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TMI Blog2017 (2) TMI 542X X X X Extracts X X X X X X X X Extracts X X X X ..... /s.36(1)(va) by way of employee’s contribution towards provident fund - Held that:- Assessee has allegedly made belated payments of employees’ contribution towards PF for the month of March-2012. It was observed by the CIT(A) that no explanation was submitted by the Assessee before the AO nor was any submission made before the him in this regard. The CIT(A) accordingly upheld the disallowance.In the absence of any particulars regarding delayed payment, if any, even before us we are not in a position to comprehend the case of the assessee. Hence, we decline to interfere with the order of CIT(A). - Decided against assessee - I.T.A. No.373/RJT/2016, I.T.A. No.374/RJT/2016, CO No.27/RJT/2016 - - - Dated:- 8-2-2017 - Shri Pradip Kumar Kedia, Accountant Member And Shri Mahavir Prasad, Judicial Member Revenue by : Shri Pravin Verma, Sr.DR Assessee by : Shri D.M. Rindani, AR ORDER Per Pradip Kumar Kedia, AM The captioned appeals are directed by the Revenue against the separate orders of the Commissioner of Income Tax(Appeals)-3, Rajkot [ CIT(A) in short] identically dated 04/07/2016 pertaining to Assessment Years (AYs) 2012-13 2013-24. The Assessee is in Cross ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO that its investment in 100% subsidiary company or any other company was not made for earning dividend income per se. The capital gains arising at the time of sale of shares is not tax-free because the investment has been made in a private limited company and not a listed company. The assessee has not received any tax exempted dividend income during the year. It was submitted that the investment in 100% subsidiary company is a strategic investment solely for carrying on business activities as a separate vehicle. The AO however, relied upon the CBDT Circular No.5 of 2014 dated 11/07/2014 on the issue and observed that the presence of actual receipt of dividend income is not necessary. This view is support by the use of term includible in the heading to section 14A of the Act as well as Rule 8D of the I.T. Rules, 1962. The AO also rejected the plea of the assessee that investment in Private Limited Company is not covered by section 14A of the Act owing to possibilities of taxable capital gains. The AO accordingly, applied the formula laid down in Rule-8D and worked out the disallowance of ₹ 17,66,181/- in aggregate under section 14A of the Act. 5. In first appeal, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... j) that: (Quote) Income AO made disallowance of expenditure of specified amount under section 14A-Disallowance was confirmed by CIT(Appeals)-Tribunal held that Assessee did not make any claim for exemption and in such situation. Section 14A could have no application-Held, S. 14A(1) provides that for the purpose of computing total income under chapter IV of the Act, no deduction shall be allowed in respect of expenditure incurred by the Assessee in relation to income which does not form part of the total income Assessee did not make any claim for exemption and in such a situation. S.14A could have no application and Revenue s Appeal was dismissed. (Unquote) 3.2. Respectfully following the above, disallowance made u/s.14A is hereby deleted. Thus ground 1 2 are allowed. 4.0 The 3rd ground is regarding disallowance u/s.36(va) of an amount of ₹ 76,500/- when AO noted that assessee has made belated payment employee s contribution towards provident fund for the month of March 2012. No explanation was submitted before the AO nor was any submission made before me. I do not find any fault in AO s action in making such disallowance. This ground is dismissed. 5.0 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the case warrants no disallowance, the computational provision does not come into picture at all. Further, the Circulars of the CBDT prejudicial to Assessee do not exert binding force on the assessee. Accordingly, where no exempt income is received or receivable during the relevant financial year, provisions of section 14A would not operate. In this view of the matter, the disallowance made by the AO is not sustainable having regard to absence of any exempt income during the financial year relevant to the assessment year in question. Therefore, we concur with the action of the CIT(A) in deleting the disallowance made by the AO. No interference therewith is called for. 10. In the result, appeal of the Revenue in ITA No.373/RJT/2016 for AY 2012-13 is dismissed. ITA No.374/RJT/2016 11. The grounds of appeal raised by the Revenue relevant to AY 2013-14 read as under:- 1. On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of ₹ 13,83,476/- made on account of disallowance u/s.14A of the I.T. Act as per Circular No.5 of 2014, dated 11.07.2014 wherein it is clearly stated that legislative intent (for introduction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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