Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (4) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (4) TMI 1970 - AT - Income TaxDisallowance of interest u/s 14A - expenditure incurred on earning exempt income - sufficiency of own funds - CIT(A) deleted the addition - HELD THAT:- As decided by CIT(A) what s.14A provides is that if there is any income which does not form part of the income under the Act, the expenditure which is incurred for earning the income is not an allowable deduction. For the year in question, the finding of fact is that the assessee had not earned any tax-free income. Hence in the absence of any tax-free income, the corresponding expenditure could not be worked out for disallowance. There are ample interest free funds available for investment in shares. A table showing year wise accruals are testimony to the same.The intention of investment was not to earn dividend. There has been no dividend during the period of holding is a testimony to that proposition. Also the objective of investment was to sit in management to influence decision making of that company and fetch construction contract and also to gain capital appreciation in value of shares by selling the same when execution risk is overcome. Therefore even presuming that the same was out of borrowed funds, it is clearly manifested that there has been no dividend but the income from acquiring contract was offered to tax. Also capital gains on sale of shares were offered to tax. Therefore in the peculiar facts and circumstances, it is demonstrated by the assessee by actually offering the income to taxation then it cannot be said that shares were intended to earn income which is tax exempt.If the investment has a potential to earn non exempt income 14A cannot be invoked. The visit to 14A (2) or (3) is permissible only when the claim of the assessee has been held to be incorrect by showing cogent reason. Satisfaction or dissatisfaction is to be supported by valid reasons From the order of the Ld. CIT(A), it is evident that the Ld. CIT(A) has examined the factual aspects of the case. The Revenue has not rebutted the finding by placing any contrary material on record. Therefore, we do not see any reason to interfere with the orders of the Ld. CIT(A). Decided against revenue.
|