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2021 (8) TMI 934 - AT - Income TaxAddition u/s 14A - HELD THAT - CIT(A) applied the law laid down by the Hon ble jurisdictional High Court in the cases of CIT vs. Holcim India Private Limited 2014 (9) TMI 434 - DELHI HIGH COURT and Cheminvest Ltd vs. CIT 2015 (9) TMI 238 - DELHI HIGH COURT wherein it has been held that no disallowance u/s 14 A of the Act can be made in a year in which no exempt income was earned are received by the assessee. There is no dispute as to the fact that in this particular assessment year the assessee did not earn or receive any dividend income. Ld. CIT(A) has rightly applied the law laid down by the Hon ble jurisdictional High Court to the facts of the case and deleted the addition made under section 14A of the Act read with Rule 8D of the Rules. We, therefore, do not find any ground to interfere with such findings and consequently confirm the same. Ground No. 1 of the Revenue s appeal is accordingly dismissed. Addition u/s 36(1) and (2) - loan balance due from Carrier Launcher Education Foundation (CLEF) was written off - HELD THAT - Since the assessee had declared the amount in question as income in the earlier assessment years and paid in taxes thereon, Ld. CIT(A) held that the conditions required u/s 36(1)(vii) read with section 36 (2) of the Act. It is not the case of the Revenue that in the earlier assessment years the assessee did not declare the impugned amount as income. It goes unchallenged that the assessee declared this amount as income in earlier assessment years and also paid the taxes. In view of the decision of the Hon ble Supreme Court in the case of TRS Ltd vs. CIT 2010 (2) TMI 211 - SUPREME COURT 7, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable; and that,it is enough if the debt is written off as irrecoverable in the accounts of the assessee. There is no doubt that the conditions u/s 36(1)(vii) read with section 36 (2) of the Act are satisfied. The deletion of this addition by the Ld. CIT(A), therefore, does not suffer any illegality or irregularity. We, therefore, confirmed the same and dismiss the other ground of the appeal of the Revenue.
Issues:
1. Disallowance under section 14A of the Income Tax Act 2. Disallowance of unearned interest on advances written off Issue 1: Disallowance under section 14A of the Income Tax Act In this case, the Revenue challenged the deletion of an addition made under section 14A of the Income Tax Act by the Ld. CIT(A). The Assessing Officer had disallowed a proportionate interest amount under rule 8D of the Income Tax Rules 1962. However, the Ld. CIT(A) applied legal precedents stating that no disallowance under section 14A can be made in a year where no exempt income was earned by the assessee. As the assessee did not earn any dividend income in the relevant assessment year, the Ld. CIT(A) deleted the addition. The Tribunal confirmed this decision, citing the law laid down by the jurisdictional High Court, and dismissed the Revenue's appeal on this ground. Issue 2: Disallowance of unearned interest on advances written off The second ground of appeal involved the disallowance of unearned interest on advances written off by the Assessing Officer. The Assessing Officer considered the written-off loan balance as capital in nature and disallowed it. However, the Ld. CIT(A) found that the amount had been declared as income in earlier years and taxes were paid on it. Citing the decision of the Supreme Court, the Tribunal noted that it is not necessary for the assessee to prove irrecoverability of the debt if it is written off in the accounts. As the conditions under relevant sections of the Act were satisfied, the Tribunal upheld the deletion of this addition by the Ld. CIT(A) and dismissed the Revenue's appeal on this ground as well. In conclusion, the Tribunal upheld the Ld. CIT(A)'s decisions on both issues, dismissing the Revenue's appeal in its entirety. The judgment provides a detailed analysis of the legal principles and precedents applied to reach these conclusions, ensuring a fair and thorough consideration of the facts and legal arguments presented in the case.
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