TMI Blog2019 (4) TMI 1018X X X X Extracts X X X X X X X X Extracts X X X X ..... We thus in the backdrop of the fact that the assessee during the year under consideration had not received any dividend income, respectfully follow the view taken in the aforementioned judicial pronouncements and vacate the disallowance made by the A.O under Sec. 14A as had been sustained by the CIT(A). - Decided in favour of assessee Addition u/s 14A - AY. 2013-14 - HELD THAT:- Whether the assessee had received any dividend income during the year under consideration is not discernible from the orders of the lower authorities. As such, in our considered view the matter in all fairness requires to be restored to the file of the A.O for fresh adjudication as per the extant law. Insofar the working of the disallowance under Sec. 14A in respect of the exempt dividend income is concerned, the A.O in the course of the set aside proceedings after verifying the amount of dividend income received by the assessee during the year shall restrict the disallowance to the extent of such exempt dividend income. - ITA Nos.1687 & 1688/Mum/2018 - - - Dated:- 3-4-2019 - Shri Ravish Sood, Judicial Member And Shri N.K. Pradhan, Accountant Member For the Appellant : Shri Mayur Kisnadwala, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .w. Rule 8D may not be worked out in its case. The assessee tried to impress upon the A.O that no disallowance under Sec.14A was called for in its hands on multiple grounds viz. (i) that the investments made by the assessee were in the nature of strategic investments made in its subsidiaries/associate companies; (ii) that as the investments with the related parties were permanent in nature, therefore, in the absence of any requirement of monitoring the same no disallowance u/rule 8D(2)(iii) was liable to be made; (iii) that as the assessee had substantial own funds by way of capital and reserves aggregating to ₹ 125 crores and other non-interest bearing funds which were more than 5 times the value of the investments in shares, hence no disallowance of any part of the interest expenditure under Rule 8D(2)(ii) was called for in its hands; (iv) that as the assessee had not incurred any direct expenses to earn the exempt income, therefore, no disallowance under Rule 8D(2)(i) could be made. Alternatively, it was submitted by the assessee that as the investments decisions were taken by the Vice President Finance and President in consultation with the Board of directors, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lds India (P) Ltd. (2019) 101 taxmann.com 86 (Del). It was submitted by the ld. A.R that in the aforementioned appeal the High Court had upheld the order of the Tribunal which had deleted the disallowance made by the A.O under Sec.14A for the reason that the assessee had not earned any exempt income during the relevant assessment year. Further, the ld. A.R relied on the order of a coordinate bench of the Tribunal viz. ITAT, Mumbai Bench J in the case of Tata Industries Ltd. Vs. ITO, Ward 2 (3)(3), Mumbai (2016) 181 TTJ 600 (Mum). It was thus submitted by the ld. A.R that as the assessee had not earned any dividend income during the year under consideration, therefore, no disallowance u/s 14A was called for in its hands. 6. Per contra, the ld. Departmental Representative (for short D.R ) relied on the orders of the lower authorities. 7. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record. Admittedly, the assessee during the year under consideration had not earned any dividend income. Insofar the contention of the ld. A.R that in the absence of any dividend income earned by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by applying Rule 8D was clearly untenable and rightly rejected by the Tribunal. Apart there from, we find that a coordinate bench of the Tribunal i.e ITAT, Mumbai J bench in the case of Tata Industries Ltd. Vs. ITO, Ward 2(3)(3), Mumbai (2016) 181 TTJ 600 (Mum), had observed that the disallowance under Sec.14A cannot exceed the tax exempt income earned by an assessee during the year. We thus in the backdrop of the fact that the assessee during the year under consideration had not received any dividend income, respectfully follow the view taken in the aforementioned judicial pronouncements and vacate the disallowance made by the A.O under Sec. 14A as had been sustained by the CIT(A). The order of the CIT(A) is set aside in terms of our aforesaid observations. 8. The appeal of the assessee is allowed. ITA No. 1688/Mum/2018 AY. 2013-14 9. We shall now advert to the appeal of the assessee for the A.Y 2013-14. The assessee assailing the order of the CIT(A) has raised before us the following grounds of appeal: Being aggrieved by the order passed by the Learned Assessing Officer (A.O) u/s 143(3) of the Income-tax Act ('the Act'), as confirmed by Lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidend income. It was further submitted by the ld. A.R that the assessee had in the computation of income filed along with its return of income worked out the disallowance under Sec. 14A at ₹ 89,614/-. Insofar the disallowance made by the A.O under Sec.14A at ₹ 26,06,171/- was concerned, it was submitted by the ld. A.R that as the assessee had not received any dividend income during the year, therefore, no disallowance under Sec.14A r.w. Rule 8D was called for in its hands. In sum and substance, it was the claim of the ld. A.R that in the absence of any dividend income having been earned by the assessee during the year, no disallowance could have been made under Sec.14A of the I.T Act. 14. Per contra, the ld. Departmental representative (for short D.R ) relied on the orders of the lower authorities. 15. We find that the facts and the issue involved in the present appeal remains the same as was there before us in the appeal of the assessee for the immediately preceding year i.e A.Y. 2012-13 in ITA No. 1687/Mum/2018. However, we find that the observation of the CIT(A) that the assessee during the year had received dividend income of ₹ 1.78 crores clearly mili ..... X X X X Extracts X X X X X X X X Extracts X X X X
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