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TMI Blog2020 (4) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... d a whopping sum of ₹ 7,72,41,277/- as proportionate expenditure for earning the exempt income. Even assuming that some expenditure is required to be disallowed but such disallowance should not exceed the quantum of exempt income. Therefore, we uphold order of the ld.CIT(A) on this issue, and dismiss the ground of appeal of the Revenue. - ITA.No.1947/Ahd/2017 With Cross Objection No.52/Ahd/2018 - - - Dated:- 4-3-2020 - SHRI RAJPAL YADAV, HON BLE VICE-PRESIDENT AND SHRI T.S. KAPOOR HON BLE ACCOUNTANT MEMBER Revenue by : Shri Biren Shah, AR Assessee by : Shri M.S.A. Khan, CIT-DR O R D E R PER RAJPAL YADAV, VICE-PRESIDENT Revenue is in appeal before the Tribunal against order of ld.CIT(A)-1, Ahmedabad dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atements. It was accordingly submitted that investment reflected in the books of assessee was due to merger/amalgamation of companies viz. Acalmar Oil Fats Ltd., and Rajshri Packagers Ltd. with the assessee company, and there was no cash outflow, except ₹ 10,02,68,894/- for purchase of 25% shares of Krishnapatnam Oils Fats P.Ltd., which was made out of interest free funds available with the assessee-company. Assessee had huge amount of interest free funds in the form of cash profit viz. profit after tax of ₹ 75.42 crores, deferred tax liability of ₹ 45.81 crores and depreciation ₹ 54.94 crores, which were sufficient to make new investment to the tune of ₹ 10 crores, and therefore, since interest free own fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowance could not be more than the amount tax free income of ₹ 2,64,500/-. The AO has simply made the impugned disallowance on the assumption that the assessee would have incurred some amount towards interest and administrative expenses, and such assumption is without any basis or lack of appreciation of assessee s case. It was further submitted by the assessee that the ld.CIT(A)-1 in the assessee s own case for the Asstt.Year 2011-12 vide order No.CITA)-1/72/DCIT, Cir.1(1)(1) 2015-16 dated 26.4.2016 similar disallowance made by the AO was restricted to the amount of exempt income earned by the assessee. Therefore, at the most the impugned disallowance should be restricted to exempt income i.e. ₹ 2,64,500/-. After considering th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also considered earlier claim of the assessee for the Asstt.Year 2011-12, whereby he concurred with the decision of his predecessor in restricting disallowance to the extent of exempt income. In the case of CIT Vs. Corrtech Energy Ltd., 372 ITR 97 (Guj) Hon ble Gujarat High Court has held that in the absence of any exempt income being claimed by the assessee provisions of section 14A r.w.r 8D could not be invoked. The rationale behind this judgment is that the amount of disallowance u/s 14A should not exceed the exempt income. The ld.AO was not justified in invoking provisions of section 14A of the Act in the present case. Moreover, the assessee has earned a small amount of ₹ 2,64,500/-, whereas the ld.AO has calculated a whoppin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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