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2016 (10) TMI 840 - ITAT DELHI

2016 (10) TMI 840 - ITAT DELHI - TMI - Addition u/s 14A - Held that:- Assessee had not earned any exempt income during the year and therefore, following the above order of Hon'ble Delhi High Court in the case of CIT vs. Holcim India Pvt. Ltd. (2014 (9) TMI 434 - DELHI HIGH COURT) disallowance u/s 14A was not warranted. - Decided in favour of assessee - ITA No. 6164/Del/2014 - Dated:- 2-9-2016 - SHRI H.S. SIDHU, JUDICIAL MEMBER For The Assessee : Sh. Rajesh Jain, CA For The Department : None ORDE .....

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t 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 .....

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ble Jurisdictional High Court in the case of CIT vs. Holcim India Pvt. Ltd. 272 CTR 542 (Del.) It was submitted that Hon'ble High Court has held that where there was no exempt income, no disallowance u/s 14A can be made. Ld. A.R. further submitted that the A.O. without pinpointing any expenditure relatable to exempt income, has calculated disallowance u/s 14A as per Rule 8D and Ld. CIT(A) has also confirmed the same, which was also against the law. Therefore, he requested that the aforesaid .....

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ore, I am deciding this Appeal as Exparte Department, after hearing the Ld. AR of the assessee and perusing the records. 4. I have heard the Ld. AR of the 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 o .....

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would have yielded dividend, which would be exempt income and therefore, the CIT(A) had invoked Section 14A to disallow the entire expenditure. The aforesaid submission does not find any specific and clear narration in the reasons or the grounds given by the CIT(A) to, make the said addition. Possibly, the CIT(A), though it is not argued before us, had taken the stand that the respondent- assessee had made investment and expenditure was incurred to protect those investments and this expenditure .....

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i 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, [2010] 323 ITR 518 and CIT Vs. Winsome Textile Industries Limited, [2009] 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] 223 Taxmann 130 (Guj.). The third decision is of the Allahabad H .....

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tion 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 income is not an allowable deduction. For the year in question, the finding of fact is that the assessee had not earned any tax free income. Hence, in the absence of any tax free income, the corresponding expenditure could not be worked out for disallowance. The view of the CIT(A), which has been affirmed by the Tribunal, hence does not give ris .....

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