M.M.KUMAR,J. - (1.) THE revenue has filed the instant appeal under Section 260A of the Income-tax Act, 1961 (for brevity, 'the Act') against the order dated 31.3.2010, passed by the Chandigarh Bench 'B' of the Income Tax Appellate Tribunal (for brevity, 'the Tribunal'). The following questions of law have been sought to be raised:- "1. Whether on the facts and in law, the ITAT was legally justified in deleting the disallowance of Rs 10,46,067.00 under Section 14A of the Income-tax Act, 1961, by ignoring the evidence relied on by the Assessing Officer and the judgment of High Court of Punjab and Haryana in the case of M/s Abhishek Industries Ltd., in ITA No. 110 of 2005? 2. Whether on the facts and in law, the ITAT was legally justified in deleting the disallowance of Rs 10,46,067.00 made under Section 14A of the Income-tax Act, 1961 by holding that a clear nexus has not been established when there is no such requirement to prove the nexus as per the provisions of law?"
(2.) WE have heard learned counsel for the revenue- appellant at some length and are of the view that the matter is no longer res integra. The aforementioned questions of law have already been decided against the revenue by the Division Bench of this Court in the case of Commissioner of Income Tax-II v. M/s Hero Cycles Ltd. (ITA No. 331 of 2009, decided on 4.4.2009) by observing as under:- " 4. .......Whether, in a given situation, any expenditure was incurred which was to be disallowed, is a question of fact. The contention of the revenue that directly or indirectly some expenditure is always incurred which must be disallowed under Section 14A and the impact of expenditure so incurred cannot be allowed to be set off against the business income which may nullify the mandate of Section 14A, cannot be accepted. Disallowance under Section 14A requires finding of incurring of expenditure where it is found that for earning exempted income no expenditure has been incurred, disallowance under Section 14A cannot stand. In the present case finding on this aspect, against the revenue, is not shown to be perverse. Consequently, disallowance is not permissible." For coming to the aforementioned conclusion, the Division Bench has placed reliance on the earlier view taken in the case of Commissioner of Income Tax Chandigarh II v. M/s Winsome Textile Industries Limited, Chandigarh (ITA No. 504 of 2008, decided on 25.8.2009). The same view has also been reiterated in the case of Commissioner of Income Tax II, Ludhiana v. M/s Hero Cycles Limited, Ludhiana (ITA No. 157 of 2010, decided on 23.7.2010).
(3.) LEARNED counsel for the appellant has not been able to controvert the aforementioned position or cite any contrary judgment. Therefore, for the sake of consistency the instant appeal is dismissed in terms of the Division Bench judgment rendered in the case of M/s Hero Cycles Ltd. (supra).;