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TMI Blog2017 (1) TMI 941X X X X Extracts X X X X X X X X Extracts X X X X ..... 14A of the Act, envisage that there should be an actual receipt of income, which is not includible in the total income, during the relevant previous year for the purpose of disallowing any expenditure incurred in relation to the income. In other words, section 14A will not apply if no exempt income is received or receivable during the relevant previous year. Since, no exempt income was earned by the assessee and since the genuineness of the expenditure, incurred by the assessee, was not in doubt, no disallowance could be made u/s 14A of the Act. - Decided in favour of assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Income Tax (Appeal), it was explained that the assessee company had invested in equity shares of its group companies to the tune of ₹ 18,10,22,126/- as a passive investment for the purposes of holding controlling interest/stay in the group concerns and no dividend/exempt income was earned. The First Appellate Authority considering the decision from Hon'ble Allahabad High Court in CIT vs Shivam Motors Pvt. Ltd. (ITA No.88 of 2014) and Hon'ble Delhi High Court in CIT vs Holcim India Pvt. Ltd. (ITA No.486 of 2014 and ITA No.299 of 214) order dated 05/09/2014 deleted the disallowance. The Revenue is aggrieved and is in appeal before this Tribunal. 2.2. If the observation made in the assessment order, leading to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 14A of the Act envisages that there should be an actual receipt of income which is not included in the total income during the relevant previous year for the purpose of disallowing any expenditure incurred in relation to the said income. 2.4. Almost identical issue has been taken by the Hon'ble Allahabad High Court in the case of "CIT Kanpur vs. M/s. Shivam Motors Pvt. Ltd." in ITA No.88 of 2014 vide order dated 05.05.2014; by the Hon'ble Gujarat High Court in the case of "CIT vs. Corrtecth Energy Pvt. Ltd." in ITA No.239 of 2014 vide order dated 24.03.2014 and by the Hon'ble Bombay High Court in the case of "CIT vs. M/s. Delite Enterprises" in ITA No.110 of 2009 vide order dated 26/02/2009. The Ld. DR relied upon the decision fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts of the case as to how much interest bearing borrowings was utilized to acquire shares in the companies. It is also necessary to see as to whether any interest bearing borrowed funds were used in making the advances and expenditure in the case of Castle Breweries. This factual exercise has to be carried out by the Assessing Officer after giving due opportunity to the assessee of being heard. The Assessing Officer may make the disallowance of interest u/ s.14A only if it is found that interest bearing borrowed funds were used to acquire shares in the companies or fur making advances to Castle Breweries. We, therefore, restore this issue to the file of the Assessing Officer with the above directions. The ground is treated as partly a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court, but in none of the decisions, the question arisen before the respective Court as to whether the finding of fact recorded by the Tribunal can be disturbed or upset at the stage of appeal before this Court, which is limited to the question of law. All decisions proceed on the basis that the nexus is established, which as per the finding of fact recorded by the Tribunal is not established in the present case. Hence, the said decisions are of no help to the appellant. 11. Hence, subject to the aforesaid observations, the appeal is dismissed. 2.6. If the aforesaid observation is analyzed, we find that in para-9 of the order of the Hon'ble Karnataka High Court, it has been clarified that in accordance with section 14A of the Act, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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