The Pr. Commissioner Of Income Taxcentral-3 v. Cellcap Invofin India Pvt. Ltd

*IN THE HIGH COURT OF DELHI AT NEW DELHI12. +ITA 819/2015 THE PR. COMMISSIONER OF INCOME TAXCENTRAL-3 Appellant Through: Mr. Rahul Chaudhary and Mr. RuchirBhatia, Advocates. versus CELLCAP INVOFIN INDIA PVT. LTD. Respondent Through: Ms. Kavita Jha and Ms. Roopali Gupta,Advocates. 16. AND ITA 823/2015 THE PR. COMMISSIONER OF INCOME TAXCENTRAL -3 Appellant Through: Mr. Rahul Chaudhary and Mr. RuchirBhatia, Advocates. versus CELLPHONE CREDITS & CREDITS SECURITIES PVT.ltd. RespondentThrough: Ms. Kavita Jha and Ms. Roopali Gupta,Advocates. CORAM:JUSTICE S. MURALIDHARJUSTICE VEBHU BAKHRU ORDER%30.10.2015 CM No. 24906 of 2015texemptionl in ITA No. 823 of 2015 ITA Nos. 819 & 823 of 2015 Signature Not VerifiedDigitally SignedBy:AMULYA Page 1 of3 1. Exemptions allowed subject to all just exceptions. 2. The application is disposed of. ITA Nos. 819 of 2015 & 823 of 2015 3. These two appeals by the Revenue under Section 260A of the Income TaxAct, 1961 ('Act') are directed against a common order dated 17* April 2015passed by the Income Tax Appellate Tribunal ('ITAT') in ITA Nos. 4364and 4365/Del/2013 for Assessment Year ('AY') 2009-10. 4. Both the Assessees are non-banking finance companies. In the return ofincome both Assessees had shown dividend income and claimed that 1% ofthe expenses had been incurred as administrative and statutory expenses and,therefore, should not be disallowed for the purposes of Section 14A of theIncome Tax Act, 1961 ('Act') read with Rule 8-D of the Income Tax Rules,1962 ('Rules'). 5. The Assessing Officer ('AO') formed an opinion that the Assessees hadnot furnished the correct particulars of income and proceeded to levy apenalty under Section 271 (1) (c) of the Act. The Commissioner of IncomeTax (Appeals) ['CIT (A)'] deleted the penalty levied by the AO and theRevenue went in appeal before the ITAT. The ground on which the ITATITA Nos. 819 & 823 of 2015 Page 2 of3 dismissed the Revenue s appeal was that nowhere in the assessment order orin the penalty order did the AO record that the Assessees' claims were false.It was noted that the Rule 8D of the Rules would come into play only whenthe AO records a finding that, having regard to the accounts of the Assessee,he was not satisfied with the correctness of the claims of the Assessee inrespect of the expenditure in relation to income which does not form part ofthe total income. Reliance was placed by the ITAT on the decision of theSupreme Court in CIT v. Reliance Petro Products Pvt. Ltd. [2010] 189Taxman 322. 6. Having heard learned counsel for the Revenue and having considered theorders of the CIT (A) as well as the ITAT, the Court finds that bothdecisions are based on the correct understanding of the legal position andthat in the facts of the present case, no substantial question of law arises fordetermination. The appeals are dismissed. S. MURALIDHAR, J OCTOBER 30, 2015/dn VIBHU BAKHRU, J ITANos.8I9 &823of201S