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TMI Blog2021 (10) TMI 548X X X X Extracts X X X X X X X X Extracts X X X X ..... upon to refute the observations of the AO. There is also no bifurcation of income earned as tax free income and taxable income. Apparently CIT(A) has accepted the contention of the assessee without giving a proper and thoughtful consideration to the issue before him. In such circumstance, we have no option but to direct the Ld. CIT(A) to re-examine the issue before him and adjudicate the same after giving proper opportunity to the assessee to present its case. Appeal of the Department stands allowed for statistical purposes. - ITA No. 4341/Del/2017 - - - Dated:- 30-9-2021 - Sudhanshu Srivastava, Member (J) And Prashant Maharishi, Member (A) For the Appellant : Anima, Sr. D.R. ORDER Per Sudhanshu Srivastava, JM This appeal is preferred by the Revenue against order dated 06.03.2017 passed by the Learned Commissioner of Income Tax (Appeals)-39, New Delhi {CIT(A)} and pertains to Assessment Year 2011-12. 2. The brief facts of the case are that the assessee respondent is engaged in the business of consultancy, online data, retrieval services, corporate insurance agency, software development etc. The return of income for the year was filed declaring an income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the hearing. 3. None was present for the assessee/respondent when the appeal was called out for hearing nor was any adjournment application received by the registry of this Tribunal on behalf of the assessee/respondent. A perusal of the case record shows that this appeal of the Department was earlier fixed for hearing on 27.11.2019, then on 28.12.2020 and later on 08.03.2021 but on all these three occasions, the assessee/respondent did not choose to be represented. The same is the case on 14.07.2021. It is also seen that the notices of the hearing were duly dispatched to the address of the assessee/respondent but the assessee/respondent has not bothered to comply with the notices so sent. We also note that in the notices sent by the registry of this Tribunal, the address in the assessment order, the address in Form-35 filed by the assessee and the address in the impugned order are the same. Therefore, this gives an impression that the assessee/respondent is not bothered about getting its case properly represented before this Tribunal. Therefore, looking into the facts of the case and considering the continued non-compliance by the assessee/respondent, we deem it appropria ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal at Page 3 above that the ground at (I) is overarching, it is included in all the other grounds. Further, while the ground at (V) is consequential and that at (VI) is general and not pressed by the appellant during the course of appellant proceedings, these are not discussed in this order. 5.1 As regards the grounds at (Ia), (IIb), (IIc), (IId) and (IIe), it is observed from the grounds of appeal that these relate to the disallowance u/s. 14A r/w Rule 8D made in the impugned order. It is observed therefrom that the AO has rejected the contention of the appellant towards the proposed disallowance of expenses u/s. 14A on the strength of the meaning of Section 14A itself, its determination vide application of Rule 8D of the Income tax Rules 1962 and having placed reliance on the following judicial pronouncements- CIT vs. United General Trust Ltd., 200 ITR 455 (SC) ITO Ward 6(2) Mumbai vs. M/s. Daga Capital Management Pvt. Ltd. ITA No. 8057/Mum/2003 M/s. Maxopp Investment Ltd. vs. ACIT CIR 6(1), New Delhi IT A No. 1372/Del/2005 5.1 From a plain reading of Section 14A (1), it is clear that the objective behind the provision is to disallow only such ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 15,42,508/-. The earning of exempt income is not in nature of passive activity having no input. In fact in present situation making of Investment, maintaining or continuing investment and time of exit from investment are well informed and well-coordinated management decisions involving not only inputs from various source but also acumen of senior management functionaries. Therefore, cost is inbuilt into even so called passive Investment. There are incidental expenditures of collection, telephone, follow up etc. Since in the present case, out of total funds available/raised by the assessee, a substantial portion of it amounting to ₹ 1,01,78,47,180/- has been invested in Shares and mutual Funds, therefore, it can be held that expenditure in relation to earning of exempt dividend income are embedded in indirect expenses The investment to the extent of ₹ 1,01,78,47,180/- made by the assessee company, being a conscious decision and having deployment of funds clearly brings into picture expenditure by way of cost of funds 'Invested.' Composite fund having cost needs to be spread so as to apportion appropriate cost of funds invested in the activity lending t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 014 (Del) DCM Ltd. vs. DCIT, Circle 10 (1) New Delhi and Vice-Versa 2015 (9) TMI 1110 ITAT Delhi Joint Investments Pvt. Ltd. vs. Commissioner of Income Tax 372 ITR 694 CIT vs. Hero Cycles Ltd. [2010] 189 taxmann 50 (PUNJ. HAR.) and in due deference to the aforementioned court decisions, I am inclined to agree with the contention of the appellant in this regard and delete the disallowance made u/s. 14A of the Act (₹ 2,76,36,280/-) over and above made by the appellant (₹ 15,42,508/-) in the impugned order. 5.4 Further, at the time of appeal hearing, the AR of the appellant sought for modification of its disallowance of ₹ 15,42,508/- u/s. 14A made suo motu in its return of income as the date for filing the revised return was over. In this connection, the AR argued that the case regarding M/s. Goetze India in the apex court related to making a fresh claim of deduction before the AO. It is also gathered from available records that the submissions/arguments put forth by the AR of the appellant are borne out from records and in accordance with the extant law as promulgated by the jurisdictional High Court (Hon'ble Delhi HC). Further, ..... 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