9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (7) TMI 1469 - AT - Income TaxDisallowance u/s 14A - Held that - This issue is covered in favour of the assessee by the decision of the Hon ble Delhi High Court in the case of Cheminvest Ltd vs. CIT (2015 (9) TMI 238 - DELHI HIGH COURT) wherein it has been held that if there is no dividend income (which is exempt from tax) earned during the relevant period, no disallowance u/s 14A can be made - Decided in favour of assessee Disallowance of preliminary expenses written off u/s 35D - Held that - It is not in dispute that in the preceding assessment year, very expenditure stand accepted. The issue is squarely covered against the revenue in light of the decision of the Hon ble Supreme Court in the case of Shasun Chemicals & Drugs Ltd vs. Commissioner of Income TaxII, Chennai reported in (2016 (9) TMI 1199 - SUPREME COURT OF INDIA) wherein the issue was with respect to claim under Section 35D and it was found that expenses claimed by the assessee for first two assessments years were allowed by the Assessing Officer, the Assessing Officer in the subsequent assessment year could not have disallowed the same. Under the circumstances, no error has been committed by the learned Tribunal in deleting the disallowance - Decided in favour of assessee
Issues:
1. Disallowance made under section 14A for not offering income from investments. 2. Disallowance of preliminary expenses written off under section 35D. 3. Applicability of Supreme Court decisions in similar cases. 4. Appeal against the order of the CIT (A) for the Assessment Year 2011-12. Issue 1: Disallowance under Section 14A The Revenue appealed against the CIT (A)'s order deleting the disallowance under section 14A, arguing that the assessee did not earn any exempt income. The AO presumed that since the assessee showed investments without offering any income, it must be exempt from tax. The AO referred to a decision by ITAT Delhi and made a disallowance under Rule 8D of the I.T. Rules. However, the assessee contended that no dividend income was earned during the relevant year. The ITAT upheld the CIT (A)'s decision based on the Delhi High Court's ruling that disallowance under section 14A cannot be made if no dividend income, exempt from tax, was earned. Issue 2: Disallowance of Preliminary Expenses under Section 35D The AO disallowed preliminary expenses of the assessee under section 35D related to ROC fee expenditure for increasing authorized share capital. Citing decisions by Delhi High Court and Supreme Court, the AO disallowed a specific amount. The CIT (A) reversed this decision, allowing the deduction claimed by the assessee. The ITAT upheld the CIT (A)'s decision, considering the nature of the expenditure and the provisions of section 35D, following the Supreme Court's decision in a similar case. Issue 3: Applicability of Supreme Court Decisions The Revenue relied on Supreme Court decisions to support the disallowance made under section 35D. The assessee distinguished these cases based on factual differences and presented arguments supporting the allowability of the claim. The ITAT examined the nature of the expenditure, amortization, and the relevant provisions of section 35D. Referring to a Supreme Court ruling in a similar case, the ITAT upheld the CIT (A)'s decision, dismissing the Revenue's appeal. Issue 4: Appeal against CIT (A) Order The Revenue's appeal against the CIT (A)'s order for the Assessment Year 2011-12 was dismissed by the ITAT. The ITAT considered the arguments, legal provisions, and relevant court decisions to uphold the CIT (A)'s findings regarding the disallowances under sections 14A and 35D. The ITAT's decision was based on the application of legal principles and precedents established by the Delhi High Court and the Supreme Court in similar cases. In conclusion, the ITAT dismissed the Revenue's appeal, upholding the CIT (A)'s order for the Assessment Year 2011-12 regarding the disallowances made under sections 14A and 35D. The decision was based on the interpretation of relevant legal provisions, court rulings, and the nature of the expenditures in question.
|
