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TMI Blog2017 (11) TMI 1350X X X X Extracts X X X X X X X X Extracts X X X X ..... , Accountant Member For The Appellant : Sh. Anil Kumar Sharma, Sr. DR For The Respondent : None ORDER Per L.P. Sahu, A.M.: This is an appeal filed by the Revenue against the order of ld. CIT(A)-I, New Delhi dated 02.12.2015 for the assessment year 2012-13 on the following solitary ground : 1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the disallowance u/s. 14A of expenditure of ₹ 64,00,223/- by ignoring the fact that there was material to establish the direct nexus between the expenditure incurred and the income not forming part of total income. 2. The brief facts of the case are that the assessee filed return of income on 27.09.2012 showing loss of ₹ 2,06,37,666/-. The assessee company is engaged in the business of providing operating voice and broad band/network service in the field of telecommunication and Information technology and entertainment. The case was selected for scrutiny and statutory notices were issued to the assessee. The total business profit in the year was ₹ 7,86,19,745/- and the same had been adjusted against the earlier year s loss. During the assessment pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In appeal before the ld. CIT(A), the first appellate authority after considering the submissions of the assessee and the facts of the case, allowed the appeal of the assessee by following the decision of CIT(A) for assessment year 2010-11 and 2011-12 in the case of assessee itself, in which similar disallowances were made by the Assessing Officer. Aggrieved by the order of ld. CIT(A), the Revenue is in appeal before the Tribunal. 3. The ld. DR relied on the order of the Assessing Officer and submitted that even if the assessee invested out of his own funds, the incidental expenses for making investments and collecting dividend cannot be denied. Therefore, the AO is justified to invoke the provisions of section 14A for disallowance made. The case laws relied by the ld. CIT(A) are distinguishable on facts. 4. None is present on behalf of the assessee nor is there any adjournment application available on record. Therefore, we have no option except to decide this appeal exparte on the basis of material available on record. 5. After hearing the submissions of the ld. DR and considering the materials available on record, we observe that during the impugned year, assessee has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat no expenditure was actually incurred for the purpose of making investments in its subsidiaries which was an strategic investment and the same was clear from the balance sheet as on 31.3.2010. It was submitted that the AO has not brought out any evidence on record to suggest that the assesses has incurred any expenditure for making the investment in its subsidiaries. It was submitted that the AO has made disallowance only on the basis of assumption and presumption without bringing any material on record in support of his assumption. 5.2.1 I also find that the appellant has not earned any dividend income during the year on this investment. AO has not controverted the above submission of the appellant. I find that Hon'ble ITAT Mumbai in the case of Garware Wall Ropes Ltd. (supra) has held that where the primary object of investment is holding controlling stake in the group concern and not earning any income out of investment, Section 14A will have no application. It was held that the object of section 14A is not allowing to reduce tax payable on the non exempt income by deducting the expenditure incurred to earn the exempt income. It is not the case of the AO that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be deleted. Grounds of appeal are allowed. I further find that similar issue has been decided by various judicial forums as under: i. CIT Vs. Holcim India Pvt. Ltd. 57 taxmann.com 28 (Delhi): Section 14A of the Income-tax Act, 1961 - Expenditure Incurred in relation to income not includible in total income (Investment) -Assessment years 2007-08 and 2008-09 Whether where business of assessee as an investment company had been set up and commenced and genuineness of expenses and fact that it was incurred for business activities was not doubted by lower authorities, expenditure under section 14A, was allowable Held, yes [Para 16][ln favour of assessee] ii. Cheminvest Ltd. Vs. CIT 61 taxmann.com 118 (Delhi) wherein it has held as under: Section 14A of the Income-tax Act, 1961 - Expenditure incurred in relation to income not includible in total income (Applicability) - Assessment year 2004-05 - Whether section 14A envisages that there should be an actual receipt of income which is not includible in total income; hence, section 14A will not apply where no exempt income is received or receivable during relevant previous year - Held, yes [Para 23] [ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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