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TMI Blog2025 (1) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... the case like Maxopp Investment Ltd. where the assessee would continue to hold those shares as it wants to retain control over the investee company. In that case, whenever dividend is declared by the investee company that would necessarily be earned by the assessee and the assessee alone. Therefore, even that the time of investing into those shares, the assessee knows that it may generate dividend income as well and as and when such dividend income is generated that would be earned by the assessee. In contrast, where the shares are held as stock-in-trade, this may not be necessarily a situation. The main purpose is to liquidate those shares whenever the share price goes upon order to earn profits - Decided against revenue. - HON'BLE MR JUSTICE V KAMESWAR RAO AND HON'BLE MR JUSTICE S RACHAIAH For the Appellants: (By Sri. Sanmathi. E.I, Advocate). For the Respondent: (By Sri. K. Suryanarayana, Senior Advocate For Smt. Tanmayee Rajkumar, Advocate). ORAL JUDGMENT (PER: HON'BLE MR JUSTICE V KAMESWAR RAO) The learned counsel for the appellants has filed a memo for framing an additional issue. 2. Sri. K. Suryanarayana, learned Senior counsel for the respondent has no object ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... F INCOME TAX AND ANOTHER V/S. SASKEN TECHNOLOGIES LID., in ITA NO.55/2021 dated 03.09.2021, wherein in the Co-ordinate Bench of this Court in paragraphs Nos.2, 3 and 4 has observed as under: 2. At the outset, the learned counsel for the assessee placing reliance on the judgment of the co- ordinate bench of this Court passed in the case of very same assessee in ITA No. 264/2017 dated 05.11.2018 would contend that the very identical substantial questions of law raised by the revenue were considered and answered by this Court. This Court, recording that the substantial questions of law raised being covered by the judgment of this Court in the case of Commissioner of Income-tax, Central Circle vs. Motorola India Electronics (P) Ltd., reported in (2014) 46 taxmann.com 167 (Karnataka) was pleased to dismiss the appeal. Hence, the substantial questions of law raised herein, being identical, the appeal deserves to be dismissed answering the substantial questions of law raised, against the revenue and in favour of the assessee. 3. Learned counsel for the revenue made an endeavor to distinguish the judgments of the co-ordinate bench decision in the very same assessee's case referred to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of law framed are without any merit. 8. Mr. Suryanarayana, would also state, in so far as the substantial question of law framed today as question No. 4 is concerned, the same is also covered in favour of the assessee by the judgment of the High Court of Delhi in the case of CARGO MOTORS (P.) LTD., VS. DEPUTY COMMISSIONER OF INCOME-TAX reported in (2022) 145 TAXMANN.COM 641 (DELHI), wherein the conclusion arrived at by the Delhi High Court in Paragraph No. 22, is as under: 22. The respondent's reliance on the CBDT Circular No.5/2014 is also untenable in law, inasmuch as, another Division Bench of this Court in Pr. Commissioner of Income Tax-04 Vs. IL FS Energy Development Company Ltd., 2017 (8) TMI 732 has held as under:- 13. In the above background, the key question in the present case is whether the disallowance of the expenditure will be made even where the investment has not resulted in any exempt income during the AY in question but where potential exists for exempt income being earned in later AYs. 14. In the Explanatory Memorandum to the Finance Act 2001, by which Section 14A was inserted with effect from 1st April 1962, it was clarified that expenses incurred can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 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 incentives by way of exemption of exempt income without making any apportionment of expenses incurred in relation to exempt income. Consequently, the Court is not persuaded that in view of the Circular of the CBDT dated 11th May 2014, the decision of this Court in Cheminvest Ltd. (supra) requires reconsideration. 20. In M/s. Redington (India) Ltd. v. The Additional Commissioner of Income Tax, Company Range - V, Chennai (order dated 23rd December, 2016 of the High Court of Madras in TCA No. 520 of 2016), a similar contention of the Revenue was negated. The Court there declined to apply the CBDT Ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at decision of this court in KINGFISHER FINVEST LTD. was distinguishable as the basis of the aforesaid decision of this court was the decision of the Supreme Court in MAXOPP INVESTMENTS LTD. supra and it was held that the aforesaid decision does not deal with applicability of Section 14A of the Act. However, eventually this court agreed with the view taken by High Court of Madras in CIT VS. CHETTINAD LOGISTICS P LTD., (2017) 80 TAXMANN.COM 221 (MAD.) AND KEM INVEST LTD. VS. CIT, (2015) 16 TAXMANN.COM 118 (DELHI) and held hat since no exempt income has accrued to the assessee therefore, the provisions of Section 14A of the Act do not apply to the fact situation of the case. Therefore, it has become necessary for us to clarify the view taken in the two decisions viz., KINGFISHER FINVEST INDIA LTD. AND M/S NOVEL SOFTWARE INDIA (P) LTD. supra. At this stage, we may refer to Paragraph 40 of the decision of the Supreme Court in MAXOPP supra, the relevant extract of which reads as under: It is to be kept in mind that in those cases where shares are held as 'stock-in-trade', it becomes a business activity of the assessee to the deal in those shares as a business proposition. Whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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