TaxTMI 
TaxTMI 
2022 (1) TMI 239
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.... 4. Whether the Ld. CIT(A) is allowed in deleting the disallowance in deleting the disallowance in respect of late deposit of ESI/EPF charges, in view of the CBDT circular no. 22/2015 dated 17.122015? 5. That the order of the Ld. CIT(A) is erroneous and is not tenable on facts and in law. 6. That the grounds of appeal are without prejudice to each other. 7. That the appellant craves leave to add, alter, amend or forego any grounds(s) of the appeal raised above at the time of hearing." 2. Facts in brief are that the case of assessee filed its return of income declaring loss of Rs. 10,91,00,761/- through electronic mode on 25.05.2015. Return was processed u/s 143(1) of the Income tax Act, 1961 ("the Act"). Thereafter, the case was selected for scrutiny under CASS and the assessment was framed u/s 143(3) of the Act vide order dated 31.12.2016. The Assessing Officer while framing the assessment made disallowance u/s 14A r.w.Rule 8D of the Income Tax Rules, 1962 ("the Rules") of Rs. 1.96,51,975/-. The Assessing Officer ("AO") further made disallowances of Employees Stock Option Cost of Rs. 2,79,032/- and late payment of employees contributions to ESI & EP....
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....The Assessing Officer simply rejected the contention of the appellant and stated that the invocation of Rule 80 was mandatory and the computation for the purposes of deduction 14A was in accordance with the provisions therein. 4.1.2 The aforesaid decisions quoted by the appellant namely Cheminvest Ltd. and also Redington (India) Ltd. 392 ITR 633 have been perused. It is also seen that the recent Delhi Tribunal decision on a same issue has also held clearly that where the assessee is not earning any exempt income, no disallowance can be made. These are Hon'ble ITAT Delhi Bench in the case of Sunrays Properties & Investment Co. Pvt. Ltd. Vs. JCIT ITA No. 353/De1/2014 Dt. 17.02.2017 and in the case of Global Capital Ltd. vs. ACIT ITA No. 6586/De1/2013 Dt. 27.11.2015 where in it has been held that if there is no exempt income no disallowance u/s 14A can be made. It has also been further held in almost all judicial precedents that the extent of disallowance under section 14A read with Rule 80 can only be to an extent of the exempt income. The relevant extract from the decision Global Capital Ltd. vs. ACIT ITA No. 6586/De1/2013 is quoted hereunder: "The grounds rais....
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....Hon'ble Delhi High Court in the case of CIT vs. Holcim India Pvt Ltd. (2014) 90 CCH 081-DEL-Hon'ble High Court, has held that there can be no disallowance u/s 14A in the absence of any exempt income. The rationale behind these judgments is that the amount of disallowance u/s 14A should not exceed the exempt income. Since the total exempt income in the instant case is Rs. 25,38,020/-, we direct that the disallowance u/s 14A be restricted to Rs. 18,01,968/- (Rs. 25,38,020-Rs. 7,36,052/-). The remaining amount of disallowance is directed to be deleted." 6. In view of above, it is observed that in the similar set of facts and circumstances, the total exempt income earned by the present assessee is Rs. 13,35,040 against which an addition of Rs. 21,87,713 has been made by the Assessing Officer u/s 14A of the Act. As noted by the Coordinate Bench of this Tribunal that in the case of Joint Investment (P) Ltd. vs CIT (supra), the Hon'ble Delhi High Court has held that the disallowance u/s 14A of the Act should not exceed the exempt income. The Tribunal also noted that the Hon'ble Delhi high Court in the case of CIT vs Holcim India Pvt. Ltd. (supra) held that there c....
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....d as under:- "7. Question No.6 concerns deletion of addition of Rs. 89,00,000 made by the AO for computation of the income for the purposes of Minimum Alternate Tax ("MAT") under Section 115 JB of the Act. This pertained to the expenditure incurred for earning exempt income under Section 14A read with Rule 80. The ITAT has rightly held that this being in the nature of disallowance, and with Explanation 115JB not specifically mentioning Section 14A of the Act, the addition of Rs. 89,00,000 was not justified. The view taken by the ITAT cannot be faulted with. It is consistent with the decision in Apollo Tyres Ltd. v. Commissioner of Income Tax (2002) 255 ITR 273 (SC) which held that "the Assessing Officer does not have the jurisdiction to go behind the net profit shown in the profit and loss account except to the extent provided in the Explanation to Section 115J. The Court declines to frame a question on the above issue. " Based on the above decision the addition to the book profit of Rs.l,96,51,975/- is not warranted. This ground of Appeal is allowed." 15. Ld.CIT(A) has decided the issue by following the judgement of Hon'ble Delhi High Court rendered in the case of CIT ....
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....hi in the appellant's own case vide order dated 10.10.2017 has also allowed aforesaid deduction. "5. Now, turning to Ground No.2, the AO made an addition of Rs. 91,89,791/- in respect of ESOP alleging the outgoing expenses are only notional and the expenditure is allowable only when the shares are purchased by the employer. However, in view of the fact that this issue was covered in assessee's own case in respect of the AYs 2008-09 & 2009-10 in ITA No. 4588/Del/2013 in Lemon Tree Hotels Ltd. vs. Addl. CIT vide order dated 23.06.2014 and ITA No. 209/Del/2014 in DCIT vs M/s. Lemon Tree Hotels Pvt. Ltd. vide order dated 18.01.2016 in assessee's favour, Ld. CIT(A) took note of the same and followed the decision of the Tribunal for those two years. It is brought to our notice by the Ld. AR that these two decisions of the Co-ordinate Bench of this Tribunal are upheld by the Hon'ble Jurisdictional High Court in ITA No. 107/Del/2015 decided on 18.08.2015 and ITA No. 862/Del/2016 decided on 02.12.2016. In view of these binding decisions of the Hon'ble High Court, we cannot interfere with the findings of the Ld. CIT(A) on this aspect, as such upholding the same, ....