TMI Blog2017 (6) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.50 lacs has been invested during the year out of company’s own funds and the rest all investments have been made in the earlier years wherein the AO has not established any reasonable nexus between the expenditure disallowed and the dividend income received in the respective years. Further, in earlier years, the Coordinate Benches have decided the matter in favour of the assessee company holding no disallowance under section 14A other than the administrative expenses suo-moto disallowed by the assessee company and we see no reason to deviate from the same. AO has lost sight of the fact that the assessee company is in the business of financing wherein the funds are borrowed and lend as part of its regular business activity. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed by Hon ble ITAT Jaipur Benches in assessee s own case for A.Y. 2011-12 2012-13. 3. The proposition in law laid down by the Hon ble Supreme Court in case of Godrej Boyce Manufacturing Company Ltdis as under:- 36. Section 14A as originally enacted by the Finance Act of 2001 with effect from 1.4.1962 in the same form and language as currently appearing in sub-section (1) of Section 14A of the Act. Section 14A (2) and (3) of the Act were introduced by the Finance Act of 2006 with effect from 1.4.2007. The finding of Bombay High Court in the impugned order that sub-sections (2) and (3) of Section 14A is retrospective has been challenged by the Revenue in another appeal which is presently pending before this Court. This said qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fferent view could have been taken for the Assessment Year 2002-03. Sub-section (2) and (3) of Section 14A of the Act read with Rule 8D of the Rules merely prescribe a formula for determination of expenditure incurred in relation to income which does not form part of the total income under the Act in a situation where the Assessing officer is not satisfied with the claim of the Assessee. Whether such determination is to be made on application of the formula prescribed under Rule 8D or in the best judgment of the Assessing Officer, what the law postulates is the requirement of a satisfaction in the Assessing Officer that having regard to the accounts of the assessee, as placed before him, it is not possible to generate the requisite satisfac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een observed by this Court in Radhasoami Satsang v. Commissioner of Income-Tax [1992] 193 ITR (SC) 321 [At Page 329]. We are aware of the fact that strictly speaking res judicata does not apply to income tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. 4. The relevant finding of the Coordinate Bench in ITA No. 122/JP/2015 vide its order dated 05.05.2016 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd any material to show that the assessee has incurred any expenditure in relation to the income which do not form part of the total income. Moreover it is not in dispute that the assessee has earned exempt income of ₹ 27,006/- and expenditure amounting to ₹ 42,22,857/- in relation to this is disallowed. The finding of the ld. CIT(A) is not rebutted by revenue by placing any contrary materials. Therefore, we do not see any reason to interfere with the order of the ld. CIT(A). The same is hereby upheld. The ground raised by the Revenue is dismissed. 5. Similar issue was involved in AY 2012-13 (in ITA No. 100/JP/16) where this Bench following the above decision of the Coordinate Bench had deleted the disallowance made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed during the year out of company s own funds and the rest all investments have been made in the earlier years wherein the AO has not established any reasonable nexus between the expenditure disallowed and the dividend income received in the respective years. Further, in earlier years, the Coordinate Benches have decided the matter in favour of the assessee company holding no disallowance under section 14A other than the administrative expenses suo-moto disallowed by the assessee company and we see no reason to deviate from the same. 8. Another aspect of the matter which the AO has lost sight of is the fact that the assessee company is in the business of financing wherein the funds are borrowed and lend as part of its regular business ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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