2018 (4) TMI 1769 - AT - Income Tax

Tribunal rules in favor of Assessee, disallowance under section 14A not applicable

The Tribunal upheld the decision of Ld. CIT(A) in favor of the Assessee, ruling that since no exempt income was earned from investments, disallowance ... Disallowance made u/s 14A holding that assessee did not earn any exempt income - HELD THAT:- It is not in dispute that the assessee has not earned any dividend income in the year under consideration. In the light of the consistent view taken by the ITAT Hyderabad Bench (in the assessee’s own case for the A.Y. 2009-10) we are of the opinion that the view taken by the Ld. CIT(A) does not call for any interference. It may be noted that the Assessee requested for time which was not granted; In fact he has not even filed his power of attorney. Considering the fact that there is no need for appearance of the assessee in the instant case, we reject the request for adjournment and proceed to dispose of the appeal. In view of the circumstances stated hereinabove, we are of the view that the order passed by the Ld. CIT(A) deserves to be upheld. As pronounced in the open court, the appeal filed by the Revenue is dismissed. Issues:1. Disallowance under section 14A for not earning exempt income.Analysis:The appeal in this case was against the order of Ld. CIT(A)-4, Hyderabad, pertaining to the assessment year 2013-14. The sole ground of appeal was the disallowance made under section 14A for not earning any exempt income. The Assessee, a real estate company, declared taxable income of Rs. 46.36 lakhs for the year. The Assessing Officer (A.O.) invoked section 14A after noticing investments in subsidiary companies that could yield exempt income. The Assessee argued that since no exempt income was earned, section 14A should not apply. However, the A.O. computed a disallowance of Rs. 39,92,033 under section 14A read with Rule 8D.On appeal, the Ld. CIT(A) held in favor of the Assessee, citing the decision of ITAT Hyderabad Bench 'A' in the Assessee's own case for A.Y. 2009-10, where it was established that if no income is earned from investments, section 14A does not apply. The Revenue challenged this decision before the Tribunal.The Tribunal noted that the Assessee did not earn any dividend income during the relevant year. Referring to the consistent view of ITAT Hyderabad Bench in the Assessee's previous case for A.Y. 2009-10, the Tribunal upheld the decision of Ld. CIT(A) and dismissed the Revenue's appeal. The Tribunal also rejected the Assessee's request for adjournment due to the lack of necessity for their appearance in this case. The order passed by Ld. CIT(A) was deemed appropriate and upheld by the Tribunal.