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2017 (10) TMI 1612 - AT - Income TaxDisallowance u/s. 14A - expenditure incurred on exempt income - HELD THAT:- We find that though the assessee has made investment in mutual funds, but during the impugned assessment years it has not received any dividend income on such investment according to the assessee. Therefore, in the absence of exempt income, no disallowance u/s. 14A can be made. It has been repeatedly held by the various High Courts and the Tribunal that where assessee did not earn any exempt income, no disallowance u/s. 14A can be made. In this case, the revenue has disputed the fact of receipt of exempt income, therefore, we find it appropriate to restore the matter to the file of the AO for verification of the fact. If the assessee does not have any exempt income, no disallowance u/s. 14A can be made, otherwise the AO may act in accordance with the law. Validity of Order passed under section 143(3) r.w.s. 153A - HELD THAT:- We find that undisputedly assessment u/s. 143(3) was completed before the search took place upon the assessee. Nothing has been demonstrated before us that any incriminating material was found during the course of search which was used for completing the assessment u/s. 143(3) r.w.s. 153A - Therefore there is no incriminating material found during the course of search on the basis of which concluded assessment can be reopened and fresh assessment can be framed u/s. 143(3) r.w.s. 153A of the Act. The question that arises in this case is “whether the AO can reframe the assessment u/s. 153A on the basis of search conducted upon the assessee wherein no incriminating material is found?” This question was examined by this Bench of the Tribunal in which one of the Members was a party to it and the Tribunal having examined both the judgments of the Hon'ble jurisdictional High Court passed in the cases of Lancy Constructions [2016 (2) TMI 797 - KARNATAKA HIGH COURT] and Canara Housing Development Company [2014 (8) TMI 642 - KARNATAKA HIGH COURT] has concluded that in the absence of any incriminating material, proceedings u/s. 153A cannot be initiated and concluded assessment cannot be reopened Thus as in the absence of incriminating material, the concluded assessment cannot be reopened and assessment u/s. 153A cannot be framed. In the instant case, undisputedly no incriminating material was found, therefore the assessment framed u/s. 143(3) r.w.s. 153A of the Act is not sustainable and we accordingly knock down the assessments. - Decided in favour of assessee. Depreciation based on the disallowance of expenses as not eligible for depreciation - assessee has allocated capital work-in-progress [“CWIP”] to assets and accordingly had claimed depreciation on assets - HELD THAT:- CIT(Appeals) correctly re-examined the issue and directed the AO to consider certain amount as not eligible for forming part of CWIP which is to be utilized at the time of achieving the commercial operation of the assessee. AO was directed to consider the amounts as held not eligible for capitalization in deciding the appeal for AY 2007-08 & 2008-09 for the purpose of allowing depreciation. TDS u/s 192 or 194J - Director sitting fees paid for attending audit committee meetings, board meetings, etc.- AO has disallowed this expenses on the ground that TDS has not been deducted on the said expenses - HELD THAT:- As we find that undisputedly amendment u/s. 194J was brought w.e.f. 1.7.2012, therefore it would apply from AY 2014-15, not in the impugned assessment year. Therefore, we find that the CIT(Appeals) has properly adjudicated the issue in the light of relevant provisions of the Act and we find no infirmity therein. We accordingly confirm his order.
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