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IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI `C' BENCH,
NEW DELHI
BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND
SHRI KULDIP SINGH, JUDICIAL MEMBER
ITA No. 1359/DEL/2017
[A.Y 2011-12]
The A.C.I.T Vs. M/s International Hospital Ltd
Circle 12(2) C/o Escorts Heart Institute &
New Delhi Research Centre, Okhla Road
New Delhi
PAN: AAACI 9712 A
(Applicant) (Respondent)
Assessee By : Shri R.M.Mehta, CA
Department By : Ms. Sushma Singh, Sr. DR
Date of Hearing : 09.12.2019
Date of Pronouncement : 10.12.2019
ORDER
PER N.K. BILLAIYA, ACCOUNTANT MEMBER,
This appeal by the Revenue is preferred against the order of the
Commissioner of Income Tax [Appeals] - 19, New Delhi dated
13.12.2016 pertaining to assessment year 2011-12.
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2. The solitary grievance of the Revenue is that the ld. CIT(A) erred
in deleting the disallowance of Rs. 13,65,85,862/- made u/s 14A of the
Income-tax Act, 1961 [hereinafter referred to as 'the Act' for short]
read with Rule 8D of the Income tax Rules, 1962.
3. Briefly stated, the facts of the case are that the assessee
company operates in hospital and health care industry and is engaged
in the business of running a multi-speciality hospital under the brand
name of `Fortis Hospital'.
4. During the course of scrutiny assessment proceedings, the
assessee was asked to give calculation of disallowance u/s 14A of the
Act r.w.r 8D of the Rules. In its reply, the assessee emphatically
stated that no dividend income has been earned, therefore,
disallowance u/s 14A of the Act was made.
5. The Assessing Officer was not convinced with this reply of the
assessee and was of the firm belief that the provisions of section 14A
of the Act r.w.r. 8D of the Rules squarely apply on the facts of the
case.
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6. Drawing support from the decision of the Special Bench of the
Tribunal in the case of M/s Cheminvest Ltd 317 ITR 86 [AT], the
Assessing Officer computed the disallowance and made addition of Rs.
13,65,85,862/-.
7. The assessee agitated the matter before the ld. CIT(A) and
vehemently contended that since there was no exempt income earned
by the assessee during the year, there is no question of any
disallowance u/s 14A of the Act.
8. After considering the facts and submissions, the ld. CIT(A)
deleted the addition observing that the decision of the Special Bench
of the Tribunal in the case of Cheminvest Ltd [supra] has been
reversed by the Hon'ble High Court of Delhi in 61 Taxmann 118 and
following the decision of the Hon'ble High Court, the ld. CIT(A) deleted
the disallowance.
9. Before us, the ld. DR strongly supported the findings of the
Assessing Officer and placed reliance on the decision of the Hon'ble
Supreme Court in the case of Maxopp Investment Ltd 402 ITR 640.
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10. Per contra, the ld. counsel for the assessee reiterated what has
been stated before the lower authorities.
11. We have given thoughtful consideration to the orders of the
authorities below. The undisputed fact is that during the year under
consideration, no exempt income was earned by the assessee. It is
equally true that the decision of the Special Bench of the Tribunal in
the case of Cheminvest Ltd [supra] has been reversed by the Hon'ble
High Court of Delhi [supra] wherein the Hon'ble High Court has held
that the expression "does not form part of total income" in section 14A
of the Act envisages that there should be an actual receipt of income
which is not includible in the total income during the relevant previous
year for the purpose of disallowance of any expenditure incurred in
relation to the said income.
12. In other words the Hon'ble High Court held that section 14A of
the Act will not apply if no exempt income is received or receivable
during the relevant previous year. Similar view has been taken by the
Hon'ble Gujarat High Court in the case of Corrtech Energy (P) Ltd 372
ITR 97.
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13. The decision of the Hon'ble Supreme Court in the case of Maxopp
Investment Ltd [supra] has not considered whether there can be any
disallowance if no exempt income is earned. Therefore, the decision
of the Hon'ble Supreme Court in the case of Maxopp Investment Ltd
would do no good to the Revenue.
14. Respectfully following the decision of the Hon'ble High Court of
Delhi, we decline to interfere with the findings of the ld. CIT(A).
15. In the result, the appeal of the Revenue in ITA No.
1359/DEL/2017 is dismissed.
The order is pronounced in the open court on 10.12.2019.
Sd/- Sd/-
[SHRI KULDIP SINGH] [N.K. BILLAIYA]
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 10th December, 2019
VL/
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Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
Asst. Registrar,
ITAT, New Delhi
Date of dictation
Date on which the typed draft is placed before the
dictating Member
Date on which the typed draft is placed before the Other
Member
Date on which the approved draft comes to the Sr.PS/PS
Date on which the fair order is placed before the
Dictating Member for pronouncement
Date on which the fair order comes back to the Sr.PS/PS
Date on which the final order is uploaded on the website
of ITAT
Date on which the file goes to the Bench Clerk
Date on which the file goes to the Head Clerk
The date on which the file goes to the Assistant Registrar
for signature on the order
Date of dispatch of the Order
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