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2021 (8) TMI 1045 - AT - Income TaxDisallowance u/s 14A r.w.r 8D - assessee had submitted before the AO that no exempt income in the form of dividend has been earned by the assessee during the year under consideration - HELD THAT - The aforesaid contention of the assessee has not controverted by the Revenue. We find that CIT(A) by following the decisions in the case of Chemnivest Ltd. 2015 (9) TMI 238 - DELHI HIGH COURT , IL FS Energy Development Company Ltd. 2017 (8) TMI 732 - DELHI HIGH COURT and the decision of Holcim India P. Ltd. 2014 (9) TMI 434 - DELHI HIGH COURT held that when no dividend income has been received by the assessee, no disallowance u/s 14A of the Act is called for. As no fallacy in the findings of CIT(A) has been pointed out by the Revenue. Revenue has also not placed on record any contrary binding decision in its support. In view of the aforesaid facts, we find no reason to interfere to the order of CIT(A) and thus the appeal of the Revenue is dismissed.
Issues:
- Disallowance u/s 14A r.w.r 8D of the Act for A.Y. 2013-14 and 2014-15. Analysis: 1. Background: The appeals by the Revenue were against the orders of the Commissioner of Income Tax for A.Y. 2013-14 & 2014-15. 2. Ex Parte Proceedings: The assessee did not appear during the hearing, leading to ex parte disposal after considering the material on record and hearing by the Learned DR. 3. Common Submissions: The Learned DR stated that the issue in both appeals was identical, focusing on the disallowance made u/s 14A r.w.r 8D of the Act. 4. Factual Overview: The assessee, a consultancy services company, filed its return for A.Y. 2013-14 declaring income. The assessment was framed, and the total income was determined. The CIT(A) granted relief to the assessee, leading to the Revenue's appeal. 5. Grounds of Appeal: The Revenue raised various grounds, primarily challenging the deletion of the disallowance made u/s 14A r.w.r 8D of the Act. 6. AO's Observations: The AO noted substantial investments by the assessee in shares for earning exempt income. The AO disallowed an amount u/s 14A based on the tax audit report's findings. 7. CIT(A)'s Decision: The CIT(A) referred to relevant High Court decisions where no disallowance was warranted if no exempt income was earned. Following this, the CIT(A) deleted the addition. 8. Arguments: The Learned DR supported the AO's order, while the assessee's contention of no exempt income earned remained uncontroverted. 9. ITAT's Decision: The ITAT found no fallacy in the CIT(A)'s findings and noted the absence of contrary binding decisions from the Revenue. Consequently, the appeal of the Revenue was dismissed. 10. Consolidated Dismissal: Given the similarity in facts for A.Y. 2014-15, the grounds for that year were also dismissed for the same reasons, resulting in the dismissal of both appeals by the Revenue. This detailed analysis outlines the legal proceedings and decisions regarding the disallowance u/s 14A r.w.r 8D of the Act for the mentioned assessment years, emphasizing the lack of exempt income as a crucial factor in determining the applicability of the disallowance provision.
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