9911796707
TMI Blog2019 (4) TMI 1731X X X X Extracts X X X X X X X X Extracts X X X X ..... tion made by him of the expenses relatable to exempt income under Rule 8D(2)(ii) and 8D(2)(iii). We also delete the disallowance suo moto offered by assessee because there is no exempt income and once there is no exempt income no disallowance can be made relatable to exempt income by invoking the provisions of section 14A read with Rule 8D of the Rules. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 10(34) of the Act. The assessee has made suo moto disallowance for earning of this exempt income at ₹ 7,50,000/-. But the AO invoked the provisions of section 14A of the Act read with Rule 8D and thereby disallowed the expenses relatable to interest expenses under Rule 8D(2)(ii) at ₹ 89,22,483/- and under Rule 8D(2)(iii) being administrative expenses at ₹ 7,50,250/-. Accordingly, the AO computed the total disallowance under Rule 8D(2)(ii) and 8D(2)(iii) at ₹ 96,72,733/-. The AO after reducing the disallowance suo moto made by assessee at ₹ 7,50,000/- made addition to the returned income at ₹ 89,22,733/-. Aggrieved, assessee preferred the appeal before CIT(A). The CIT(A) restricted the disal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ext of the facts enumerated hereinbefore the Court answers the question framed by holding that the expression 'does not form pail of the total income" in Section 14A of the envisages that there should be an actual receipt of income, which is not includible in the total income, during the relevant previous year for the purpose of disallowing any expenditure incurred in relation to the said income. In other words, Section 14A will not apply if no exempt income is received or receivable during the relevant previous year." In view of the legal position on the issue as discussed above and also the fact that the appellant's own interest free funds are in excess of the investments made, the disallowance made by the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... though it did not receive any dividend income. As per the decisions rendered by various courts, no disallowance is required to be made in the absence of exempt income. Hence the assessee has filed CO with the plea to delete the voluntarily disallowance made by it, which is supported by various decisions referred above. Accordingly, we allow the CO filed by the assessee. The relief granted to the assessee in CO may reduce the assessed income, which may also go below the returned income. This issue, i.e, whether the assessed income can go below the returned income (which was urged by Ld DR), has been examined and decided in favour of the assessee by the co-ordinate bench in the case of Tata Industries Ltd (supra), which has followed the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 14A of the Income Tax Act, 1961 would not apply to the facts of this case as no exempt income was received or receivable during the relevant previous year. It is not the case of the Assessing Officer that any actual income was received by the assessee and the same was includible in the total income. In the facts of the case, the Authorities held that since the investments made by the assessee in the sister concerns were not the actual income received by the assessee, they could not have been included in the total income." 6. Once there is no exempt income, the issue is squarely covered by the decision of Hon'ble Bombay High Court in the case of Ballarpur Industries Limited (supra). Respectfully following the Hon'ble Jurisdictional Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
