आयकर अपील(cid:547)य अ(cid:876)धकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ A ‘ Bench, Hyderabad Before Shri Vijay Pal Rao, Vice-President A N D Shri Madhusudan Sawdia, Accountant Member आ.अपी.सं /ITA No.1550/Hyd/2017 (िनधा१रण वष१/Assessment Year: 2012-13)

Asstt. Commissioner of Vs. Lycos Internet Ltd Income Tax, Circle 16 (1) Hyderabad Hyderabad PAN:AAACL5827B (Appellant) (Respondent)

आ.अपी.सं /ITA No.1769/Hyd/2018 (िनधा१रण वष१/Assessment Year: 2012-13)

Lycos Internet Ltd Vs. Asstt. Commissioner of Hyderabad Income Tax, Circle 16 (1)

PAN:AAACL5827B Hyderabad (Appellant) (Respondent)

िनधा१ौरती (cid:554)ारा/Assessee by: Shri P Murali Mohan Rao, CA राज(cid:830) व (cid:554)ारा/Revenue by:: Shri B Bala Krishna, CIT(DR)

सुनवाई की तारीख/Date of hearing: 16/12/2024 घोषणा की तारीख/Pronouncement: 22/01/2025 आदेश/ORDER Per Vijay Pal Rao, Vice President These are two appeals, one by the Department against the order dated 23/06/2017 of the learned CIT (A) and another by the assessee against the revision order dated 26/02/2018 passed by the learned Pr. CIT u/s 263 of the I.T. Act, 1961 respectively for the A.Y 2012-13.

2. First, we take up the appeal filed by the Department in ITA No.1580/Hyd/2017, wherein the Department has raised the following grounds:

3. Ground No.1 is regarding non-payment of self- assessment tax. At the time of hearing, the learned DR has accepted the fact that the assessee has already paid the self - assessment tax and therefore, this ground becomes infructuous. In view of the fact that the assessee paid the tax due on return of income, therefore, no specific finding is required on Ground No.1 of Revenue’s appeal.

4. Ground of appeal 2 to 4 are regarding disallowance made by the Assessing Officer u/s 14A was deleted by the learned CIT (A). The learned DR has submitted that the learned CIT (A) has deleted the addition on the ground that no exempt income was earned by the assessee in respect of the investment made in the shares of subsidiary/group entities of the assessee. He has referred to the CBDT Circular No.5/2024 dated 11/02/2024 and submitted that if the investment is capable of yielding exempt income, provisions of section 14A are applicable in so far as expenditure incurred by the assessee in respect of exempt income irrespective of the fact whether the assessee has actually earned any exempt income or not. The mandate of section 14A is to curb the practice of claiming deduction of expenditure incurred in relation to exempt income against taxable income. He has relied upon the order of the Assessing Officer.

5. On the other hand, the learned AR submitted that the Assessing Officer has not disputed the fact that the assessee has not earned any dividend income during the year under consideration and therefore, in view of the binding precedent, no disallowance u/s 14A of the Act is called for. In support of his contention, he has relied upon the judgment of the Hon'ble Supreme Court in the case of CIT vs. Chettinad Logistics (P) Ltd (2018) 95 taxmann.com 250 (SC)as well as the judgment in the case of Pr.CIT vs. Oil Industries Development Board (SPECIAL LEAVE PETITION (CIVIL) Diary No(s). 2755/2019 dated 8/2/2019 and submitted that section 14A can only be triggered if the assessee seeks to claim expenditure incurred against the income which does not form part of the total income. He has further submitted that Rule 8D provides only a method of determining the amount of expenditure incurred in relation to income which does not form part of the total income and it cannot go beyond what is provided in section 14A. Thus, it has been held that where no exempt income was earned for the relevant A.Y by the assessee, section 14A should not be invoked. Thus, the learned AR has submitted that the learned CIT (A) has rightly deleted the disallowance made by the Assessing Officer u/s 14A of the Act when there is no exempt income earned by the assessee from alleged investment. He has further submitted that even t