DCIT Vs Sarita Synthetics & Industries Ltd. (ITAT Visakhapatnam)
Conclusion: No disallowance u/s 14A was called for in case of no exempt income earned by assessee in the relevant assessment years.
Held:
In the instant case, assessee did not earn income which was exempt u/s 14A. AO made the addition placing reliance on the Circular No.5/2014 of the CBDT dated 11.02.2014. It was noted that High Court in the case of Pr.Commissioner of Income Tax Vs. IL &FS Energy Development Company Ltd. reported in 250 Taxman 0174 considered the Board Circular and held that the Circular cannot override the express provisions of section 14A r.w.Rule 8D of I.T.Rules. Following the same, it was concluded that no disallowance u/s 14A was called for in case of no exempt income earned by assessee, in the relevant assessment years.
FULL TEXT OF THE ITAT JUDGEMENT
These appeals are filed by the revenue against the orders of the Commissioner of Income Tax (Appeals) [(CIT(A)]-9, Hyderabad vide ITA No.10224/ACIT Circle-4(1)/2017-18 and I.T.A No. 10223/DCIT Circle- 4(1)/2017-18 dated 26.06.2018 for the Assessment Years(A.Y.) 2012-13 and 2013-14 respectively.
2. All the grounds of appeal are related to the addition made by the Assessing Officer (AO) u/s 14A of the Income Tax Act, 1961 (hereinafter called as ‘Act’) read with Rule 8D of the Income rules (hereinafter called as ‘Rules’) for an amount of Rs.2,70,89,092/- and Rs.2,70,03,495/- for the A.Y. 2012-13 and 2013-14 respectively In the instant case, the assessee filed the return of income admitting total loss of Rs.4,46,32,496/- for the A.Y.2012-13 and Rs.3,78,51,394/- for the A.Y. 2013-14. The assessment was completed u/s 143(3) on total loss of Rs.1,62,58,913 for the A.Y.2012-13 and Rs.1,05,85,358/- for the A.Y.2013-14. During the assessment proceedings, the AO made the following additions to the income / loss returned as under :
A.Y.2012-13
