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TMI Blog2019 (4) TMI 552X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessment Year 2013-14. 2. The assessee filed its return of income on 29.09.2013 declaring total loss of Rs.(-)32,28,046/- which was processed u/s 143(1) of the Act. Subsequently, under scrutiny notice u/s 143(2) of the Act was issued on 04.09.2014 followed by a further notice u/s 143(2) r.w.s 129 and along with a notice u/s 142(1) along with a questionnaire dated 13.07.2015 due to change of jurisdiction. It appears from the record that the assessee invested in shares of M/s. Chem-Edge International Pvt. Ltd. and M/s. Ardor International Pvt. Ltd. The investment to the tune of Rs. 21,03,01,050/- as on 31.03.2013 was increased from Rs. 16,13,35,150/- as on 31.03.2012. The AO observed that the assessee suo moto disallowed an amount of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. in A.Ys. 2012-13 and 2013-14 when the appellate authority fully allowed the appeal in favour of the assessee which was in turn was affirmed by the Co-ordinate Bench in ITA Nos. 2039 and 2040/Ahd/2016 a copy whereof has also been submitted before us. He therefore prayed for the similar relief before us. It was further submitted by the Learned Advocate that since there is no exempt income being claimed by the assessee the provision of section 14A r.w.r. 8D cannot be applied so as to make disallowance of expenditure u/s 14A of the Act as also settled by the Jurisdictional High Court in the case of CIT-vs-Corrtech Energy Pvt. Ltd. reported [2014] 45 taxmann.com 116. However, the Learned representative of the department relied upon the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee voluntarily disallowed Rs. 98.03 Lakhs against the non- existent tax free income. The AO however re-worked the disallowance at Rs. 1,67,32,314/- and after reducing the disallowance suo moto made by the assessee amounting to Rs. 98,03,322/- computed the additional disallowance under s.14A of the Act at Rs. 69,28,992/-. The learned AR thereafter submitted that the assessee preferred appeal before the CIT(A) and withdrawn the suo moto disallowance of Rs. 98,03,322/- being wrongly offered in its return of income under erroneous impression of law. The learned AR submitted that in the light of various judicial pronouncements on the issue discussed in detail by the CIT(A), the CIT(A) granted relief to the assessee and deleted the ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has made while filing the return of income. In other words, whether the action of the CIT(A) in bringing down the income returned by the assessee and granting relief on the issues not raised at the time of filing original return of income or by way of revised return at a subsequent stage is justified in law or not. 7. The first issue framed above appears quite simple as we see. While adjudicating the issue, we take note of CBDT Circular No. 5/2014 dated 11/02/2014 which seeks to emphasize that all expenses pertaining to an exempt income is required to be disallowed notwithstanding the fact that no corresponding tax free income has been earned during the financial year. Notwithstanding the aforesaid circular, various Courts have held tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct can be triggered only if assessee seeks to square off expenditure against the income which does not form part of total income under the Act and Section 14A of the Act cannot be invoked where no exempt income was earned in the relevant assessment years. In consonance with the judicial precedents, we do not see any infirmity in the conclusion drawn by the CIT(A) for non-applicability of Section 14A of the Act in the facts of the case. 8. We shall now turn to the second issue raised on behalf of the Revenue regarding propriety of the action of the CIT(A) in granting relief on the disallowance (suo moto made by the assessee) beyond the return of income and in the absence of any formal revised return. The CIT(A) has discussed this aspect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not ipso facto bar an assessee from claiming an expense or disputing an addition if it is otherwise permissible under law. It is thus well settled that if a particular income is not taxable under the Act, it cannot be taxed on the basis of estoppel or any other equitable doctrine. The Revenue authorities cannot enforce untenable actions of the assessee against it which led to declaration of income of higher amount incorrectly. It is thus open to assessee to show that it was over assessed in correctly owing to its own mistake. 10. So viewed, we do not see any potency in the argument laid on behalf of the Revenue that the CIT(A) allegedly committed error in granting total relief in the matter of disallowance under s.14A of the Act. In ou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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