Revenue's Appeal Dismissed: Section 14A Disallowance Not Applicable

The Tribunal dismissed the revenue's appeal, affirming the deletion of the disallowance under section 14A of the Income Tax Act, 1961. The Tribunal held that since no exempt income was earned or receivable, section 14A did not apply, in line with the judgment of the Hon'ble Delhi High Court.

---

---

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 Rs. 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 Rs. 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.

---