2019 (1) TMI 1853 - AT - Income Tax

Disallowance u/s 14A r.w.r 8D - HELD THAT - Any investments made in the subsidiary, which may not be for the purpose of earning dividend and may be for the purpose of having controlling interest therein, shall attract the provisions of section 14A read with Rule 8D. The reliance placed by assessee on the decision of the Hon ble Jurisdictional High Court in the case of Redignton India Ltd., 2017 (1) TMI 318 - MADRAS HIGH COURT wherein, it was held that no disallowance could be made when no exempt income is earned by the assessee has no legs to stand once the Hon ble Supreme Court has subsequently given a detailed judgement in the matters of section 14A of the Act in the case of Maxopp Investment Ltd. v. CIT 2018 (3) TMI 805 - SUPREME COURT which automatically supersedes all existing decisions of the Hon ble High Courts. In view of the above facts and circumstances, we sustain the disallowance confirmed by the ld. CIT(A). Thus, the ground raised by the assessee stands dismissed.

Summary

Issues Involved:
Disallowance under section 14A of the Income Tax Act, 1961.

Detailed Analysis:

Issue 1: Disallowance under section 14A of the Income Tax Act, 1961

Analysis: The appeal was against the order confirming the disallowance of &8377;17,02,500 made under section 14A of the Income Tax Act, 1961. The Assessing Officer determined the expenditure to the extent of &8377;17,02,500 under section 14A of the Act r.w. Rule 8D due to the absence of quantification of disallowance by the assessee. The ld. CIT(A) confirmed the disallowance, considering the latest decision of the Hon'ble Supreme Court in the case of Maxopp Investment Ltd. v. CIT. The assessee argued against the disallowance, citing the decision of the Hon'ble Madras High Court in the case of Redington (India) Ltd. v. Addl. CIT. However, the Tribunal upheld the disallowance, emphasizing that investments in subsidiaries attracting section 14A read with Rule 8D are subject to disallowance, irrespective of the purpose of investment. The Tribunal noted that the decision in Maxopp Investment Ltd. v. CIT supersedes previous decisions of the High Courts, leading to the dismissal of the appeal.

Conclusion: The Tribunal sustained the disallowance under section 14A of the Income Tax Act, 1961, based on the principles outlined in the Maxopp Investment Ltd. v. CIT case, despite the absence of exempt income earned by the assessee. The Tribunal's decision was in line with the interpretation of section 14A and Rule 8D as per the Hon'ble Supreme Court's judgment, leading to the dismissal of the appeal.

This detailed analysis covers the issues involved in the legal judgment comprehensively, providing insights into the application of the relevant provisions of the Income Tax Act, 1961 and the judicial interpretations guiding the decision-making process.