9911796707
TMI Blog2016 (12) TMI 1399X X X X Extracts X X X X X X X X Extracts X X X X ..... facts are identical and issues are common, they are clubbed, heard together and disposed-off by way of this common order for the sake of convenience. ITA No.20/Vizag/2015: 2. The brief facts of the case are that assessee is an individual carrying business in manufacture of vests and briefs under the name and style of M/s. Thatavarthi Apparels filed his return of income for the assessment year 2011-12 on 30.9.2011 declaring total income of Rs. 40,74,340/- besides agricultural income of Rs. 1,24,900/-. The case was selected for scrutiny under CASS and accordingly notices u/s 143(2) & 142(1) of the Income Tax Act, 1961 (hereinafter called as 'the Act') were issued. In response to notices, the authorized representative of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the assessee that the provisions of section 14A of the Act are applicable only when there is an exempt income, which is includible in total income of the assessee. In case there is no exempt income received or there is no exempt income includible in total income, the provisions of section 14A of the Act cannot be applied to disallow expenditure incurred on such exempt income. 4. Having heard both the sides and considered materials on record, we find that the A.O. disallowed interest paid on loan by invoking the provisions of section 14A of the Act. According to the A.O., expenditure incurred in relation to any exempt income whether such income is received during the financial year or not cannot be allowed as deduction u/s 14A of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and observed that since section 14A of the Act bars any deduction pertaining to any expenditure incurred by the assessee for earning any income, which does not form part of the total income, any expenditure incurred in relation to earning exempt income cannot be allowed as deduction. We have examined the case laws relied upon by the A.O. in the light of the facts of the present case and found that the case laws relied upon by the A.O. are factually different from the assessee's case and accordingly cannot be applied to the facts of the assessee's case. 6. Coming to the case laws relied upon by the assessee. The assessee has relied upon the decision of Hon'ble High Court of Delhi, in the case of Cheminvest Ltd. Vs. CIT (supra). The Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee in that case and that expenditure ha( incurred to protect investment made. (Para 17) In the present case, the factual position that had not been disputed was that the investment Assessee in the shares of Max India Ltd. was in the form of a strategic investment. Sin business of the Assessee was of holding investments, the interest expenditure must be held to have been incurred for holding and maintaining such investment. The interest expenditure incurred Assessee was in relation to such investments which gives rise to income which does not form part of total income. (Para 18) In light of the clear exposition of the law in Holcim India (P) Ltd. and in view of the ac factual position in this case that the Assessee has made strategic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was 'for the purpose of making or earning such income Section 14A on the hand contains the expression 'in relation to income which does not form part of the total income'. The decision in Rajendra Prasad Moody cannot be used in the reverse to contend that even if no income has been received, the expenditure incurred can be disallowed u/s 14A. (Para 21) In the context of the facts enumerated hereinbe fore the Court answers the question framed holding that the expression 'does not form part of the total income' in Section 14A of the el that there should be an actual receipt of income, which was not includible in the total during the relevant previous year for the purpose of disallowing any expenditure incurred in to the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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