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TMI Blog2016 (10) TMI 840X X X X Extracts X X X X X X X X Extracts X X X X ..... ment year 2010-11 on the following grounds:- 1. That on the facts of the case and as per law, the Ld. CIT(A) upheld the order of the AO in assessing the income of the appellant at ₹ 12,30,680/- against the returned income of ₹ 7,39,000/-, after making the disallowance of expenditure of ₹ 4,91,677/- u/s. 14A of the Act in spite of the fact that the appellant did not earn any income exempt from income tax which is a precondition for invoking the provision of section 14A of the Act. 2. That on the facts and circumstances of the case, the Ld. CIT(A) erred in not appreciating the fact that the AO did not controvert the submission that the appellant did not make investment for earning income of the dividend and the inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the present case, I am of the considered view that no useful purpose would be served to serve the notice again and again to the Department, therefore, I am deciding this Appeal as Exparte Department, after hearing the Ld. AR of the assessee and perusing the records. 4. I have heard the Ld. AR of the assessee and have gone through the material placed on record. I find that A.O. as well as Ld. CIT(A) has not pointed out any income earned by assessee which was exempt income. I find that there was no exempt income pointed out by the Revenue Authorities and A.O. had made addition holding that assessee had source of exempt income. Section 14A of the Income Tax Act cannot be invoked when no exempt income was earned. I find that the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlier decisions of the same Court in CIT Vs. Hero Cycles Limited, [2010] 323 ITR 518 and CIT Vs. Winsome Textile Industries Limited, [2009] 319 ITR 204 to hold that Section 14A cannot be' invoked when no exempt income was earned. The second decision is of the Gujarat High Court in Commissioner of Income Tax-I Vs. Corrtech Energy (P.) Ltd. [2014] 223 Taxmann 130 (Guj.). The third decision is of the Allahabad High Court in Income Tax Appeal No. 88 of 2014, Commissioner of Income Tax (Ii) Kanpur, Vs. M/s. Shivam Motors (P) Ltd. decided on 05.05.2014. In the said decision it has been held: As regards the second question, Section 14A of the Act provides that for the purposes of computing the total income under the Chapter, no deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring right to management. Possibility of sale of shares by private placement etc. cannot be ruled out and is not an improbability. Dividend mayor may not be declared. Dividend is declared by the company and strictly in legal sense, a shareholder has no control and cannot insist on payment of dividend. When declared, it is subjected to dividend distribution tax. 16. What is also noticeable is that the entire or whole expenditure has been disallowed as if there was no expenditure incurred by the respondentassessee for conducting business. The CIT(A) has positively held that the business was set up and had commenced. The said finding is accepted. The respondent-assessee, therefore, had to incur expenditure for the business in the form of inves ..... X X X X Extracts X X X X X X X X Extracts X X X X
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