TMI Blog2019 (1) TMI 599X X X X Extracts X X X X X X X X Extracts X X X X ..... y forward of the unabsorbed depreciation relating to the assessment year 1997-98 is set aside and the matters are remanded to the Tribunal for a fresh decision on merits and in accordance with law. Disallowance under Section 14A - Held that:- The disallowance under Section 14A has been a point of dispute in several cases. Therefore, we opine that the Tribunal shall reconsider the said issue factually taking note of the precedents relied upon by both the Revenue as well as the assessee and take a reasoned decision so that they could be applied in future cases as well. Considering the above, we are of the view that substantial question raised by the Revenue i.e. the issue pertaining to disallowance under Section 14A of the Act for all the assessment years requires to be redone. - Tax Case Appeal Nos.785, 787, 788, 790, 793 to 797, 812 to 814 & 947 to 953 of 2018 & CMP.Nos.19267, 19276, 19282, 19464, 19466, 19611, 19613, 19616, 19929, 19931, 19933, 22532, 22533, 22535, 22538, 22539 & 22540 of 2018 - - - Dated:- 11-12-2018 - Mr. Justice T.S. Sivagnanam And Mr. Justice N. Sathish Kumar For the Assessee : Mr.V.K.Vijayaraghavan For the Revenue : Mr.M.Swaminathan, SSC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the dividend income received, the provisions of Section 14A read with Rule 8D could be invoked ? iii. Whether the Tribunal was right in law in confirming the disallowance under Section 14A read with Rule 8D(2) without appreciating that the assessee had sufficient own funds and investments were made out of own funds and no borrowings were used for making investments ? And Additional Question in TCA.Nos.948 to 953 of 2018 : iv. Without prejudice to the above, whether the Tribunal ought to have directed that disallowance under Section 14A should be restricted only to investments from which exempt income were earned during the year ? 4. We have heard Mr.M.Swaminathan, learned Senior Standing Counsel for the Revenue and Mr.V.K.Vijayaraghavan, learned counsel appearing on behalf of the assessee. 5. In so far as the first substantial question of law raised by the Revenue is concerned, it pertains to the expenditure incurred by the assessee for establishing their unit at Sriperumbudur and whether the same to be treated as revenue expenditure or capital expenditure and the assessment is for the assessment year 2008-09. We have perused the findings recorded by the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Finance and Investment Company Limited. 12. We have gone through the order passed by the Tribunal and we find that this issue was dealt with by the Tribunal in paragraph 28. The Tribunal held that the issue is squarely covered by the principles laid down by the High Court of Gujarat in the aforementioned decisions. However, the factual aspect has not been gone into nor there is a discussion as to how the Tribunal was satisfied that the decisions of the Gujarat High Court would apply to the assessee s case and that the decision of the jurisdictional High Court would not apply and as to why the decision of the Hon ble Supreme Court in the case of Peerless General Finance and Investment Company Limited cannot be applied to the facts and circumstances of the case. Therefore, we hold that the Tribunal should have assigned reasons however brief it may be and recorded satisfaction as to how the decisions of the Gujarat High Court would be squarely applicable to the case of the assessee. 13. Therefore, we are of the considered view that this issue relating to unabsorbed depreciation has to be reconsidered by the Tribunal after due opportunity to the Revenue and the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o exempt income and that unless the Assessing Officer establishes that specific expenditure has been incurred by the assessee for earning exempt income, there can be no disallowance under Section 14A of the Act. 18. It is also contended by the assessee that under Section 14A(2) of the Act, expenditure can be determined as prescribed under Rule 8D of the Rules only where the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim that the expenditure made by the assessee in relation to income, which does not form part of total income under the Act. 19. It is further contended by the assessee that the assessee already disallowed an expenditure for the relevant assessment years for earning dividend income and hence, no further notional expenditure could be deducted from the said income. He again submits that the Assessing Officer is bound to give cogent reasons in terms of Section 14A(2) of the Act with regard to his satisfaction with the correctness of the claim of the assessee in respect of such expenditure, which does not form part of the total income. 20. The learned counsel for the assessee has placed reliance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gujarat High Court in the case of CIT Vs. Gujarat State Fertilizers Chemicals Ltd [reported in 85 CCH 273] to support his argument that if the assessee has sufficient funds available with it, no adhoc disallowance of dividend income under Section 14A of the Act could be made. Further, according to the assessee, while computing disallowance under Section 14A of the Act, only those investments made in the current assessment year that yielded dividend income should be taken. 24. With these submissions, the learned counsel for the assessee contends that specific questions of law were raised before the Tribunal. However, the Tribunal has not considered the same, but disposed of the matter by following the decision of the Delhi High Court in the case of M/s. Joint Investments Private Limited. 25. In our considered view, the disallowance under Section 14A of the Act has been a point of dispute in several cases. Therefore, we opine that the Tribunal shall reconsider the said issue factually taking note of the precedents relied upon by both the Revenue as well as the assessee and take a reasoned decision so that they could be applied in future cases as well. Considering ..... X X X X Extracts X X X X X X X X Extracts X X X X
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