TMI Blog2016 (5) TMI 1337X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax(Appeals) - 12, Hyderabad, dated 29/01/2015 for AY 2011-12. 2. The brief facts of the case are that the assessee has filed return of income for AY 2011-12 on 29/09/2012 declaring a loss of Rs. (-) 21,56,83,227/-. On perusal of the schedules forming part of the certified balance sheet, the AO noted that the assessee company had incurred preliminary expenditure to the tune of ₹ 32,32,610/- for the AY 2010-11. The AO observed that the assessee has claimed a deduction of ₹ 42,26,322/- in the computation of income as against the allowable deduction u/s 35D of ₹ 3,23,261/-. He, therefore, added the difference amount of ₹ 39,03,061/- to the total income of the assessee as excess claimed. 2.1 AO found from the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it report mentioned this Item, he had qualified the above. b) Part of the amounts borrowed was invested in the subsidiary companies and the same is made wholly and exclusively for the business of expediency of the assessee company. c) The assessee company and the sister companies, in whose equity shares, investment was made, are interdependent and have trade relation with each other. Survival of the companies is on mutual dependency. d) It cannot be therefore be said that the investment is made for earning income which is exempt from tax, so as to attract the mischief of the provisions of section 14A of the Act. Since the expenditure was wholly and exclusively incurred for business expediency of the assessee, the same is allowable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ieved by the order of the CIT(A), the assessee is in appeal before us raising the following grounds of appeal: 1. The order of the Ld. CIT(A) XII, Hyderabad is erroneous both on facts and in law. 2. The Ld. CIT(A) XII, ought to have allowed the claim of ₹ 39,03,061/- towards deduction u/s 35D of the Act. 3. The Ld. CIT (A), ought to have appreciated that the appellant has invested in its subsidiaries for the purpose of expansion of the business, which do not have any exempted income and hence the provisions of Sec 14A are not applicable to the appellant. 4. The Ld. CIT (A) XII ought to have followed the decision of Hon'ble Supreme Court in the case of S.A. Builders vs. CIT in 288 ITR, for allowing the interest e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f M/s Alliance Infrastructure Projects Pvt. Ltd., (supra), the coordinate bench of ITAT Bangalore has held as under: 14. Therefore, unless and until, there is receipt of exempted income for the concerned assessment years, we are of the view, Section 14A of the Act cannot be invoked. In this appeal, the revenue has not dispelled the contention of the assessee before AO that it was not in receipt of any exempt income. Learned CIT(A), has misconstrued the decision of Delhi Bench of this Tribunal in the case of Mis Technopak Advisors (P) Ltd., as that of the Hon' Delhi High Court, without recognizing that after the said decision, there has been a catena of judgments from various High Courts, going in favour of the assessee. Hence accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... however, notice that sub-section(1) of section 14A provides that for the purpose of computing total income under chapter IV of the Act, 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. In the present case, the tribunal has recorded the finding of fact that the assessee did not make any claim for exemption of any income from payment of tax. It was on this basis that the tribunal held that disallowance under section 14A of the Act could not be made. In the process tribunal relied on the decision of Division Bench of Punjab and Haryana High Court in case of CIT v Winsome Textile Industries Ltd. [2009] 319 ITR 204 in which also the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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