TMI Blog2017 (5) TMI 1213X X X X Extracts X X X X X X X X Extracts X X X X ..... instant year as requisite bills were received during the previous year relevant to the assessment year under consideration. For the said reasons, we find no infirmity in the ultimate decision of the CIT(A) in deleting the addition - Decided against revenue. Addition u/s 14A - assessee has made investments in shares and securities, which is capable of generating exempt income - Held that:- Factually speaking, there is no dispute to the fact that during the year under consideration assessee has not received any exempt income and, therefore, on this count alone no disallowance under section 14A is merited following the ratio in the case of Cheminvest Ltd. (2015 (9) TMI 238 - DELHI HIGH COURT ). The other finding of the CIT(A) with regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dice to ground No.l, on the facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting the disallowance of ₹ 15,19,000/- made by the AO on treating such sum as capital expenditure. In doing so, the AO had relied on the decision of the Apex Court in the case of Brooke Bond India Ltd. v/s CIT [225 ITR 798 (SC)]. 3. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting the disallowance u/s.14A of the I.T.Act at ₹ 47,74,689/- made by the AO without appreciating the fact that the assessee has neither established that no part of interest-bearing fund as well as expenses so claimed has found its way into the investments in shares nor adduced any documentary evidences during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the claim of the assessee. 4. Before us, the Ld. Departmental Representative has reiterated the stand of the Assessing Officer, which we have already noted in the earlier paras and the same is not being repeated for the sake of brevity. 5. On the other hand, the Ld.Representative for the assessee defended the order of the CIT(A) and pointed out that the Hyderabad Bench of the Tribunal in the case of Deccan Chronicles Holdings Ltd. vs. DCIT, ITA No.219,517/Hyd/2014 order dated 16th September, 2014, has held that expenditure incurred in relation to buy-back of shares is not a capital expenditure, but was allowable as a business expenditure in terms of section 37(1) of the Act. On this basis, the decision of the CIT(A) is sought to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d objective litmus test to apply to any case for determining both the applicability of section 14A of the Act as well as that of Rule 8D of the Income Tax Rules. The facts of each case have to be carefully subjected to the litmus test of the following questions and answered objectively: 1. Whether there is any income earned by the assessee which is claimed to be exempt? (Answer has to be YES) 2. Whether investments were made in subsidiary/sister company and were for furthering business of assessee? (If YES then no disallowance of interest paid.) 3. Whether interest free funds were available sufficient to meet its Investments? (If YES, it can be presumed that the investments were from the interest free funds available.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of earning tax exempt income in future. He has also not dealt with the fact that the appellant had ample interest free own funds or that the investments are either in foreign companies which have to be excluded or in Indian companies which are for strategic purpose. 5.2.7 In view of the above facts and in view of the citations given above, I do not find that the disallowance of ₹ 47,74,689/- made under section 14A read with Rule 8D is sustainable, Accordingly, this ground of appeal is allowed. 8. On this aspect, the only point made by the Ld. Departmental Representative is that CIT(A) erred in deleting the disallowance because assessee could not establish that no part of interest bearing fund was used to make the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 14A of the Act is merited following the ratio of the Hon'ble Delhi High Court in the case of Cheminvest Ltd. (supra). The other finding of the CIT(A) with regard to the availability of sufficient interest free funds is also quite justified and is borne out of record as there is no material led by the Revenue to controvert the same. For the said reason also the disallowance of interest expenditure under section 14A of the Act is quite unjustified. Considering the aforesaid, we therefore, deem it fit and proper to affirm the action of the CIT(A) in deleting the disallowance made by the Assessing Officer under section 14A of the Act. Thus, on this aspect, Revenue fails. 11. In the result, appeal of the Revenue is dismissed. Orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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