2019 (4) TMI 351 - AT - Income Tax

Disallowance made u/s 14A r.w. Rule 8D - no exempt income received - HELD THAT - Admittedly, since, the assessee has not earned any dividend income in the assessment year under consideration, the ld. CIT(A) rightly following the decision in the case of Redington (India) Ltd. v. Addl. CIT 2017 (1) TMI 318 - MADRAS HIGH COURT and directed to delete the addition. - Decided in favour of assessee.

Summary

Issues:
1. Deletion of disallowance under section 14A of the Income Tax Act for the assessment year 2013-14.
2. Delay in filing the appeal for the assessment year 2012-13 and challenging the ex-parte order.

Issue 1: Deletion of disallowance under section 14A of the Income Tax Act for the assessment year 2013-14:
The appeal was against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2013-14. The Revenue contended that the deletion of disallowance under section 14A was erroneous as there was no exempt income, despite no exception in Rule 8D. The Revenue argued that even if no exempt income was earned, disallowance under section 14A had to be made. The investment made by the assessee yielded only dividend income, which is exempt, making section 14A applicable. On the contrary, the assessee argued that no exempt income was earned in that year, hence no disallowance was warranted. The Assessing Officer believed that some expenditure was incurred for maintaining investments, leading to disallowance under Rule 8D. The CIT(A) directed the Assessing Officer to delete the addition, following a relevant court decision. As the assessee had not earned any dividend income, the CIT(A) rightly directed to delete the addition, which the Revenue could not challenge.

Issue 2: Delay in filing the appeal for the assessment year 2012-13 and challenging the ex-parte order:
The appeal for the assessment year 2012-13 was delayed by 13 days, but the delay was condoned, and the appeal was admitted for adjudication. The assessee challenged the ex-parte order by the CIT(A) for not providing an opportunity to be heard. The delay in filing the appeal was due to the unavailability of the authorized signatory during a business visit. The assessee sought condonation of the delay, which was not seriously opposed by the Revenue. The Tribunal directed the CIT(A) to adjudicate the issue on merits after giving the assessee an opportunity to present its case. Consequently, the appeal filed by the Revenue was dismissed, and the appeal by the assessee was allowed for statistical purposes.

In conclusion, the judgment addressed the deletion of disallowance under section 14A for the assessment year 2013-14 and the delay in filing the appeal for the assessment year 2012-13 challenging the ex-parte order. The decision provided detailed analysis and reasoning for each issue, ultimately resulting in the dismissal of the Revenue's appeal and allowing the assessee's appeal for statistical purposes.