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2019 (8) TMI 152 - AT - Income TaxDisallowance u/s 14A r/w Rule 8D - no exempt income receipt - HELD THAT - In the present case, it is undisputed that the assessee had not received any exempt income during the year under consideration and, therefore, the ratio of judgment of Cheminvest Ltd. vs C.I.T. 2015 (9) TMI 238 - DELHI HIGH COURT would come to the aid of the assessee wherein the Hon ble High Court had held that in the absence of any exempt income, disallowance u/s 14A of the Act of any amount was not permissible. - Decided against revenue
Issues:
Deletion of disallowance under section 14A of the Income Tax Act, 1961. Analysis: The appeal before the Appellate Tribunal ITAT Delhi concerned the deletion of disallowance of ?1,50,72,830 made under section 14A of the Income Tax Act, 1961. The assessee, a company engaged in trading commodities, had filed its return declaring an income of ?2,100 for the assessment year 2013-14. The Assessing Officer made an addition under section 14A despite the assessee not earning any exempt income during the relevant year. The Commissioner of Income Tax(A) allowed the assessee's appeal, stating that since no exempt income was earned, section 14A did not apply. The department appealed this decision before the Tribunal, challenging the deletion of the addition. During the proceedings, the department argued that the disallowance was wrongly deleted, while the assessee's representative supported the Commissioner's decision. The Tribunal referred to a judgment of the Hon'ble Delhi High Court in the case of Cheminvest Ltd. vs C.I.T. (2015) 378 ITR 33, which held that in the absence of exempt income, disallowance under section 14A was not permissible. The Tribunal noted that the assessee had indeed not received any exempt income during the relevant year. Citing the High Court's judgment, the Tribunal concluded that since no exempt income was earned or receivable, section 14A did not apply. Consequently, the Tribunal upheld the Commissioner's decision and dismissed the revenue's appeal. In light of the above analysis, the Tribunal dismissed the revenue's appeal, affirming the deletion of the disallowance under section 14A of the Income Tax Act, 1961.
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