Appellate Tribunal Upholds No Disallowance without Exempt Income under Income Tax Act

ACIT, Circle 9 (2), New Delhi Versus Fortis Hospotals Ltd. C/o Escorts Heart Institute And Research Centre, Okhla, New Delhi

ACIT, Circle 9 (2), New Delhi Versus Fortis Hospotals Ltd. C/o Escorts Heart Institute And Research Centre, Okhla, New Delhi - TMI Issues:
1. Disallowance under section 14A read with Rule 8D of the Income Tax Act.

Analysis:
The Appellate Tribunal ITAT Delhi heard an appeal filed by the revenue against an order passed by Ld.CIT(A)-3 New Delhi for the assessment year 2011-12. The revenue challenged the deletion of an addition of Rs. 91,52,780 made by the Assessing Officer (AO) on account of disallowance under section 14A read with Rule 8D of the Act. The Ld. CIT (A) had deleted this addition, prompting the revenue to appeal.

The assessee had filed its return of income declaring total income of Rs. 2,07,58,510. The AO observed that the assessee had made investments totaling Rs. 22,59,32,106 during the relevant year. The sole issue raised by the revenue was regarding the deletion of the disallowance of Rs. 91,52,780 under section 14A read with Rule 8D.

The Ld. CIT (A) justified the deletion by pointing out that there was no exempt income during the year, citing decisions by various High Courts. The Tribunal noted that the issue had been settled in favor of the assessee by the Hon'ble judicial High Court in previous cases, emphasizing that if there is no exempt income, no disallowance under section 14A can be made.

Relying on the binding precedents set by the High Courts, the Tribunal dismissed the revenue's appeal, stating that there was no infirmity in deleting the addition since there was no exempt income in the present case. As a result, the appeal filed by the revenue was dismissed, and the order was pronounced on 29th November 2017.