9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (2) TMI 489 - HC - Income TaxDisallowance u/s 14A - stand of the department is that the expression 'includible' appearing in heading of Section 14A would mean that it is not necessary that exempt income should be included in the particular year's income for deduction to be allowed - HELD THAT - This Court in the case of Commissioner of Income Tax Vs. M/s. Delite Enterprises 2009 (2) TMI 498 - BOMBAY HIGH COURT answering a similar question held that since there was no profit in the relevant assessment year, question of disallowance under Section 14A would not arise. Again Delhi High Court in case of Pr. Commissioner of Income Tax -4 Vs. IL FS Energy Development Company Ltd 2017 (8) TMI 732 - DELHI HIGH COURT held that CBDT circular referred to herein above cannot override the statutory provisions and declined to admit the related appeal raising similar question. Adverting to the facts of the present case, admittedly, there is no exempt income of the assessee in the year under consideration. Consequently, the questions proposed do not arise.
Issues involved:
Disallowed under Section 14A of the Income Tax Act, 1961. Analysis: The appeal was filed by the revenue against the order of the Income Tax Appellate Tribunal, Mumbai Bench 'B', regarding the assessment year 2008-09. The substantial questions of law projected in the appeal revolved around the disallowance under Section 14A of the Act. The first issue raised was whether the Tribunal was justified in deleting the disallowance under Section 14A despite no dividend income being earned during the assessment year. The second issue questioned the Tribunal's decision to delete the disallowance based on the absence of dividend income, disregarding the CBDT Circular No. 5/2014 which clarifies the disallowance of expenditure even in the absence of exempt income. The third issue challenged the Tribunal's decision to delete the disallowance by considering the investments made by the assessee as strategic in nature, without appreciating the Karnataka High Court's ruling that strategic investments also fall under Section 14A. The crux of the matter was the interpretation of Section 14A which deals with expenditure incurred in relation to income not includible in total income. The department argued that the term 'includible' in Section 14A does not require the exempt income to be included in the specific year's income for disallowance. The Court referred to the CBDT Circular No. 5/2014 to support this interpretation. Previous judgments, such as Commissioner of Income Tax Vs. M/s. Delite Enterprises and Pr. Commissioner of Income Tax -3 Vs. M/s. India Debt Management Pvt Ltd, emphasized that if no exempt income was earned during the assessment year, disallowance under Section 14A would not be permissible. Delhi High Court's decision in the case of Pr. Commissioner of Income Tax -4 Vs. IL & FS Energy Development Company Ltd further reinforced that the CBDT circular cannot override statutory provisions. In the present case, since there was no exempt income for the assessee during the relevant year, the questions raised in the appeal were deemed irrelevant. Consequently, the Court found no merit in the appeal and dismissed it without costs.
|
