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TMI Blog2016 (12) TMI 1544X X X X Extracts X X X X X X X X Extracts X X X X ..... OJ KUMAR AGGARWAL, ACCOUNTANT MEMBER For The Assessee : Shri Jay Bhansali, A.R. For The Revenue : Ms. R.M. Madhavi, D.R. ORDER Per C.N. Prasad, Judicial Member: Both these appeals are filed by the assessee against the orders of the Commissioner of Income Tax (Appeals)-4, [hereinafter referred to as the CIT(A)] Mumbai dated 25.01.12 for the assessment years 2008-09 and 2009- 10 arising out of the assessment orders passed under section 143(3) of the Act. 2. The only issue in both these appeals of the assessee is that the Ld. CIT(A) erred in upholding the disallowance of ₹ 2,95,53,327/- and ₹ 3,20,53,826/- out of interest under rule 8D(2)(ii) and ₹ 47,22,550/- and ₹ 47,22,550/- out of expens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 10.08.2016 4) Garware Wall Ropes Limited v Addl. CIT (ITA No. 5408/Mum/2012) 5) M/s JM Financial Limited v Addl. CIT (ITA No: 4521/Mum/2012) 4. The Ld. Counsel for the assessee further submits that the assessee company has substantial own funds of about ₹ 212.40 crores as on 31.03.07 when all these investments of ₹ 94.45 crores were made and therefore he submits that when the assessee has sufficient own funds the presumption is that the investment was made from out of own funds and not from the borrowed funds. For this proposition he places reliance on the following decisions: 1) CIT v Reliance Utilities and Power Ltd [313 ITR 340 (Bom)] 2) CIT v HDFC 383 ITR 529 (Bom) 3) Fiduciary Euromax Global Markets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 74,31,010/- under section 14A r.w. Rule 8D. Admittedly, the assessee has not earned any exempt income in the year under consideration and this fact has not been controverted by the learned CIT(A). The applicability of the provisions of section 14A of the Act is in respect of expenditure incurred is in relation to the earning of income not includible in total income. A plain reading of the provisions of section 14A of the Act envisages that there should be actual receipt of income not includible in the total income. Therefore, the provisions of section 14A of the Act will not apply when no exempt income is received or receivable by the assessee during the relevant previous year. This proposition has been upheld by the Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation to the said exempt income. Therefore, in the factual matrix of the case on hand, as discussed above, we respectfully following the decisions of the Hon'ble Delhi High Court in the case of Cheminvest Ltd. (supra) and the Coordinate Bench of this Tribunal in the case of Fair Exports (India) Pvt. Ltd. (supra) hold that no disallowance under section 14A of the Act can be made in the case on hand for the year under consideration since the assessee has not earned any exempt income. We therefore set aside the decision of the authorities below and direct the AO to delete the disallowance of expenditure amounting to ₹ 74,31,010/- under section 14A of the Act. 9. The co-ordinate bench further held that if the investment was made a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted on such an income u/s 14A of the Act. In the light of the above referred to decisions and respectfully following the same, we direct the AO to exclude the strategic investments made by the assessee in group companies while calculating the disallowance under section 14A read with rule 8D of the Income Tax Act. 3.5.2 Following the aforesaid decision of the Coordinate Bench of this Tribunal in the case of Fiduciary Euromax Global Markets Ltd. (supra), we hold and direct that the strategic entire investments made by the assessee in group companies are to be excluded while computing the disallowance under section 14A r.w. Rule 8D. 10. Respectfully following the said decision, we hold that since the assessee has not earned any dividend ..... X X X X Extracts X X X X X X X X Extracts X X X X
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