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TMI Blog2015 (10) TMI 2674X X X X Extracts X X X X X X X X Extracts X X X X ..... that no penalty can be imposed where a proper disclosure is made but the disallowance has been made by the Assessing Officer. In considered opinion, the learned CIT(A) was justified in not upholding penalty on this amount of disallowance. Disallowance u/s 14A r.w.r 8D - Held that:- There cannot be any disallowance u/s 14A if there is no exempt income. As confronted with a situation in which the assessee has not earned any exempt income but the disallowance has been made to the extent of 13.64 lakh by applying Rule 8D. Despite there being no challenge to or sustenance of the disallowance u/s 14A, it is of considered opinion that under no circumstance, such ill founded disallowance, not having any authority of law to stand on, can be conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imposed by the Assessing Officer on disallowance of foreign travelling expenses of relatives of directors amounting to ₹ 2,60,370/-; disallowance u/s 14A at ₹ 13,64,000/-; and disallowance out of credit card expenses to the tune of ₹ 1,00,000/-. The penalty so imposed by the Assessing Officer came to be deleted in the first appeal. The Revenue is aggrieved against the deletion of such penalty. 3. I have heard the rival submissions and perused the relevant material on record. It is observed that the assessee declared income of ₹ 19.27 crore which was adjusted against brought forward unabsorbed depreciation for earlier year and the net resultant income was Nil. The assessee also disclosed book profit u/s 115JB at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned CIT(A) was justified in not upholding penalty on this amount of disallowance. 5. The second component of the penalty is disallowance u/s 14A amounting to ₹ 13,64,000/-. This disallowance was made by the Assessing Officer u/s 14A by applying Rule 8D. It is an admitted position that the assessee did not earn any exempt income during the year in question. The Hon'ble Jurisdictional High Court in a series of judgments including CIT Vs. Holcim India Pvt.Ltd. (2014) 90 CCH 081 (Del-HC) has held that in the absence of any exempt income, there cannot be any disallowance u/s 14A. In Joint Investment Pvt.Ltd. (2015) 372 ITR 674 (Del), the Hon'ble Jurisdictional High Court has held that disallowance u/s 14A cannot exceed the exem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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