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TMI Blog2017 (6) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... er years as per law if so advised in accordance with law. These appeals have decided only on sole contention raised by Ld. Counsel for assessee as recorded in this order. With these observations, we allow the appeal of assessee and dismiss the departmental appeal. - ITA No.3875/Del/2014, And ITA No.4158/Del/2014 - - - Dated:- 7-6-2017 - PRESIDENT SHRI G.D. AGRAWAL, AND SHRI BHAVNESH SAINI, JUDICIAL MEMBER For The Assessee : Shri Ashwani Kumar, CA And Shri Aditya Kumar, CA For The Department : Shri S.K. Jain, Sr. DR Per BHAVNESH SAINI, Judicial Member ORDER Both the cross appeals are directed against the order of Ld. CIT(A) I, New Delhi dated 8th May, 2014 for asstt. year 2011-12. 2. We have heard Ld. Repres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO asked the assessee to give detailed note on applicability of section 14A of the Income Tax Act,. The assessee submitted that assessee company has earned exempt income during the year and disallowed a sum of ₹ 1,75,063/- u/s 14A of the I.T. Act. AO however did not accept contention of the assessee and noted that as per provision of section 14A, it is not at all mandatory that assessee should have actually earned the exempt income or even that he should have actually incurred any expenses for earning such income during the year under consideration. The AO applied Rule 8D of the I.T. Act and relied upon order of ITAT Delhi Bench in the case of ACIT vs. Cheminvest Ltd. 317 ITR 86 in which the Tribunal has observed that disallowance u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 of the I.T. Act. He has therefore submitted that the disallowance u/s 14A could not be more than the exempt income of ₹ 1,75,063/- which assessee has already added to the income, as per computation of income filed on record. He has therefore submitted that no further addition is required in the matter. He has relied upon decision of Delhi High Court in the case of Joint Investments Pvt. Ltd. vs. CIT ITA No. 117/2015 dated 25th February, 2015. He has also relied upon decision of Delhi High Court in the case of Cheminvest Ltd s CIT 378 ITR 33. He has stated liberty may be given to assessee to raise other contentions in other years as raised in grounds of appeal. 9. On the other hand, Ld. DR relied upon order of the AO and submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income is to be disallowed. The window for disallowance is indicated in Section 14A, and is only to the extent of disallowing expenditure incurred bv the assessee in relation to the tax exempt income . This proportion or portion of the tax exempt income surely cannot swallow the entire amount as has happened in this case. 10. For the above reasons, the impugned order of the ITAT is set aside. The question of law is answered in favour of the assessee. Consequently, order of the AO is set aside. The initiation of penalty proceedings also is set aside. The matter is remitted to the AO for fresh consideration in accordance with the above directions. The appeal is partly allowed. 11. The AO while disallowing the deduction u/s 14A re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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