Case Law Details
Zoetis Pharmaceutical Research P. Ltd. Vs. ACIT (ITAT Mumbai)
Conclusion: When no exempt income was received or receivable on the investments, no disallowance u/s 14A of the Income Tax Act, 1961 is warranted.
Held: The assessee is engaged in the business of trading exports, trading in empty vegetables capsules & research and development in veterinary medicine on lab scale for Zoetis USA and its affiliates. The assessee filed its return in 2014 , wherein disallowance u/s 14A of the Act was taken, but later on the assessee revised its return of income in 2016 u/s 139(5) of the Act, wherein the aforesaid disallowance u/s 14A was withdrawn.
During the course of assessment AO upheld disallowance u/s 14A of the Act by holding that the investments decisions generally requires certain administrative and managerial expenses to be incurred.
The Ld. CIT(A) in the appeal while dismissing the claim of assessee held that , “In the Note to the revised return it has been mentioned that the company has not earned any exempt income and the investments made by the company are strategic in nature. Therefore, revised return is filed by withdrawing disallowance u/s. .14A. It must be noted that these issues are debatable in nature. In the recent judgement, the Hon’ble High Court of Karnataka, in the case of Sharavathy Conductors (P) Ltd. vs. CCIT, 87 taxmann.com 244 (2O17), has held that revised return cannot be filed to make a debatable claim. Therefore, applying the ratio laid down by the Hon’ble High Court of Karnataka, it is held that the revised return filed by the appellant is not a valid revised return u/s. 139(5)”.
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