Sh. Naresh Malhotra, Ludhiana vs Assessee
- CitationITA No. 828/Chd/2012
Ratio decidendi
The rule this decision rests on
No disallowance under section 14A of the Income-tax Act, 1961 can be made where the assessee has no exempt income in the year concerned, following the jurisdictional High Court's decision in CIT v. Lakhani Marketing Ltd. (as cited in the order). Where the assessee has pleaded before the Assessing Officer and the first appellate authority that there was no exempt income, and the record does not establish whether any exempt income arose, the disallowance cannot stand on the existing record and the matter must be remitted to the Assessing Officer to verify whether exempt income existed during the year, with no disallowance to be made if it did not.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Shri Naresh Malhotra, Vs. The AC IT, Circle V, Ludhiana Ludhiana
PAN No.AFMPN4448M
(Appellant) (Respondent)
Appellant By : Shri Ashwani Kumar Respondent By : Shri Amarveer Singh
Date of hearing : 01/06/2015 Date of Pronouncement : 05/06/2015
ORDER
PER T.R.SOOD, A.M.
The appeal by the assessee is directed against the order dated 27.06.2012
passed by C IT(A)-II, Ludhiana.
2. In this appeal the assessee has raised the following ground:-
That order passed u/s 250(6) of the Income-tax Act, 1961 by the Ld. CIT(A)-II, Ludhiana is against law and facts on the file in as much he was not justified to arbitrarily uphold a disallowance of Rs. 3,13,512/- out of total disallowance of Rs. 4,80,040/- by resort to provisions of section14A."
3. After hearing both the parties we find that during assessment proceedings
it was noticed that assessee had made certain investments, therefore, provisions of section 14A read with Rule 8D were invoked and disallowance of Rs.
4,80,040/- was made.
4. On appeal, action of the Assessing Officer was confirmed by Ld. C IT(A).
5. Before us Ld. Counsel for the assessee submitted that since there was no
exempt income, therefore, no disallowance could be made. He further pointed
out that in assessee's own case for assessment year 2009-10 in ITA No.
846/Chd/2013, similar issue was set aside and, therefore, same order may be
followed.
4. On the other hand Ld. DR supported the order of the Ld. C IT(A).
5. After considering the rival submissions we find that no disallowance can
be made u/s 14A if there is no exempt income. This position is on the basis of
decision of Hon'ble Punjab & Haryana High Court in the case of C IT Vs.
Lakhani Marketing in ITA No. 970 of 2008. However, the fact whether there is
any exempt income or not is not recorded in the assessment order or impugned
appellate order. This issue was decided in earlier year for assessment year
20090-10 vide para 7, which reads as under:-
"7. After considering the submissions of Ld. DR we find that Hon'ble Punjab & Haryana High Court in the case of CIT v Lakhani Marketing Ltd ITA No. 970 of 2008 has clearly held that if there is no exempt income then section 14A is not attracted. Since assessee has pleaded before Assessing Officer as well as CIT(A) that there was no exempt income, therefore, we set aside the order of Ld. CIT and remit the matter back to the file of Assessing Officer with a direction to verify that if there is no exempt income during the year then no disallowance should be made otherwise the issue can be decided in accordance with the direction of Ld. CIT(A)."
6. Following the above order we set aside the order of Ld. CIT(A) and remit
this matter back to the file of Assessing Officer with a direction that if there is no exempt income during the year then no disallowance should be made.
However, if there is any exempt income then issue may be decided in
accordance with law.
7. In the result, appeal is allowed for statistical purposes.
Order pronounced in the open Court on 05.06.2015.
Sd/- Sd/- (BHAVNESH SAINI) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 5 t h June, 2015 Rkk Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR
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