9911796707
TMI Blog2024 (2) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... ual expenditure could be identified by the Ld. AO. Hon ble Supreme Court in Maxopp Investment Ltd. [ 2018 (3) TMI 805 - SUPREME COURT ] has held that the expression expenditure incurred in section 14A means actual expenditure and not to some imagined expenditure . If no expenditure is incurred in relation to the exempt income, no disallowance can be made. The decision (supra) of the Hon ble Supreme Court squarely applies to the facts of the assessee s case. In our humble opinion, the order of the Ld. CIT(A) is still maintainable de-hors his finding on strategic investment. We, therefore, hold that on the facts and in law as set out above, the Ld. CIT(A) was perfectly justified in deleting the impugned disallowance under section 14A r.w. Rule 8D. The remanded matter is disposed of accordingly. Decided against revenue. - SHRI G.S. PANNU, HON BLE VICE PRESIDENT AND MS. ASTHA CHANDRA, JUDICIAL MEMBER For the Assessee : Mr. Debesh Panda, Advocate For the Department : S/Shri Sanjay Kumar Vivek Upadhyay, Sr. DR ORDER PER ASTHA CHANDRA, JM It is a remand matter. 2. The appeal of the Revenue pertaining to AY 2008-09, 2011-12 and 2012-13 was di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) vide order dated 30.04.2010 on loss of Rs. 9,44,28,286/- was reopened under section 147 of the Act and notice under section 148 of the Act was issued on 25.03.2013 which was duly served upon the assessee. The reasons recorded for reopening included, interalia that the assessee has earned dividend income of Rs. 11,66,20,012/- which is claimed as exempt but no disallowance has been made by the assessee under section 14A of the Act. On the other hand assessee has debited financial expenses of Rs. 53,33,209/- as interest on others. As per provision of section 14A of the Act r.w. Rule 8D the disallowance comes to Rs. 1,63,50,877/-. During the reassessment proceedings, the assessee was show-caused why the disallowance under section 14A read with Rule 8D for expenses incurred on investment of Rs. 229,23,71,031/- may not be made. 7. The assessee responded vide letter dated 22.02.2014, the relevant portion of which is reproduced by the Ld. Assessing Officer ( AO ) at para 5 of assessment order. The assessee submitted that it has not incurred any amount on interest to invest in the Investments. The investments has been acquired through an amalgamation as per the order of Hon ble Delhi H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee and the Ld. AO has concurred that the assessee has not incurred any interest expenditure directly or indirectly for the earning of the exempt income. (b) The assessee has made investment in the subsidiary company for the purposes of control and therefore these are strategic investment on which no disallowance under section 14A can be made. (c) Assessee has not incurred any expenditure on earning exempt income . 11. Dissatisfied, the Revenue appealed before the Tribunal. In the first round, the Tribunal decided the appeal of the Revenue against it. On appeal by the Revenue before the Hon ble Delhi High Court, the matter has been remitted back to the Tribunal for hearing and disposal afresh in the light of the directions of the Hon ble Delhi High Court. This is how, the matter is before the Tribunal once again. 12. The Revenue has raised the following grounds of appeal:- 1. The Ld. CIT(A) has erred in law and on facts in directing the AO to exclude the investments in Subsidiary Companies for the purpose of calculating disallowance u/s 14A and allowing consequential relief thereof. 2. The Ld. CIT(A) has erred in law and on facts in directing the AO to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amined this aspect. 14.3 According to the Ld. AR, invoking the provisions of section 14A and Rule 8D framed thereunder by the Ld. AO was not in accordance with the settled position of law. He pointed out that the decision of Hon ble Delhi High Court in Maxopp Investment Ltd. vs. CIT 347 ITR 272 (Del) has been affirmed by the Hon ble Supreme Court in Maxopp Investment Ltd. vs. CIT (2018) 15 SCC 523 wherein it is held that the expression expenditure incurred in section 14A means actual expenditure and not to some imagined expenditure . Therefore, if no expenditure is incurred in relation to the exempt income, no disallowance can be made. This squarely applies to the assessee s case. The Hon ble Supreme Court further added that if an expenditure incurred has no casual connection with the exempted income, then such expenditure would obviously be treated as not related to the income exempted from tax and such expenditure would be allowed as business expenditure. 14.4 According to Ld. AR this aspect is important as the case of the assessee has all along been that the legacy investment were acquired by it pursuant to an amalgamation order of Hon ble Delhi High Court dated Octob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iling some expenditure. Therefore, he is satisfied that the assessee has incurred expenses in earning exempt income which needs to be disallowed under section 14A r.w. Rule 8D. 18. The Ld. CIT(A) did not accept the above contention of the Ld. AO and recorded the following finding (page 23 of appellate order):- ...however it is seen that dividend income has been earned by the appellant from the mutual funds and no direct or indirect expenditure seems to be incurred by the appellant. The money was received from the foreign investor and till the same was invested in the projects, the same was invested in the mutual funds. Therefore, no cost expenditure seems to be incurred by the appellant for making these investments. It is also seen that the making investment in these mutual funds was a single day activity and appellant was not involved in frequent buying and frequent selling, therefore, no expenditure was incurred by the appellant. 19. Again at page 24 of his appellate order, the Ld. CIT(A) recorded as under:- ...in view of the fact that no specific nexus has been established by the Assessing Officer about the receipt of the exempt income and incurring of expense ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
