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TMI Blog2018 (9) TMI 1985X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment Years 2012-13 & 2013-14. Since facts and issues are common, clubbed and heard together and disposed of by way of this consolidated order. ITA No. 306/VIZ/2018 2. The assessee has raised the following grounds:- 1. The Ld.CIT(A) has not taken into consideration the CBDT Circular No.5/2014 while disposing the case which is binding on IT Authorities. 2. Further the Ld. CIT(A) erred in taking the view that no disallowance is necessary when there is no exempt income during the relevant year which is contrary to Circular No.5/2014 dated 11-02-2014 issued by the CBDT. 3. The Ld. CIT(A) erred in not appreciating the fact that as per CBDT Circular No.5/2014 which clarifies that for invoking disallowance under Section 14A, it is imma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case would come to Rs. 16,21,582/- as calculated under Rule 8D and offered consent for disallowance of the same. But the same was retracted vide another letter dated 16/03/2015 stating that assessee has not received any exempt income during the year and therefore no disallowance can be made in view of the decision of ITAT, Chennai Benches in ITA No. 1717/MDS/2013. The Assessing Officer has considered the explanation of the assessee and observed that assessee's explanation is not acceptable, as actual earning of income is not sine qua non for deciding deduction of expenditure laid out or expended wholly or exclusively for the purpose of earning such income i.e. dividend income is not earned, it doesn't prevent the expenses on investment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncurred expenses relating to the exempt income therefore, he disallowed the expenditure by invoking section 14A r.w.r. 18D of the IT Rules, 1962. The case of the assessee is that the assessee has not earned any dividend income therefore, no disallowance can be made under section 14A r.w.r. 18D of the IT Rules, 1962. The Assessing Officer has not agreed and by relying CBDT Circular No. 05/2014 and also by following the decisions of the ITAT, Ahmedabad & Delhi Benches (supra) disallowance was made. However, ld. CIT(A) by following the decision of the coordinate bench of the tribunal in the case of Radha Krishna Automobiles (supra) directed the Assessing Officer to delete the addition. The relevant portion of the order of the ld. CIT(A) is ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h regard to incorrect set off of business loss against the income from property which was examined by the assessing officer. During the course of revision proceedings, it has come to the notice of Ld.CIT that the assessee has made investments in shares and bonds, and did not make disallowance which was required to be made u/s 14A of IT Act. The assessee explained that there were no expenses incurred in relation to the exempt income which was claimed as deduction for the assessment year 2009-10. Hence, the assessee argued before the Ld. CIT that Section 14A is not applicable in assessee's case. As per the observation of the Ld.CIT, the assessee made the investments to the tune of Rs. 19,90,625/- in shares and bonds from the borrowed funds an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty income which was examined by the AO and dropped the assessment proceedings and the Ld. CIT also satisfied that there is no case for revision on account of incorrect set off of business loss. With regard to the issue of disallowance u/s 14A as per the judicial pronouncements no disallowance is called for when there is no exempt income. Therefore, we are of the considered opinion that there is no case for revision of order u/s 263 and accordingly we set aside the orders of the CIT and allow the appeal of the assessee." Ld. Departmental Representative has not brought any decision of the Jurisdictional High Court or any other High Court which is contrary to the decision of the Hon'ble Madras High Court. 7. We, therefore, respectf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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