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TMI Blog2016 (10) TMI 840X X X X Extracts X X X X X X X X Extracts X X X X ..... ture of Rs. 4,91,677/- u/s. 14A of the Act in spite of the fact that the appellant did not earn any income exempt from income tax which is a precondition for invoking the provision of section 14A of the Act. 2. That on the facts and circumstances of the case, the Ld. CIT(A) erred in not appreciating the fact that the AO did not controvert the submission that the appellant did not make investment for earning income of the dividend and the investment was only strategic commercial decision. That the appellant further stressed that there is no nexus of expenditure claimed in the profit and loss account with the investment made by the appellant and therefore, the provision of section 14A invoked by the AO and the CIT(A) are wrongly invoked. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee and have gone through the material placed on record. I find that A.O. as well as Ld. CIT(A) has not pointed out any income earned by assessee which was exempt income. I find that there was no exempt income pointed out by the Revenue Authorities and A.O. had made addition holding that assessee had source of exempt income. Section 14A of the Income Tax Act cannot be invoked when no exempt income was earned. I find that the case of assessee is fully covered in its favour by the decision of the Hon'ble Delhi High Court in the case of CIT Vs Holcim India Pvt. Ltd. (Supra) wherein, the Hon'ble High Court under similar circumstances has held as under: "13. We are confused about the stand taken by the appellant-Revenue. Thus, we had a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Corrtech Energy (P.) Ltd. [2014] 223 Taxmann 130 (Guj.). The third decision is of the Allahabad High Court in Income Tax Appeal No. 88 of 2014, Commissioner of Income Tax (Ii) Kanpur, Vs. M/s. Shivam Motors (P) Ltd. decided on 05.05.2014. In the said decision it has been held: "As regards the second question, Section 14A of the Act provides that for the purposes of computing the total income under the Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. Hence, what Section 14A provides is that if there is any income which does not form part of the income under the Act, the expenditure which is incurred for earning the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted to dividend distribution tax. 16. What is also noticeable is that the entire or whole expenditure has been disallowed as if there was no expenditure incurred by the respondentassessee 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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