TMI Blog2016 (2) TMI 677X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable to the present case of the assessee company wherein held that the expression ‘does not form part of the total income’ in section 14A of the envisages that there should be an actual receipt of income, which is not includible in the total income, during the relevant previous year for the purpose of disallowing any expenditure incurred in relation to the said income. In other words, section 14A will not apply if no exempt income is received or receivable during the relevant previous year. Thus disallowance deleted - Decided in favour of assessee - I.T.A. No. 2712/Mum/2014 - - - Dated:- 8-2-2016 - Shri Amit Shukla, Judicial Member And Shri Ramit Kochar, Accountant Member For the Petitioner : Shri J.P. Bairagra Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue of Investments towards indirect expenses for earning the exempt income and as confirmed by the CIT - Appeals is erroneous, incorrect and not in the accordance with the law. c. The Learned Commissioner - Appeals has erred in upholding the additions by deeming that the Appellant would have incurred an expenses for earning the Exempt Income by holding that the expenditure incurred by the assessee in relation to the income is wide enough to cover all forms of expenses provided that have some connection with the exempt income . While upholding the addition made by the AO, the learned Commissioner - Appeals failed to appreciate that there was no expenses incurred whatsoever for earning the exempt income. Hence without establishi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot or shall not form part of total income as required u/s 14A of the Act in accordance with the provisions of Rule 8D of Income Tax Rules, 1962. The assessee company was asked to furnish the details of its investments. The assessee company, in response, contended that it has made investment in the preference shares of its group companies and it has not received any dividend during the year. The assessee company further contended that no expenditure is incurred on making investment in these group companies, hence, no disallowance u/s 14A of the Act is called for. The assessee company further contended it has its own funds as well as free reserves out of which the assessee company has made such investments and as such no interest cost is incu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of whether they are direct or indirect, fixed or variable and managerial or financial and whether the income is earned or not earned , thus the CIT(A) vide orders dated 21.02.2014 upheld the additions made by the A.O. 6. Aggrieved by the orders of the CIT(A) dated 21.02.20014, the assessee company is in appeal before the Tribunal. 7. The ld. Counsel for the assessee company submitted that the A.O. has applied Rule8D(2)(iii) of Income Tax Rules, 1962 to disallow 0.5% of average investment i.e. ₹ 3,02,500/-. The ld. Counsel submitted that no expenditure is incurred on making investment in the group companies. The Ld. Counsel contended that the assessee company has its own funds as well as free reserves out of which the assessee c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of the assessee company to make disallowance u/s 14A of the Act. He submitted that disallowance of expenses which are attributable for earning exempt income is to be made and the same has to be computed as provided in Rule 8D of the Income Tax Rules,1962 which are applicable w.e.f. the assessment year 2008-09 as laid down by the Hon ble Bombay High Court in the case of Godrej Boyce Mfg. Co. Ltd.(2010) 194 taxman 203( Bom.). 9. We have considered the rival contention and also perused the material on record. We have observed that the assessee company has made investment in its group companies of ₹ 9,10,00,000/- as at 31-03-2010 , while the same was ₹ 3,00,00,00.00 as at 31-03-2009. We have observed that the assessee comp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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