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TMI Blog2021 (4) TMI 338X X X X Extracts X X X X X X X X Extracts X X X X ..... e case are that the assessee company is engaged in the business of developing infrastructure facilities. They have filed their return of income for the assessment years 2013-14 and 2014-15 and while computing the taxable income of the assessee for both the years, learned Assessing Officer made an addition of Rs. 3,61,53,268/- and Rs. 4,46,76,162/- for the assessment years 2013-14 and 2014-15 respectively by invoking the provisions under section 14A of the Income Tax Act, 1961 (for short "the Act") read with Rule 8D of the Income Tax Rules1962 ("the Rules"). 3. Case of the assessee all through the proceedings is that the assessee did not earn any exempt income during the year and, therefore, the provisions of section 14A of the Act read wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uest to the postal department to detain the mail till the assessee claims the same. Since the assessee does not seem to have adopted any of these methods, we are the considered opinion that no time could be granted. Basing on the record we proceed to hear the counsel for Revenue and decide the matter on merits. 6. We have gone through the record in the light of the submissions made on either side. There is no dispute and as a matter of fact authorities below categorically recorded that the assessee had not earned any exempt income during these assessment years and therefore the decision of the Hon'ble jurisdictional High Court in the cases of Cheminvest Ltd (supra) and Holcim India Pvt. Ltd (supra) are applicable to the facts of the case. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lucknow) Relaxo Footwear Ltd. v. Addl. CIT [2012] 50 SOT 102 (Del). xxx xxx xxx xxx xxx xxx 19. In the considered view of the Court, this will be a truncated reading of Section 14 A and Rule 8D particularly when Rule 8D (1) uses the expression 'such previous year'. Further, it does not account for the concept of 'real income'. It does not note that under Section 5 of the Act, the question of taxation of 'notional income' does not arise. As explained in Commissioner of Income Tax v. Walfort Share and Stock Brokers Pvt. Ltd [2010] 326 ITR 1 (SC), the mandate of Section 14A of the Act is to curb the practice of claiming deduction of expenses incurred in relation to exempt income being taxable income and at the same time avail of the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that, in the context of Section 57(iii), the Supreme Court in Commissioner Of Income Tax, West v. Rajendra Prasad Moody [1978] 115 ITR 519 (SC) explained that deduction is allowable even where income was not actually earned in the AY in question. This aspect of the matter was dealt with by this Court in M/s Cheminvest Ltd. (supra) where it reversed the decision of the Special Bench of the ITAT by observing as under: "20. Since the Special Bench has relied upon the decision of the Supreme Court in Rajendra Prasad Moody (supra), it is considered necessary to discuss the true purport of the said decision. It is noticed to begin with that the issue before the Supreme Court in the said case was whether the expenditure under Section 57 (iii) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he contention of Mr. Vohra that the decision of the Supreme Court in Rajendra Prasad Moody (supra) was rendered in the context of allowability of deduction under Section 57(iii) of the Act, where the expression used is "for the purpose of making or earning such income." Section 14A of the Act on the other hand contains the expression "in relation to income which does not form part of the total income." The decision in Rajendra Prasad Moody (supra) cannot be used in the reverse to contend that even if no income has been received, the expenditure incurred can be disallowed under Section 14A of the Act." 23. The decisions of the ITAT in ACIT v. Ratan Housing Development Ltd. (supra) and Relaxo Footwear Ltd. v. Addl. CIT (supra), to the exten ..... X X X X Extracts X X X X X X X X Extracts X X X X
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