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2016 (1) TMI 574 - ITAT NAGPUR

2016 (1) TMI 574 - ITAT NAGPUR - TMI - Disallowance u/s 14A - whether presence of exempt income is necessary for disallowance of expenditure u/s 14A? - Held that:- As far as the exemption for the years under consideration were concerned, it was an admitted factual position that the AO has not mentioned any such amount. Meaning thereby, there was no exempt income earned by the assessee for the years under consideration. In reply to one of our questions, the learned AR, Mr. K. P. Dewani has also m .....

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he relevant previous year as decided in Cheminvest Limited Versus Commissioner of Income Tax-VI [2015 (9) TMI 238 - DELHI HIGH COURT] - Decided in favour of assessee - I.T.A. Nos.376, 377, 378 & 379/Nag/2014 - Dated:- 4-12-2015 - SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. For the Petitioner : Smt. Anita Rupavabataram, JCIT For the Respondent : Shri K. P. Dewani, Advocate ORDER Per Mukul K. Shrawat, J.M. All these four appeals have been filed by the Revenue D .....

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T (A) was right in holding that investments were made out of the non-interest bearing funds and as no expenditure has been incurred for earning the exempt income without appreciating the fact that the assessee has not proved nexus between the owned interest fee funds and investment? 3. Whether on the facts and circumstances of the case and in law the CIT (A) was right in holding that the reopening of case is not in accordance with the provisions of sec. 147 of the Act without appreciating the fa .....

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was escapement of income and reopening was made on the basis of new fact with came to light while scrutiny of the case for subsequent years? 2. Facts in brief, as emerged from the corresponding assessment orders passed u/s 143(3) read with section 147 of the IT Act dated 26-02-2013 were that the assessee company is in the business of manufacturing of paper, pulp etc. There was an allegation that the income has escaped assessment in the light of the provisions of section 14A of the IT Act. The A .....

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er invoking the provisions of section 14A of the IT Act, the AO has worked out the disallowance as per the rule prescribed as under:- 4.7 In view of the above discussions, the proportionate interest expenditure attributable to income which does not form part of total income is disallowed u/s.14A. Hence, the proportionate interest expenses attributable to investment in exempt income u/s. 14A of the I. T. Act is computed as under: A) Total interest ₹ 1,12,14,87,815/- B) Total investment on F .....

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s computed by the AO. Being aggrieved, the issue was carried before the first appellate authority. 3. In respect of invocation of the provisions of Section 14A of the IT Act, the finding of the learned CIT (A) was as under:- 5.1 I have carefully considered the facts of the case and the written submissions of the appellant. I find substantial force in the submissions made. The Hon ble Bombay High Court in the case of CIT vs. Delite Enterprises (supra) has held that if there is no income earned by .....

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(relied upon by the Ld. AO) and after considering the jurisdictional High Court decision of CIT Vs. Delite Enterprises decided the matter in favour of the appellant. ...... 5.2 Similarly in the case of Ascent Tradecom P. Ltd., Mumbai VS ACIT in ITA Nos. 5779/Mum/2006 & ITA No.208/Mum/2009, it was held on identical facts as under:- .............. 5.3. Also in the case of Corrtech Energy Pvt. Ltd. vs. DCIT in ITA No.208/Ahd/2012 it has been held as under: -.... 5.4 Thus respectfully following .....

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e is in appeal before us. 4. From the side of the Revenue, the learned DR, Smt. Anita Rupavabataram appeared and in respect of ground No.1, she pleaded that although several decisions are discussed in favour of the assessee but the formula as prescribed under Rule 8D is to be applied irrespective of the fact whether an exempt income has been earned or not. The AO has rightly invoked the provisions of section 14A of the IT Act. Hence, the order of the first appellate authority deserves to be reve .....

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f 2008 (O&M) in the case of M/s. Lakhani Marketing Incl. Vide order dated 02/04/2014 (iv) (2014) 272 CTR 0262 (Guj.) CIT-I Vs Corrtech Energy Pvt. Ltd. (v) Hon ble Delhi High Court order in ITA No.749/2014 in the case of Cheminvest Limited vide order dated 02/09/2015 6. We have heard both the sides at some length and carefully perused the orders of the authorities below in the light of the precedence cited. As far as the exemption for the years under consideration were concerned, it was an a .....

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ly in respect of disallowance of proportionate interest expenditure. There was no allegation of the AO that the exempt income was earned by the assessee. In the light of the undisputed finding on facts, we have perused the decision of the Hon ble Courts. We may like to mention that a view has been expressed consistently that if there is no exempted profit then there is no question of invocation of the provisions of section 14A of the IT Act but, we have also carefully perused that very decision .....

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