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TMI Blog2019 (11) TMI 1333X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year. This is by now settled position of law that in the absence of exempt income, provisions of section 14A cannot be invoked and hence, by respectfully following these various judgments cited by ld. AR of assessee, we delete the disallowance made by the AO and confirmed by ld. CIT(A) u/s. 14A of the IT Act. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... ree resources. 7. The appellant submits the extract of the pronouncement: We have heard rival submissions and perused material on record. The only issue in the appeal filed by the revenue is that whether the ld.CIT(A) was justified in deleting addition of ₹ 75,67,905/-under the provisions of rule 8D(2)(ii) of the Act. The Id. CIT(A) deleted the addition after considering the fact that reserves and surplus are more than investments in the year in which investments are made i.e. 2009- 10. Therefore, he concluded that a presumption should be drawn that only free funds are utilised for making investments and therefore, held that no disallowance should made under the said provision. The reasoning of the ld.CIT(A) is supported by the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure under section 14A and therefore the said section would not apply if no exempted income was received or receivable during the relevant previous year. 11. The appellant wishes to rely on the decision of the Punjab and Haryana High Court in the case of CIT v Hero Cycles ltd 323 ITR 518, CIT V Winsom Textile Industries Ltd 319 ITR 204. 12. The appellant also submits for your consideration the findings with respect to rule 8D(2)(iii) The only issue is whether any disallowance is called for under rule 8D(2)(iii) or not. The contention of the assessee that no expenditure was incurred to earn dividend income of ₹ 29,000/- was not accepted by the AO. As held by the Hon'ble Delhi High Court in the case of Maxopp Investment Ltd. Vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ween the finance cost incurred for the said borrowing and the investments made. 18. The appellant submits that the CIT ought to have considered the findings of the Honorable court in the case of CIT V Hero cycles Ltd 323 ITR 518. The Courts have held that disallowance is not permissible under section 14A where there is no nexus between expenditure incurred and exempted income generated. 19. Your appellant also wishes to draw your attention the findings of the Courts on similar principles in the case of Godrej & Boyce Mfg Co Ltd 328 ITR 81 and Wall fort Shares and Stock Brokers Ltd v ITO 310 ITR 421. Ground of recording reason for rejecting the appellants claim 20. The appellant further submits that the CIT ought to have appreciated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted a copy of this Tribunal order and drawn our attention to para 4 of this Tribunal order and pointed out that in this case also, it is held by the Tribunal that the provisions of section 14A cannot be invoked in the absence of exempt income. The ld. DR of revenue supported the orders of authorities below. 4. We have considered the rival submissions. First of all, we examine the P&L account of the assessee company to find out as to whether any exempt income is earned by the assessee in the present year or not. We find that as per the P&L account, there is gross income of ₹ 4,95,79,007/- which includes sales of products, interest received, excess provision written off and service income and hence, it is seen that there is no exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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