the Supreme Court. The grounds of appeal filed by the revenue were dismissed, and the appeal was ultimately rejected.
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