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2019 (2) TMI 1977 - AT - Income TaxDisallowance u/s 14A - HELD THAT:- We feel that there is no merit in this argument of ld. DR of revenue that disallowance u/s. 14A cannot be lower than the amount disallowed by the assessee while filing the return of income if as per law, lower disallowance is justified. This argument of ld. DR of revenue is rejected. We examine the applicability of the Tribunal order cited by ld. AR of assessee having been rendered in the case of ACIT Vs. Vireet Investment (P.) Ltd. [2017 (6) TMI 1124 - ITAT DELHI] - As per which only those investments are to be considered for computing average value of investment which yielded exempt income during the relevant year. Respectfully following this order of Special Bench of the Tribunal, we direct the AO to determine the amount of disallowance to be made u/s. 14A on this basis. Whether disallowance u/s 14A is to be made in a year in which there is no exempt income? - As per the judgement of Hon’ble Apex Court rendered in the case of Maxopp Investment [2018 (3) TMI 805 - SUPREME COURT] it was held that dominant purpose for which investment into shares is made by assessee may not be relevant as section 14A applies irrespective of whether shares are held to gain control or as stock-in-trade. Hence, in our considered opinion, this judgment is not relevant to decide this aspect that whether disallowance u/s 14A is to be made in a year in which there is no exempt income. Since, the judgment of Hon’ble Delhi High Court and other High Courts are in favour of the assessee on this aspect that no disallowance u/s 14A is to be made in a year in which there is no exempt income, any adverse order of Tribunal cannot be followed by ignoring the judgment of High Court. Respectfully following the decision of Hon’ble Delhi High Court rendered in the case of Cheminvest Pvt. Ltd. [2015 (9) TMI 238 - DELHI HIGH COURT] we decide this issue in favour of the assessee and delete the disallowance made u/s. 14A. - Decided in favour of assessee.
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