TMI Blog2016 (5) TMI 1425X X X X Extracts X X X X X X X X Extracts X X X X ..... - 25-5-2016 - Shri N. V. Vasudevan, JM Shri M. Balaganesh, AM For the Appellant: Shri Sunil Surana, FCA For the respondent: Md. Ghayas Uddin Ansari, JCIT, Sr. DR ORDER Per Shri M. Balaganesh, AM: This appeal by assessee is arising out of order of CIT(A)-XXIV, Kolkata vide Appeal No. 1139/CIT(A)-XXIV/C-1/12-13 dated 20.05.2013. Assessment was framed by DCIT, Circle-1, Kolkata u/s. 143(1) of the Income tax Act, 1961 (hereinafter referred to as the Act ) for AY 2008-09 vide his order dated 06.12.2010. 2. The only issue to be decided in this appeal is as to whether disallowance u/s. 14A of the Act could be made in the facts and circumstances of the case. 3. Brief facts of this issue are that the AO observed that assessee had earned dividend income to the tune of ₹ 13,83,515/-. The position of own capital, unsecured loans and investments as on 31.03.2008 as under: 31.03.2008 (Rs. In crore) Own fund (capital Reserve) 19.20 Unsecured Loans 31.26 Investments 68.71 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 32.91% 304623955 100.00% Basis of calculation 1. Haryana Scrip was sold after 158 days from 01.04.2007, cost was 10076160/-. 2. As per audited Accounts, Loan Capital on 01.04.2007 was ₹ 100249343/- (32.91%). 3. Total interest on 10076160/- @ 11% for 158 days during 31.03.2007 amounted to 479291/-. Interest on LTCG of Haryana to be Disallowed: 279291 x 32.91% = 157895/- (A) INTEREST RELATABLE TO EXEMPT DIVIDEND INCOME Total interest (Dr.) as per Profit Loss Account - ₹ 93,26,183/- Allocation of interest on different source of income Income Amount in (Rs.) Ratio Interest Allocation Dividend 13,83,515/- 13.12% 12,02,564/- (9168288x13.12%) Other Taxable Income 91,64,335/- 86.88% 79,65,724/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the Coordinate Bench of this Tribunal in the case of Luccas Estates Pvt. Ltd. in CO No. 65/Kol/2014 in ITA No. 721/Kol/2014 dated 11.05.2016. He also placed reliance on the decision of this Tribunal in the case of REI Agro ltd. Vs. DCIT in ITA No. 1331/Kol/2011 dated 19.06.2013, which was approved by Hon ble Calcutta High Court. He also placed reliance on the decision of Bangalore ITAT in the case of John distilleries Ltd. Vs. DCIT in ITA No. 1429/Bang/2014 dated 24.02.2016. Without prejudice to the aforesaid arguments, he argued that even assuming Rule 8D(2) of the Rules are to be invoked for the purpose of making disallowance u/s. 14A of the Act, the investments yielding dividend income alone are to be reckoned for the same. In support of this, he placed reliance on the aforesaid decisions. He further argued that disallowance in any case cannot exceed the income which does not form part of the total income. In support of this proposition, he placed reliance on the decision of Hon ble Delhi High Court in the case of CIT Vs. Holim India Pvt. Ltd. in ITA No. 486/2014 and 299/2014 dated 05.09.2014 which was followed by the decision of this Tribunal in the case of PDGD Investme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of CIT vs Holim India (P) Lyd. In ITA Nos.486/2014 and 299/2014 judgment dated 5th September, 2014. The relevant portion of the judgment is reproduced herein below :- On the issue whether the respondent-assessee could have earned dividend income and even if no dividend income was earned, yet Section 14A can be invoked and disallowance of expenditure can be made, there are three decisions of the different High Courts directly on the issue and against the appellant- Revenue. No contrary decision of a High Court has been shown to us. The Punjab and Haryana High Court in Commissioner of Income Tax, Faridabad Vs. M/s. Lakhani Marketing Incl., ITA No. 970/2008, decided on 02.04.2014, made reference to two earlier decisions of the same Court in CIT Vs. Hero Cycles Limited, [2010] 323 ITR 518 and CIT Vs. Winsome Textile Industries Limited, [2009] 319 ITR 204 to hold that Section 14A cannot be invoked when no exempt income was earned. The second decision is of the Gujarat High Court in Commissioner of Income Tax-I Vs. Corrtecb Energy (P.) Ltd. [2014] 223 Taxmann 130 (Guj .). The third decision is of the AlIahabad High Court in Income Tax Appeal No. 88 of 2014, Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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