TMI Blog2014 (6) TMI 957X X X X Extracts X X X X X X X X Extracts X X X X ..... dicial Member) And R. K. Panda (Accountant Member) For the Petitioner : Nikhil Pathak For the Respondent : Santosh Kumar ORDER R. K. Panda (Accountant Member) This appeal filed by the assessee is directed against the order dated 10-09-2012 of the CIT(A)-II, Pune relating to Assessment year 2009-10. 2. At the time of the hearing, the Ld. Counsel for the assessee did not press ground of appeal No.2 relating to disallowance of ₹ 1,50,000/- being vehicle expenses for personal use. The Ld. Departmental Representative has no objection for the same. Accordingly, Ground No.2 is dismissed as not pressed . 3. Ground of appeal No.1 relates to the order of the CIT(A) sustaining the disallowance of ₹ 5,86,962/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es get merged with the expenses claimed by the assessee. In view of the above and applying the provisions of section 14A r.w. Rule 8D, the Assessing Officer worked out the disallowance of ₹ 25,10,262/- u/s.14A which is as under : Disallowance u/s.14A on account of interest expenses 19,23,300 +0.5% of the average value of investment 5,86,962/- TOTAL 25,10,262 5. In appeal the Ld.CIT(A) deleted the addition of ₹ 19,23,300/- u/s.14A being interest expenses for which the Revenue is no in appeal. Therefore, we are not concerned with the same. He however upheld the order of the Assessing Officer in disallowin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the investments of unlisted shares of the appellant, and hence other expenditure like administration charges, brokerage, De-mat charges have not been incurred at all. In view of this disallowance cannot be sustained. 1.2 The learned CIT (A) should have appreciated the fact that during the current year there is no dividend income from unlisted shares which does not form part of total income; therefore, the disallowance made by the learned AO cannot be sustained. 7. The Ld. Counsel for the assessee referring to page 23 of the paper book drew the attention of the Bench to the share trading account and submitted that the assessee has earned dividend income of ₹ 12,49,008.74 in share trading account. Referring to page 25 26 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come for the concerned assessment years provisions of section 14A cannot be invoked. Referring to the decision of the Hon ble Gujarat High Court in the case of CIT Vs. Corrtech Energy Pvt. Ltd. vide Tax Appeal No.239/2014 order dated 24- 03-2014 he submitted that the Hon ble High Court in the said decision has upheld the decision of the Tribunal in deleting the disallowance u/s.14A since no claim was made by the assessee for exemption of any income from payment of tax. He submitted that during the preceding as well as succeeding assessment years there is also no disallowance u/s.14A. He accordingly submitted that since the assessee has not received any dividend income out of the share held as investment and since no disallowance has been ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowance of ₹ 5,86,962/- by the Assessing Officer being 0.5% of the average value of investment towards administrative expenses etc. is concerned we find the CIT(A) sustained the same. 9.1 It is the submission of the Ld. Counsel for the assessee that all the shares are held in physical form and not in Demat account and no dividend income has been received on account of shares held under the head investment . Whatever dividend was received was in the share trading account . The above submission of the Ld. Counsel for the assessee could not be controverted by the Ld. Departmental Representative. We find various courts have held that disallowance u/s.14A cannot be made when there is no tax free income. 9.2 We find the Hon ble A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income Tax Act. 9.4 Since in the instant case the assessee has not received any dividend income out of the shares held as investment and since no disallowance u/s.14A has been made in the preceding as well as succeeding assessment years, therefore, we agree with the contention of the Ld. Counsel for the assessee that no disallowance u/s.14A can be made under the facts and circumstances of the case. Accordingly, the order of the CIT(A) is setaside and the Assessing Officer is directed to delete the disallowance of ₹ 5,86,962/- made u/s.14A. Ground raised by the assessee is accordingly allowed. 10. In the result, the appeal filed by the assessee is partly allowed. Pronounced in the open court on 26-06-2014. - - TaxT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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