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2016 (11) TMI 1297 - AT - Income TaxDisallowance u/s 14A - AO given a finding that the assessee had not used any borrowed funds for earning exempt income - Held that:- It is not disputed that the assessee for the relevant previous year had not claimed any income as exempt. In other words, even if the investment made by the assessee was capable to raise any exempt income in future, assessee had not earned any such income during the impugned assessment year. That Sec. 14A cannot be invoked where the assessee has not claimed any income of exempt is a view taken by various High Courts of the country. It has been held so by the Delhi High Court in the case of Cheminvest vs CIT [2015 (9) TMI 238 - DELHI HIGH COURT]. Accordingly, we are of the opinion that disallowance u/s 14A would not have been made and such disallowance is deleted. - Decided in favour of assessee Addition being the expenditure incurred for business promotion/advertisement - expenditure incurred for sponsoring of special box - Held that:- No commercial concern would employ a software concern for development of software through its exposure from hoardings at a cricket tournament. They would be looking into the skills of the concern to decide whether it would be an appropriate choice for developing software. It is also an admitted position that the Managing Director of the assessee-company was the Vice President of Tamilnadu Cricket Association. The special box sponsored by the assessee could be used by 15 persons and was an air-conditioned one. It is difficult to imagine how 15 persons sitting in an air-conditioned box and watching a cricket match would help the business of the assessee. As per the ld AR, similar disallowances ought to have been made in the case of other concerns who had sponsored similar boxes. In our opinion, this would not help the assessee’s case in any manner. Sec. 37 mandates that an expenditure could be allowed only if it was incurred wholly and exclusively for the purpose of business. The assessee has not been able to show the nexus of the business of the assessee with the expenditure incurred for sponsoring of special box. Hence, we are of the view that the CIT(A) had rightly confirmed the disallowance made by the Assessing Officer - Decided against assessee
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