TMI Blog2016 (1) TMI 856X X X X Extracts X X X X X X X X Extracts X X X X ..... see. Disallowance under Section 80G - Held that:- There is no evidence on record to show that the receipts are produced before the Assessing Office. Accordingly, we restore the matter to the file of the Assessing Officer for verification of the donations made. - Decided in favour of assessee for statistical purposes. Disallowance of gifts and awards distributed to the trainees for the best performance - Held that:- Since the assesee company was engaged in the business of management consultancy and training, it is not in dispute that the expenditure was actually incurred. The Assessing Officer only disallowed the same on the ground that the expenditure is not for business purposes. In the absence of management consultancy, training & development and human resource development, this expenditure cannot be considered to be non-business purposes and the reasoning of the Assessing Officer cannot be accepted. - Decided in favour of assessee - ITA Nos. 5752 & 5753/Del/2013 - - - Dated:- 6-11-2015 - SH. INTURI RAMA RAO, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER For The Appellant : Sh. Ved Jain, CA For The Respondent : Smt. Anjula Jain, Sr. DR ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 was filed on 29th September, 2008 declaring total income of ₹ 25,95,08,010/-. After processing the return of income under Section 143(1) of the Act, the assessment was complete under Section 143(3) of the Act vide order dated 19.11.2010 at total income of ₹ 27,27,56,494/- after making the following disallowances: i. Expenses allocated towards earning of exempted income u/s 14A of ₹ 11,96,000/- ii. Employees contribution towards PF ESI of ₹ 88,24,215/- iii. Additions under Section 40(a)(ia) of ₹ 15,85,328/- iv. Excess claim made u/s 80G of the I.T. Act of 14,02,250/- Being aggrieved from the assessment order, the assessee filed an appeal before the learned CIT(A) who vide impugned order date 21.08.2013 partly allowed the appeal. Being aggrieved, the appellant is before us with the present appeal. 3. We shall now deal with the appeal ground-wise. Ground nos. 1 and 6 are general in nature which do not require adjudication. 4. Ground no.2 relates to the addition towards expenditure alleged to be incurred in earning exempt income of ₹ 11,96,000/-. 4.1 Learned counsel for the appellant submitted that the disallowance u/s 14A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le of share per se is not exempt. Further the issue of dividend income being taxable or nontaxable will be in the year in which such dividend is received. In the absence of any dividend being received it cannot be said that income is exempt. The observation of the Hon'ble High Court are as under:- 14. On the issue whether the respondent-assessee could have earned dividend income and even if no dividend income was earned, yet Section 14A can be invoked and disallowance of expenditure can be made, there are three decisions of the different High Courts directly on the issue and against the appellant-Revenue. No contrary decision of a High Court has been shown to us. The Punjeb and Haryana High Court in Commissioner of Income Tax, Faridabad Vs. M/s. Lakhani Marketing Incl., ITA No. 970/2008, decided on 02.04.2014, made reference to two earlier decisions of the same Court in CIT Vs. Hero Cycles Limited, [2010J 323 ITR 518 and CIT Vs. Winsome Textile Industries Limited, [2009J 319 ITR 204 to hold that Section 14A cannot be invoked when no exempt income was earned. The second decision is of the Gujarat High Court in Commissioner of Income Tax-I Vs. Corrtech Energy (P.) Ltd. [2014 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the respondent-assessee for conducting business. The CIT(A) has positively held that the business was set up and had commenced. The said finding is accepted. The respondent- assessee, therefore, had to incur expenditure for the business in the form of investment in shares of cement companies and to further expand and consolidate their business. Expenditure had to be also incurred to protect the investment made. The genuineness of the said expenditure and the fact that it was incurred for business activities was not doubted by the Assessing Officer and has also not been doubted by the CIT(A). 17. In these circumstances, we do not find any merit in the present appeals. The same are dismissed in limine. 4.4 In the light of the law laid down by the Hon ble Jurisdictional High Court, we hold that no addition is called for on account of any alleged expenditure towards any exempt income. According, ground no. 2 is allowed. 5. Ground no. 3 relates to the disallowance of ₹ 15,85,328/- made under Section 40(a)(ia) of the Act. The undisputed facts of the case are that the amount of TDS deducted was remitted to the account of the Government before the due date of filing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (ii) That the disallowance has been confirmed rejecting the contention of the assesse that the same has been incurred wholly and exclusively for the purposes of business. 4. The appellant craves leave to add, amend or alter any of the grounds of appeal. 10. The assessee raised four grounds of appeal. Ground nos. 1 and 4 are general in nature which does not require any adjudication. 11. Ground no. 2 relates to the addition made of ₹ 7,48,600/- made under the provisions of Section 14A of the Act. For the reasons mentioned in appeal i.e. ITA No. 5752/Del/2013 for AY 2008-09, we allow this ground of appeal in favour of the assessee. 12. Ground no. 3 relates to the disallowance of ₹ 6,90,324/- incurred towards gifts and awards which were distributed to the trainees for the best performance. Since the assesee company was engaged in the business of management consultancy and training, it is not in dispute that the expenditure was actually incurred. The Assessing Officer only disallowed the same on the ground that the expenditure is not for business purposes. In the absence of management consultancy, training development and human resource development, this e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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