TMI Blog2014 (2) TMI 1265X X X X Extracts X X X X X X X X Extracts X X X X ..... UMAR MITTAL AND MR. JASPAL SINGH JJ. Present: Mr. Tejinder K. Joshi, Advocate for the appellant. Mr. Pankaj Jain, Sr. Advocate with Mr. Divya Suri, Advocate for the respondent. Ajay Kumar Mittal, J. 1. This order shall dispose of ITA Nos.56 and 67 of 2009 as learned counsel for the parties are agreed that the issue involved in both these appeals is identical. However, the facts are being extracted from ITA No.67 of 2009. 2. ITA No.67 of 2009 has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short, the Act ) against the order dated 30.5.2008, Annexure A-III passed by the Income Tax Appellate Tribunal, Delhi Bench G New Delhi (in short, the Tribunal ) in ITA No.3783/DEL/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in appeal before the Tribunal. Vide order dated 30.5.2008, Annexure A.III, the Tribunal partly allowed the appeal relying upon its order in the case of M/s Lakhani Marketing Inc., ITA Nos.3782 and 3784/Del/2004 and directed the Assessing officer to restrict the disallowance to the expenditure incurred for earning dividend of ₹ 7200/-. Hence the present appeals by the revenue. 4. We have heard learned counsel for the parties and perused the record. 5. The CIT(A) vide its order dated 21.6.2004, Annexure A.II recorded as under:- 8.2 Keeping in view the above facts and circumstances of the case it is held that the AO was not correct in applying section 14A of the IT Act in disallowing the expenditure on account o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvoked. In this appeal, the revenue has not dispelled the findings of the CIT(A), nor the statement of the assessee before AO that assessee is not in receipt of any dividend income and hence according to us, the Assessing Officer has erred in invoking Section 14A of the Act, to disallow various interest payments on capital account, security deposits and unsecured loans. This conclusion of ours finds support from the decision of Bombay Bench of the Tribunal in the case of Joint Commissioner of Income Tax v. Holland Equipment Co. B.V.reported in (2005) 3 SOT 810 (Mumbai) and the relevant portion of the order of the Bombay Bench of the Tribunal is reproduced below:- Regarding application of Section 14A of the Act, the contention of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year 2000-01 is concerned, the Assessing Officer is directed to restrict the disallowance to the expenditure incurred for earning dividend of ₹ 7200/-. 7. The CIT(A) as well as the Tribunal had rightly come to the conclusion that in respect of assessment year 2000-01, since the assessee had received dividend of ₹ 7200/-, the expenditure to that extent being on account of interest liability be disallowed. 8. In view of the aforesaid findings, which could not be shown to be erroneous, the plea of the revenue cannot be accepted. Further, this Court in CIT vs. Hero Cycles Limited, (2010) 323 ITR 518 recorded as under:- 5. In view of finding reproduced above, it is clear that the expenditure on interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 006) 286 ITR 1 (P H) and therefore, disallowance under section 14A was justified. 7. We do not find any merit in this submission. Judgment of this Court in Abhishek Industries (supra) was on the issue of allowability of interest paid on loans given to sister concerns, without interest. It was held that deduction for interest was permissible when loan was taken for business purpose and not for diverting the same to sister concern without having nexus with the business. Observations made therein have to be read in that context. In the present case, admittedly, the assessee did not make any claim for exemption. In such a situation, section 14A could have no application. 9. As a result, the substantial question of law is answered ..... X X X X Extracts X X X X X X X X Extracts X X X X
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