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2020 (3) TMI 1164 - AT - Income TaxDisallowance u/s.14A - AO noticed that assessee had borrowed money from various parties and interest thereof - HELD THAT - We find that various Courts as well as Tribunals have taken a consistent view that when assessee has not made any claim for exemption of any income from the payment of tax, therefore, there cannot be any disallowance u/s.14A of the Act. In this respect, we also relied upon the decision of Hon ble Delhi High Court in the case of Cheminvest Ltd. CIT 2015 (9) TMI 238 - DELHI HIGH COURT wherein it was held that section 14A of the Act envisages that there should be an actual receipt of income which is not includible in total income. Since in the present case also, the assessee has not made any claim for exemption of any income from payment of tax, therefore while relying upon the decision(s) in the case of Cheminvest Ltd. vs. CIT(supra) and CIT vs. Corrtech Energy (P.) Ltd. 2014 (3) TMI 856 - GUJARAT HIGH COURT we are also of the view that no disallowance u/s.14A of the Act ought to have been made by the Ld.AO. - Decided in favour of assessee.
Issues:
Challenge to disallowance of total interest expenditure under section 14A of the Income Tax Act, 1961. Detailed Analysis: Issue 1: Disallowance of Interest Expenditure - The assessee appealed against the order of the Ld. Commissioner of Income Tax(Appeals) regarding the disallowance of total interest expenditure of ?10,40,977 made by the Assessing Officer under section 14A of the Income Tax Act, 1961 for Assessment Year 2012-13. - The Assessing Officer observed that the assessee had borrowed money from various parties, incurring interest expenses of ?10,47,877, leading to the disallowance under section 14A. - The Ld.CIT(A) dismissed the appeal filed by the assessee, upholding the disallowance. - The appellant challenged the order of the Ld.CIT(A) in upholding the disallowance of interest expenses under section 14A. - The appellant contended that the interest expenditure was incurred for earning profit from partnership firms and argued against the disallowance. - The appellant cited the decision of a Special Bench of ITAT in a specific case to support their claim that the interest expenditure was not for earning exempt income. - The appellant provided detailed submissions and referred to various legal judgments to support their case, emphasizing that no disallowance should be made under section 14A as no exempt income was earned. - The Tribunal considered the arguments of both parties and analyzed the legal precedents cited. - Relying on various court decisions and the absence of any exempt income earned by the assessee, the Tribunal concluded that no disallowance under section 14A should have been made by the Assessing Officer. - Consequently, the Tribunal set aside the order of the Ld.CIT(A) and allowed the ground of appeal raised by the assessee. - The appeal of the assessee was ultimately allowed by the Tribunal. This detailed analysis covers the issues involved in the legal judgment, providing a comprehensive overview of the arguments presented, legal citations referenced, and the final decision rendered by the Tribunal.
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