The Principal Commissioner Of Income Tax-2, Chandigarh v. M/S Dabwali Transport Company Pvt. Ltd., Bathinda

ITA-237-2018 IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ITA-237-2018 (O&M) Date of Decision: 20.3.2019 The Principal Commissioner of Income Tax-2, Chandigarh Versus ....Appellant. M/s Dabwali Transport Company Pvt. Ltd., Bathinda ...Respondent. CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL.HON'BLE MRS. JUSTICE MANJARI NEHRU KAUL. PRESENT: Ms. Urvashi Dhugga, Sr. Standing Counsel for the appellant. *** AJAY KUMAR MITTAL, J. 1.This order shall dispose of two appeals bearing ITA Nos. 237and 416 of 2018, as according to learned counsel for the revenue, identicalissues are involved therein. For brevity, the facts are being taken from ITA-237-2018. 2.ITA-237-2018 has been preferred by the revenue under Section260A of the Income Tax Act, 1961 (in short “the Act”) against the orderdated 31.10.2017 (Annexure A-3) passed by the Income Tax AppellateTribunal, Amritsar Bench, Amritsar (hereinafter referred to as “theTribunal”) in ITA No. 76(Asr)/2017, claiming the following substantialquestions of law:- i).Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT has erred indeleting the addition of ` 65,97,366/- made u/s14A read with Rule 8D on the ground that no taxfree income has been earned by the assessee, incontravention to Board's Circular No. 5/2014 dated11.02.2014? ii). Whether on the facts and in the circumstances ofthe case and in law, the Hon'ble ITAT has erred inobserving that as per Section 14A(3) where therespondent claimed that no expenditure had beenincurred by it in relation to income which did notform part of the total income, the provisions ofsection 14A(2) would not apply whereas section14A(2) specifically provided that provisions ofsection 14A(2) would apply even in relation to acase where the respondent claimed that noexpenditure had been incurred in relation toincome which did not form part of the income andthe A.O. is not satisfied with the correctness of theclaim made by the assessee? iii).Whether on the facts and in the circumstances ofthe case and in law, the Hon'ble ITAT has erred inignoring the legislative intent expressed in CBDT'sCircular No. 5/2014 dated 11.02.2014 whichexplicitly states that expenses relatable to earningof exempt income have to be considered for disallowance irrespective of the fact whether anysuch income has been earned during the F.Y. ornot?such income has been earned during the F.Y. ornot? iv).Whether on the facts and in the circumstances ofthe case and in law, the Hon'ble ITAT has erred infollowing the decisions of Hon'ble High Courtswhose facts were distinguishable from thetaxpayers, ignoring the principal laid down byHon'ble Supreme Court decision in CIT vs.Walfort Share and Stock Brokers P Ltd. 326 ITR 1(SC) and that the department is in SLP in severalcases on this issue 'Niligiri InfrastructureDevelopment Ltd. ITA No. 135 of 2016 A.Y.2009-10 of Delhi High Court and Instant HoldingLtd. ITA No. 2168 of 2011?the case and in law, the Hon'ble ITAT has erred infollowing the decisions of Hon'ble High Courtswhose facts were distinguishable from thetaxpayers, ignoring the principal laid down byHon'ble Supreme Court decision in CIT vs.Walfort Share and Stock Brokers P Ltd. 326 ITR 1(SC) and that the department is in SLP in severalcases on this issue 'Niligiri InfrastructureDevelopment Ltd. ITA No. 135 of 2016 A.Y.2009-10 of Delhi High Court and Instant HoldingLtd. ITA No. 2168 of 2011? 3.Put shortly, the facts necessary for adjudication of the instantappeal as narrated therein may be noticed. The assessee filed its return ofincome on 30.9.2012 for the assessment year 2012-13 declaring an incomeof ` 13,60,37,129/-. The Assessing Officer vide order dated 31.3.2015(Annexure A-1) completed the assessment under Section 143(3) of the Actat an income of ` 14,30,34,500/- by, inter alia, making the additions of` 65,97,366/- on account of disallowance of interest under Section 14A ofthe Act to the returned income of the assessee. 4.Feeling aggrieved, the assessee filed an appeal before theCommissioner of Income Tax (Appeals) [in short “the CIT(A)”] challengingthe addition of ` 65,97,366/- on account of disallowance of interest under ITA-237-2018 -4- Section 14A of the Act. The CIT(A) vide order dated 20.10.2016(Annexure A-2) allowed the appeal and deleted the said addition. Therevenue challenged the order, Annexure A-2, before the Tribunal. TheTribunal vide order dated 31.10.2017 (Annexure A-3) upheld the order ofthe CIT(A) and dismissed the appeal of the revenue. Hence, the presentappeal by the revenue against the deletion of disallowance made underSection 14A of the Act. 5.We have heard learned counsel for the revenue. 6.It was not disputed by the learned counsel for the revenue thatthe aforesaid matter is covered by the judgment of this Court in ITA No.322 of 2016 (Principal Commissioner of Income Tax-I, Chandigarh v. M/s Vardhman Chemtech Private Limited, Chandigarh) decided on28.8.2018, wherein the appeal filed by the revenue was dismissed.7.Accordingly, the appeals are dismissed in terms of ITA No. 322of 2016 decided on 28.8.2018. (AJAY KUMAR MITTAL) JUDGE March 20, 2019(MANJARI NEHRU KAUL)gbsJUDGE Whether Speaking/ReasonedYes/NoWhether ReportableYes/No