Regent Automobiles Pvt. Ltd., New Delhi vs Assessee

This appeal by the assessee is directed against the order passed by

the CIT(A) on 1.11.2013 in relation to the Assessment Year 2009-10. ITA No.684/Del/2014 2

2. Briefly stated, the facts of the case are that the Assessing Officer

(AO), during the course of assessment proceedings, required the

assessee to file details with reference to disallowance u/s 14A of the

Income-tax Act, 1961 (hereinafter also called 'the Act') read with Rule

8D. The assessee contended before the AO that it had not made any

investments to earn any exempt income nor it had earned any such

income during the year. It was also submitted that the assessee had

surplus funds of its own and the investments in securities were made

out of such surplus funds. Not convinced, the AO invoked the

provisions of section 14A and, accordingly, made disallowance to the

tune of Rs.45,46,631/-. The ld. CIT(A) upheld the impugned order.

The assessee is aggrieved against the addition.

3. I have heard the rival submissions and perused the relevant

material available on record. It is observed from the submissions made

by the assessee before the AO that no exempt income was earned

during the year. This contention raised by the assessee has not been

rebutted by the AO. Despite that, the AO proceeded to compute

disallowance u/s 14A read with Rule 8D. In the absence of any exempt

income, there can be no disallowance u/s 14A. The Hon'ble ITA No.684/Del/2014 3

jurisdictional High Court in CIT vs. Holcim India Pvt. Ltd. (2014) 90

CCH 081 Del-HC, has held that no disallowance u/s 14A can be made

in the absence of any exempt income. In Joint Investments Pvt. Ltd. Vs.

CIT (2015) 372 ITR 694 (Del), it has been held that disallowance u/s

14A cannot exceed the exempt income. Since the assessee admittedly

did not earn any exempt income during the relevant year, respectfully

following the precedents, I hold that no disallowance u/s 14A can be

made.

4. In the result, the appeal is allowed.

The decision was pronounced in the open court on 19th June,

2015.

Sd/-

(R.S. SYAL) ACCOUNTANT MEMBER Dated:19th June, 2015.

dk

Copy forwarded to

1. Appellant

2. Respondent

3. CIT

4. CIT(A)

5. DR Dy. Registrar, ITAT, New Delhi