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2019 (4) TMI 1617 - AT - Income TaxDisallowance u/s.14A - CIT(A) had deleted the disallowance made by the AO u/s.14A on the ground that assessee has not earned any exempt income during the year under consideration - HELD THAT:- It is now well settled in the case of Essar Teleholdings Ltd reported [2018 (2) TMI 115 - SUPREME COURT OF INDIA] that no disallowance u/s.14A of the Act could be made when there is no exempt income claimed by the assessee.No infirmity in the order of ld. CIT(A) in this regard. Accordingly Ground No.1 raised by the revenue for both the years is dismissed. Addition u/s.41(1) - HELD THAT:- It is not the case of the revenue that the assessee had claimed deduction or allowance in the earlier years with regard to these sundry creditors. It is not in dispute that these sundry creditors pertain to capital account transactions and hence, does not fall within the ambit of a trading liability of the assessee. Hence, we hold that the CIT(A) had rightly deleted the addition made u/s.41(1). Addition made deemed dividend u/s.2(22)(e) - HELD THAT:- There is no need in the facts of the instant case to look into the dispute as to whether the assessee had maintained a current account with Muchhala Magic Land Pvt. Ltd.,(lending company) and that the provisions of Section 2(22)(e) could indeed be made applicable to the same as the assessee had been given relief by the CIT(A) on the ground that it was not holding any shares in the lending company. This is a primary condition to be satisfied in order to invoke the provisions of Section 2(22)(e) of the Act. Reliance in this regard is placed on the decision of Hon’ble Delhi High Court in the case of CIT vs Ankitech (P) Ltd & Ors [2011 (5) TMI 325 - DELHI HIGH COURT] which in turn followed the decision of Hon’ble Jurisdictional High Court in the case of CIT vs Universal Medicare (P) Ltd [ 2010 (3) TMI 323 - BOMBAY HIGH COURT ] Accordingly, we hold that assessee company is not a shareholder in the lending company and hence, the provisions of Section 2(22)(e) of the Act cannot be made applicable in the facts of the instant case. We find that the ld, CIT(A) had rightly deleted the addition in this regard.
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