9911796707
TMI Blog2020 (1) TMI 989X X X X Extracts X X X X X X X X Extracts X X X X ..... 8D(3) of the Rules. But it is also quite correct that the disallowance is not required to exceed more than the exempt income in view of the decision of Cheminvest Ltd. Vs. CIT [ 2015 (9) TMI 238 - DELHI HIGH COURT ] and CIT Vs. Holcin India Pvt. Ltd. [ 2014 (9) TMI 434 - DELHI HIGH COURT ]. Accordingly, we restrict the disallowance to the extent of exempt income i.e. to the tune of ₹ 94,00,147/-. Accordingly, this issue is decided in favour of the assessee against the revenue. Addition u/s 14A r.w. Rule 8D of the Rules on account of Explanaton-1 to Section 115JB - HELD THAT:- The provisions of Section 14A of the Act is confines to the nowhere provisions of Chapter IV of the Act and the said Section 14A cannot be extended and read into section 115JB falling under Chapter XII-B of the Act. Accordingly, no addition is required u/s 14A and Section 115JB of the Act, hence, we delete the addition and allowed the claim of the assessee. - Shri Rajesh Kumar, AM And Shri Amarjit Singh, JM For the Assessee : Shri Farrokh Irani For the Revenue : Shri Awungshi Gimson (DR) ORDER PER AMARJIT SINGH, JM: The assessee has filed the present appeal against the order dated 24.10.2017 passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Id. CIT(A) to make any further adjustment. The Id. CIT(A) erred in holding that levy of interest u/s.234B and 234C of the Income Tax Act, 1961 is mandatory. The Appellant denies its liability for such interest. The Id. CIT(A) erred in holding that the ground raised disputing initiation of penalty proceedings u/s.271(1)(c) is premature. The Appellant denies its liability for such penalty. The Appellant craves leave to add, alter, amend or delete any or all of the above grounds of appeal. 3. The brief facts of the case are that the assessee filed its return of income on 29.11.2013 declaring total loss to the tune of ₹ 690,02,799/- for the A.Y. 2013-14 under the normal provisions and offered MAT income u/s 115JB of the Act at ₹ 403,27,327/-. A notice u/s 143(2) 142(1) of the Act were issued and served upon the assessee. The assessee is in the business of Manufacturing of Sponge Iron, Steel Ingots and Non Alloys Rolled Products and Power. The assessee earned the dividend income in sum of ₹ 94,00,147/-. The AO applied the provisions u/s 14A of the Act r.w. Rule 8D of the Rule and assessed the expenditure to earn the exempt income to the tune of ₹ 6,00,40,820/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired to be considered which is more than the investment to earn the exempt income. In the said circumstances and by relying upon the decision in the case of CIT Vs. HDFC Bank Ltd. (2014) 366 ITR 505 (Bom) no disallowance is required u/s 14A r.w. Rule 8D(ii) of the Rules. Now it is to be seen whether the disallowance u/s 14A r.w. Rule 8D(iii) of the Rules is required to be seen in view of the provisions u/s 36(1)(iii) of the Act. The assessee invested in the share of group companies in sum of ₹ 7,71,05,69,515/- which was 96.15% of the total investment generating exempt income. The appellant paid the interest in sum of ₹ 60,47,62,354/- to banks, financial institutions and others on term loans and working capital required for the purposes of its business. The appellant also received the interest in sum of ₹ 9,43,68,056/- on its surplus funds. The interest was paid by appellant in sum of ₹ 51,03,94,298/-. Where the interest free funds available with the assessee was sufficient to make the advance to its sister concern then such investment should be presumed to be made from interest free funds available and not out of borrowed funds and in the said circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o quite correct that the disallowance is not required to exceed more than the exempt income in view of the decision of Cheminvest Ltd. Vs. CIT 378 ITR 33 (Delhi) and CIT Vs. Holcin India Pvt. Ltd. 486 of 2014 dated 05.09.2014. Accordingly, we restrict the disallowance to the extent of exempt income i.e. to the tune of ₹ 94,00,147/-. Accordingly, this issue is decided in favour of the assessee against the revenue. ISSUE NO.2 5. Issue no.2 is in connection with the raising the addition in sum of ₹ 33,64,08,457/- u/s 14A r.w. Rule 8D of the Rules on account of Explanaton-1 to Section 115JB of the Act. It is also argued that the disallowance u/s 14A r.w. Rule 8D of the Rules is not liable to be added in view of the Explanation-1 of Section 115JB of the Act and in this regard. The Ld. Representative of the assessee has relied upon the decision of the Hon ble ITAT in the case of ACIT Vs. Vireet Investment P. Ltd. (2017) 82 taxmann.com 415 (Del). However, on the other hand, the Ld. Representative of the Department has refuted the said contention. The relevant finding has been given in para no. 4.8 to 4.18 which is hereby reproduced as under.:- 4.8. Ld. counsel submitted that S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of the Act is computed under the five heads specified in section 14. Provisions relating to computation of income under different heads are contained in sections 14 to 59, forming part of Chapter IV of the Act. In other words, the said Chapter provides for computation of income of an assessee under the normal provisions of the Act. As a necessary corollary, provisions of section 14A cannot be extended to any Chapter, other than Chapter IV of the Act. 4.13. Section 115JB finds place under Chapter XII-B of the Act. Being so, provisions of sec. 14A contained in Chapter IV cannot be imported and incorporated u/s 115JB more so when clause (f) to Explanation 1 to the said section contains no reference to section 14A of the Act. 4.14. Ld. counsel submitted that if provisions of Sec. 14A are to be imported into section 115JB of the Act, the same would tantamount to reading additional words into the statute which is not permissible and would be against the cardinal rule of literal interpretation . In this regard ld. counsel has relied on following decisions: - Jugal Kishore Saraf v. Raw Cotton Co. Ltd. AIR 1955 SC 376, wherein it has been observed as under: The cardinal rule of construct ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
