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TMI Blog2022 (11) TMI 1205X X X X Extracts X X X X X X X X Extracts X X X X ..... i Corporation India Pvt. Ltd. vs. DCIT [ 2015 (1) TMI 48 - ITAT DELHI] and LG- Chemical India Pvt. Ltd. [ 2014 (12) TMI 294 - ITAT DELHI] whereby the ITAT has deleted the additions made u/s 14A on the ground that no exempt income has been earned by the appellant. When the entire amount of dividend income of Rs.1,22,16,840/- has been offered for taxation by the assessee in its return of income and no exempt income has been claimed for AY 2015-16, then, the disallowance u/s 14A of the Act r.w.r. 8D of the Rules cannot be held as sustainable in view of the judgement of Cheminvest Ltd. [ 2015 (9) TMI 238 - DELHI HIGH COURT] and in view of the judgement of CIT vs. Chettinad Logistics Pvt. Ltd. [ 2018 (7) TMI 567 - SC ORDER] Contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore or during the hearing of this appeal. 3. The ld. Sr. DR, supporting the assessment order dated 26.12.2017 passed u/s 143(3) of the Income-tax Act, 1961 (for short, the Act ) submitted that the assessee had earned substantial dividend income of Rs.1,22,16,840/-, therefore, the AO was right in making disallowance u/s 14A of the Act r.w.r. 8D of the Income-tax Rules, 1962 (for short, the Rules ). The ld. Sr. DR submitted that the assessee has capitalized substantial amount of interest paid by him on the amount invested, therefore, the amount of disallowance has to be calculated accordingly. 4. Replying to the above, the ld. Counsel of the assessee vehemently supporting the first appellate order, submitted that the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of Apex Court in the case of CIT vs. Chettinad Logistics Pvt. Ltd. [20181 95 taxman.com 250 ~(SC). It has been noticed that the appellant has not shown any exempt income during the year. In this regard, reference is made to the judgment in the case of CIT vs Holcim India P Ltd. (2014 TOI 1586 Del IT), in which the jurisdictional High Court has observed as under: 14. On the issue whether the respondent-assessee could have earned dividend income and even if no dividend income was earned, yet Section 14A can be invoked and disallowance of expenditure can be made, there are three decisions of the different High Courts directly on the issue and against the appellant- Revenue. No contrary decision of a High Court has been shown to us. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The view of the CIT(A), which has been affirmed by the Tribunal, hence does not give rise to any substantial question of law. Hence, the deletion of the disallowance of Rs.2,03,752/ - made by the Assessing Officer was in order 15. Income exempt under Section 10 in a particular assessment year, may not have been exempt earlier and can become taxable in future years. Further, whether income earned in a subsequent year would or would not be taxable, may depend upon the nature of transaction entered into in the subsequent Assessment Year. For example, long term capital gain on sale of shares is presently not taxable where security transaction tax has been paid, but a private sale of shares in an off market transaction attracts capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contended that the AO has not rejected the computation and suo moto disallowance made by the appellant. In view of the above decisions of jurisdictional courts and in view of the fact that there is no exempt income shown by the appellant during the year, the disallowance made by the AO u/s 14A read with Rule 8D cannot be sustained and therefore, the addition made on this account is deleted and the ground of appeal is allowed. 6. Ground no. 6 of the appeal is regarding the charging of interest u/s 234A, 234B 8s 234C of the Act. In this respect, it is stated that the levy of interest is mandatory and consequential to the determination of total income and has to be paid when the statutory conditions are satisfied. This has been observed an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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