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TMI Blog2015 (7) TMI 1277X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowance of ₹ 5,22,832/- u/s.14A by applying rule 8D. 3. Rival contentions have been heard and record perused. Facts in brief are that the assessee s main business is publishing of magazines, trading in books, nutrition products and producing film. During the course of scrutiny assessment, the AO disallowed ₹ 5,22,832/- u/s.14A by applying rule 8D. 4. By the impugned order, the CIT(A) confirmed the disallowance made by the AO, against which the assessee is in further appeal before the Tribunal. 5. Ld. AR Mr. Shekhar Gupta, appearing on behalf of the assessee contended that assessee has not earned any exempt income in the form of dividend during the year and as such no disallowance u/s.14A should be made. He placed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad High Court, Gujarat High Court and Bombay High Court, deleted the disallowance of expenses made u/s.14A r.w.r.8D, where the assessee has no exempt income. The precise observation of the Bench was as under :- 5. Heard both sides. Perused orders of lower authorities and submissions made by the assessee and the decisions in relied on. No doubt in the decision of the Special Bench of Delhi Tribunal in the case of Cheminvest Ltd. Vs. ITO (supra), the Special Bench held that disallowance under section 14A can be made even in the year in which no exempt income has been earned or received by the assessee. This decision of Special Bench of the Tribunal has been impliedly overruled by the decisions of High Courts in the following cases: 6. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owance of ₹ 2,03,752/- made by the Assessing Officer was in order. 8. The Gujarat High Court in the case of CIT Vs. Corrtech Energy Pvt.Ltd.(supra) held as under:- We have given our thoughtful consideration to the facts and the decision relied upon by the Id AR. The Hon'ble Punjab Haryana High Court in the case of CIT vs. Winsome Textile Industries Ltd. reported at (2009) 3191TR 204(P H) has held that in the present case, admittedly, the assessee did not make any claim for exemption. In such a situation, section 14A could have no application. In this case also, the assessee has not claimed any exempt income in this year. Therefore, respectfully following the judgement of Hon'ble High Court of Punjab Haryana in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 1 was on the issue of allowability of interest paid on loans given to sister concerns, without interest. It was held that deduction for interest was permissible when loan was taken for business purpose and not for diverting the same to sister concern without having nexus with the business. The observations made therein have to be read in that context. In the present case, admittedly the assesse did not make any claim for exemption. In such a situation section 14A could have no application. 5. We do not find any question of law arising, Tax appeal is therefore dismissed. 9. The Hon ble Bombay High Court in the case of CIT Vs.Delite Enterprises(supra) held as under:- The Revenue is in appeal on the following questions:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals. 8. The primary issue that arises for consideration in these apepals is whether the CIT(A) as well as the Tribunal were right in allowing deduction of interest liability out of other income and the claim of the revenue to disallow the same under section 14A of the Act was justified. 9. The CIT(A) vide order dated 24.6.2004 annexure A.II recorded as under:- 7.2 Keeping in view the above facts and circumstances of the case it is held that the AO was not correct in applying section 14A of the IT Act in disallowing the expenditure on account of interest amounting to ` 46,91,684/-. It was incumbent on the AO to establish a nexus between the expenditure incurred and the income which was exempt under the Act. Facts clearly do not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income Tax v. Holland Equipment Co. B.V. reported in (2005) 3 SOT 810 (Mumbai) and the relevant portion of the order of the Bombay Bench of the Tribunal is reproduced below:- 'Regarding application of Section 14A of the Act, the contention of the learned Department Representative has to be rejected on the face of it inasmuch as the entire income of the assessee is taxable under the Act. Section 14A is applicable only when any part of the income is not to be included in the total income of the assessee and the expenditure relating to that part of income is claimed by the assessee as deduction. In such cases only, the expenditure relating to the exempted income can be disallowed and not otherwise. Since in the present case the enti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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