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TMI Blog2019 (1) TMI 1853X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be made when no exempt income is earned by the assessee has no legs to stand once the Hon ble Supreme Court has subsequently given a detailed judgement in the matters of section 14A of the Act in the case of Maxopp Investment Ltd. v. CIT [ 2018 (3) TMI 805 - SUPREME COURT] which automatically supersedes all existing decisions of the Hon ble High Courts. In view of the above facts and circumstances, we sustain the disallowance confirmed by the ld. CIT(A). Thus, the ground raised by the assessee stands dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidering the submissions of the assessee and by following the latest decision of the Hon'ble Supreme Court in the case of Maxopp Investment Ltd. v. CIT Taxsutra SC 2018 [in Civil Appeal Nos. 104-109 of 2015 dated 12.02.2018], the ld. CIT(A) confirmed the disallowance made under section 14A of the Act. 4. On being aggrieved, the assessee is in appeal before the Tribunal. By relying upon the decision of the Hon'ble Madras High Court in the case of Redington (India) Ltd. v. Addl. CIT 392 ITR 633, the ld. Counsel for the assessee has submitted the assessee has not earned any exempt income and therefore, no disallowance could be made and prayed that the disallowance should be deleted. 5. On the other hand, the ld. DR strongly supported the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income which is includible in total income that has to be disallowed. If an expenditure incurred has no causal connection with the exempted income, then such an expenditure would obviously be treated as not related to the income that is exempted from tax, and such expenditure would be allowed as business expenditure. To put it differently, such expenditure would then be considered as incurred in respect of other income which is to be treated as part of the total income. 33) There is no quarrel in assigning this meaning to section 14A of the Act. In fact, all the High Courts, whether it is the Delhi High Court on the one hand or the Punjab and Haryana High Court on the other hand, have agreed in providing this interpretation to section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o, if expenditure is incurred on earning the dividend income, that much of the expenditure which is attributable to the dividend income has to be disallowed and cannot be treated as business expenditure. Keeping this objective behind Section14A of the Act in mind, the said provision has to be interpreted, particularly, the word 'in relation to the income' that does not form part of total income. Considered in this hue, the principle of apportionment of expenses comes into play as that is the principle which is engrained in Section 14A of the Act. This is so held in Walfort Share and Stock Brokers P Ltd., relevant passage whereof is already reproduced above, for the sake of continuity of discussion, we would like to quote the following few l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases where shares are held as investment in the investee company, may be for the purpose of having controlling interest therein. On that reasoning, appeals of Maxopp Investment Limited as well as similar cases where shares were purchased by the assessees to have controlling interest in the investee companies have to fail and are, therefore, dismissed. 6.1 From the above judgement of the Hon'ble Supreme Court, it is amply clear that any investments made in the subsidiary, which may not be for the purpose of earning dividend and may be for the purpose of having controlling interest therein, shall attract the provisions of section 14A read with Rule 8D. 6.2 The reliance placed by the ld. Counsel for the assessee on the decision of the Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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