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TMI Blog2018 (11) TMI 877X X X X Extracts X X X X X X X X Extracts X X X X ..... e reasons which had prevailed upon the AO, while dealing with the Assessment Year 2002-2003, to hold that the claims of the Assessee that no expenditure was incurred to earn the dividend income cannot be accepted and why the orders of the Tribunal for the earlier Assessment Years were not acceptable to the Assessing Officer, particularly, in the absence of any new fact or change of circumstances - Decided in favour of assessee. - D.B. Income Tax Appeal No. 152/2018 - - - Dated:- 31-7-2018 - Mr. Justice Kalpesh Satyendra Jhaveri And Mr. Justice Ashok Kumar Gaur For the Appellant(s) : Ms. Parinitoo Jain with Ms. Shiva Goyal For the Respondent(s) : None JUDGMENT 1. By way of this appeal, the appellant has assailed the jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company and not by the recipient Assessee, when Under Section 10(33) of the Act such income by way of dividend is not a part of the total income of the recipient Assessee. A plain reading of Section 14A would go to show that the income must not be includible in the total income of the Assessee. Once the said condition is satisfied, the expenditure incurred in earning the said income cannot be allowed to be deducted. The Section does not contemplate a situation where even though the income is taxable in the hands of the dividend paying company the same to be treated as not includible in the total income of the recipient Assessee, yet, the expenditure incurred to earn that income must be allowed on the basis that no tax on such income has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and it therefore follows that the expenses which are relatable to earning of exempt income have to be considered for disallowance, irrespective of the fact whether any such income has been earned during the financial-year or not. 4. The above position is further clarified by the usage of term includible in the Heading to section 14A of the Act and also the Heading to Rule 8D of I.T.Rules, 1962 which indicates that it is not necessary that exempt income should necessarily be included in a particular year s income, for disallowance to be triggered. Also, section 14A of the Act does not use the word income of the year but income under the Act . This also indicates that for invoking disallowance under section 14A, it is not material t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in accordance with such method as may be prescribed, if the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act. (3) The provisions of sub-section (2) shall also apply in relation to a case where an assessee claims that no expediture has been incurred by him in relation to income which does not form part of the total income under this Act 2.4 In view of the provisions of section 14A of the Income-Tax Act, 1961 and in the light of Board s Circular No.5/2014 and having regard to the books of account of the assessee, I am not satisfied with the corr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B The average of value of investment, income from which does not or shall not form part of the total income, as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year (73,96,668 + 74,97,068/2) 74,46,868/- C The average of total assets as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year. (3,98,53,872+3,67,48,489/2) 3,83,01,181/- A*B/C 1738161X7446868 3,37,949/- 38301181 (iii) Amount equal to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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