TMI Blog2019 (2) TMI 1072X X X X Extracts X X X X X X X X Extracts X X X X ..... URT) and Redington (India)Ltd., Vs. Addl. CIT [2017 (1) TMI 318 - MADRAS HIGH COURT] have held that the disallowance u/s. 14A cannot be made where there is no exempt income during the relevant assessment year. Therefore, we set aside the order of CIT(A) and direct the AO to delete the addition made by him. Since there is no dividend in come earned from the investments, no disallowance u/s.14A i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income Tax Act [Act]. 3. During the assessment proceeding u/s. 143(3) of the Act pursuant to the selection by CASS, the Assessing Officer observed that the assessee-company has made its investments in M/s. Sunway Mak International Private Limited to the tuneof ₹ 14 Crores as on 31-03-2013. But the assessee has notclaimed any expenditure in the P L A/c in relation to investments mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot satisfied with the contentions of assessee and held that assessee has not demonstrated that it has interest free funds available on the assets side of the Balance Sheet as on the date of making tax free investments. Therefore, he held that disallowance u/s.14A is to be made. Accordingly, he made disallowance underRule 8D(ii) and 8D(iii) and brought it to tax. 3.1. Aggrieved, assessee preferr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of interest cost) u/s 14A totally ignoring the fact that the entire interest cost for the year is on loans borrowed for working capital. 3. The learned Commissioner of Income-Tax failed to note that the investment in equity shares were made long before the year relevant to the assessment year under consideration out of own funds and not out of borrowed funds. 4. The learned Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14A cannot be made where there is no exempt income during the relevant assessment year. Therefore, we set aside the order of Ld.CIT(A) and direct the AOto delete the addition made by him. Since there is no dividend in come earned from the investments, no disallowance u/s.14A is called for. Therefore, the disallowance u/s. 14A r.w.Rule 8D(iii) is deleted. 5. In the result, the appeal of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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