2019 (2) TMI 1677

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..... to earning of tax free income then such expenditure would not be allowed. CIT(A) has recorded a finding that neither interest/other expenses were incurred nor any exempt income was earned by the assessee, and therefore, there is no question of allocating expenditure. - CIT(A) is justified in deleting the disallowance. - Decided in favour of assessee.
SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER For The Revenue : Shri S. K. Dev, Sr. DR For The Assessee : Shri Tushar Hemani, AR ORDER PER RAJPAL YADAV, JUDICIAL MEMBER: Revenue is in appeal before the Tribunal against order of the ld.CIT(A)-2, Ahmedabad dated 2.6.2017 passed for the Asstt.Year 2014-15. 2. At the outset it was pointed out to the Bench .....

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..... ssued and served upon the assessee. During the assessment proceedings, the AO noticed that the assessee has invested in shares of different limited company, and accordingly the assessee was asked to furnish details of investment in shares along with working of disallowance under section 14A of the Act. In response to that the assessee explained that since the assessee has not claimed any exempt income, therefore, the provisions of section 14A would not be applicable to the assessee's case. However, the ld.AO did not accept contentions of the assessee, and made addition by invoking Rule 8D. 6. Dissatisfied with the order of the ld.AO, assessee carried the matter in appeal before the ld.CIT(A). The ld.first Appellate Authority found that id .....

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..... hen such expenditure would not be allowed. The ld.CIT(A) has recorded a finding that neither interest/other expenses were incurred nor any exempt income was earned by the assessee, and therefore, there is no question of allocating expenditure. The relevant observation of the Hon'ble High Court in this regard reads as under: "4. Counsel for the Revenue submitted that the Assessing Officer as well as CIT(Appeals) had applied formula of rule 8D of the Income Tax Rules, since this case arose after the assessment year 2009-2010. Since in the present case, we are concerned with the assessment year 2009-2010, such formula was correctly applied by the Revenue. We however, notice that sub-section(l) of section 14A provides that for the purpose of .....

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