TMI Blog2014 (9) TMI 511X X X X Extracts X X X X X X X X Extracts X X X X ..... d – Decided against revenue. - ITA No. 772/Del./2013 - - - Dated:- 28-8-2014 - Shri I. C. Sudhir And Shri B. C. Meena,JJ. For the Petitioner : Shri Ved Jain, Advocate and Shri Venktesh Mohan, CA For the Respondent : Ms. Parwinder Kaur, Senior DR ORDER Per B. C. Meena, Accountant Member : This appeal filed by the revenue emanates from the order of CIT (Appeals)- VI, New Delhi dated 23.11.2012 for the Assessment Year 2009-10. 2. The assessee is a company filed return of income declaring income at ₹ 1,36,18,360/-. The assessment was finalized by making disallowance u/s 14A of the Income-tax Act, 1961 of ₹ 19,59,692/- by applying Rule 8D being o.5% of the average investment. The assessee filed the appeal and the CIT (A) granted the relief by holding as under :- 5. I have carefully considered the submissions made by the ld. AR and have gone through the assessment order. It is an admitted fact that the appellant company during the relevant assessment year has not earned either any exempt income or claimed any expenditure for earning any exempt income. It is seen that during the relevant assessment year the appellant company has shown inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure to be disallowed under section 14A in relation to income not forming part of the total income ~y inserting Rule-8D in the Income-tax Rules. However, Rule-8D is not applicable in an automatic manner. Rule 8D would be applied to determine the amount of disallowance under section 14A, where the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with- (a) the correctness of the claim of disallowance of expenditure made by the assessee; or (b) the claim made by the assessee that no expenditure has been incurred, in relation to income which does not form part of the total income under the Act for such previous year. If the AO is not satisfied with the correctness of claim of disallowance of expenditure made by the assessee or the claim made by the assessee that no expenditure has been incurred in relation to income which does not fall part of the total income under the Act for such a previous year, he shall determine the amount of expenditure in relation to such Income In accordance with the provisions of sub-rule (2). The objective behind the section 14A was that expenditure which has a bearing on exempt income should not be considered i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in appeal by taking the following grounds of appeal :- 01. Whether the Ld. CIT(A) has erred on facts and in law in deleting the addition of ₹ 19,59,692/- on account of disallowance u/s 14A ignoring the facts that - (a) Assessee has incurred interest expenses and no bifurcation for the same was submitted during the assessment proceedings. (b) The Hon'ble ITAT in the case of M/s. Cheminvest Ltd. has held that disallowance u/s 14A can be made even if no exempt income has been earned or received by the assessee. . 02. The appellant craves leave for reserving the right to forego any ground(s) of appeal at any time before appeal. 4. While pleading on behalf of the revenue, ld. DR submitted that the assessee has incurred interest expenses and no bifurcation was provided during the assessment proceedings. In view of this fact, the Assessing Officer rightly applied the Rule 8D by making the disallowance as the Assessing Officer was not satisfied with the correctness of the claim of expenditure made by the assessee. He further submitted that CIT (A) was not justified in observing that disallowance u/s 14A of the Act cannot be made when there is no exempted income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le High Courts :- (i) CIT vs. Suzlon Energy Limited (2013) 354 ITR 630 wherein Hon'ble Gujarat High Court has explicitly approved the decision of ITAT by holding that disallowance u/s 14A is not justified where the assessee s own funds far exceeds the investment made; (ii) CIT vs. Winsome Textile Industries Ltd. 319 ITR 204 for the proposition that section 14A does not have any application where the assessee does not make any claim for exemption and where investments are out of own funds; (iii) ITAT, Ahmedabad decision dated 10.05.2013 in the case of DCIT vs. Gujarat Narmada Valley Fertilizer Co. Ltd. 2013-TIOL-405-ITATMUM and ITAT, Mumbai decision in the case of Shopper s Stop Ltd. vs. ACIT 2011-TIOL-581-ITAT-MUM for the proposition that section 14A cannot be invoked where the assessee s own funds far exceeds the investment made; (iv) ITAT, Ahmedabad decision dated 05.12.2012 in the case of DCIT vs. Jay Chemical Industries Ltd. in ITA No.97/Ahd/2012; (v) ITAT, Mumbai Bench in the case of ITO vs. Strides Arcolab Ltd. 138 ITD 323 (Mum); (vi) Hon'ble Bombay High Court decision in the case of CIT vs. Reliance Utilities and Power Ltd. 313 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X
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