TMI Blog2015 (10) TMI 2674X X X X Extracts X X X X X X X X Extracts X X X X ..... e by the Assessing Officer. In considered opinion, the learned CIT(A) was justified in not upholding penalty on this amount of disallowance. Disallowance u/s 14A r.w.r 8D - Held that:- There cannot be any disallowance u/s 14A if there is no exempt income. As confronted with a situation in which the assessee has not earned any exempt income but the disallowance has been made to the extent of ₹ 13.64 lakh by applying Rule 8D. Despite there being no challenge to or sustenance of the disallowance u/s 14A, it is of considered opinion that under no circumstance, such ill founded disallowance, not having any authority of law to stand on, can be considered for the purposes of imposition of penalty u/s 271(1)(c) of the Act. Therefore, appro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer on disallowance of foreign travelling expenses of relatives of directors amounting to ₹ 2,60,370/-; disallowance u/s 14A at ₹ 13,64,000/-; and disallowance out of credit card expenses to the tune of ₹ 1,00,000/-. The penalty so imposed by the Assessing Officer came to be deleted in the first appeal. The Revenue is aggrieved against the deletion of such penalty. 3. I have heard the rival submissions and perused the relevant material on record. It is observed that the assessee declared income of ₹ 19.27 crore which was adjusted against brought forward unabsorbed depreciation for earlier year and the net resultant income was Nil. The assessee also disclosed book profit u/s 115JB at ₹ 19.37 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) was justified in not upholding penalty on this amount of disallowance. 5. The second component of the penalty is disallowance u/s 14A amounting to ₹ 13,64,000/-. This disallowance was made by the Assessing Officer u/s 14A by applying Rule 8D. It is an admitted position that the assessee did not earn any exempt income during the year in question. The Hon'ble Jurisdictional High Court in a series of judgments including CIT Vs. Holcim India Pvt.Ltd. (2014) 90 CCH 081 (Del-HC) has held that in the absence of any exempt income, there cannot be any disallowance u/s 14A. In Joint Investment Pvt.Ltd. (2015) 372 ITR 674 (Del), the Hon'ble Jurisdictional High Court has held that disallowance u/s 14A cannot exceed the exempt incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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