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The A.C.I.T Circle 12(2) New Delhi Vs. M/s International Hospital Ltd C/o Escorts Heart Institute & Research Centre, Okhla Road New Delhi
December, 10th 2019
                                     1


    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.
                                     2


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.
                                   3


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.
                                   4


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.
                                    5


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/
                                        6


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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