TMI Blog2019 (11) TMI 1242X X X X Extracts X X X X X X X X Extracts X X X X ..... law. It is pertinent to mention that no averments are made by Revenue nor there is any material on record to show that there is an malafide on part of assessee in filing this appeal late with tribunal Disallowance u/s 14A - no exempt income is earned by taxpayer - HELD THAT:- In the case of Chettinad Logistics Private Limited [ 2017 (4) TMI 298 - MADRAS HIGH COURT] has held that no disallowance of expenditure u/s 14A can be made when no exempt income is earned by taxpayer. The SLP filed by Revenue against decision of Hon ble Madras High Court decision in case of Chettinad Logsitics Private Limited(supra) has been dismissed by Hon ble Supreme Court [ 2018 (7) TMI 567 - SC ORDER] When no exempt income is earned by taxpayer, no disallowances of expenditure u/s 14A are warranted. Thus no disallowance of expenditure by invoking provisions of Section 14A of the 1961 Act is warranted as assessee has not earned any exempt income during the year under consideration and hence we hereby order deletion of disallowances of expenditure made by AO by invoking provisions of Section 14A of the 1961 Act read with Rule 8D of the 1962 Rules, which additions were later confirmed by Ld.CIT(A). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such disallowance under section 14A of the Act is uncalled for. 2.4 The CIT (A) and the AO ought to have appreciated that provisions of section 14A of the A are not applicable in case of strategic investments made for the purpose of acquiring controlling interest. 2.5 The CIT (A) ought to have appreciated that the Appellant had taken a business decision to invest in a joint venture entity and it did not make the investments with a view to earn exempt income and as such notional attribution of expenses is unsustainable. 2.6 The CIT (A) has failed to appreciate that the Appellant has made investments out of its surplus funds and no borrowed funds were utilised for the investments. 2.7 The CIT (A) has erred in rejecting the claim of the Appellant that AO has not formed an opinion regarding the necessity of invoking the provisions of section 14A of the Act. 2.8 Without prejudice to the above, the CIT (A)/AO erred in considering average value of investments which did not yield exempt dividend income while computing the disallowance under section 14A read with Rule 8D of the Income Tax Rules (t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s , while for year under consideration viz. ay: 2015-16 , the appeal is decided by learned CIT(A) against assessee. It was explained in affidavit that when statutory auditors were reviewing contingent liabilities of the assessee for year ended 31st March 2019, then this fact of non filing of an appeal with tribunal came to notice and steps were taken to file this appeal with tribunal. It is also explained in the aforesaid affidavit that Managing Director of assessee company was not in India and after coming back to India , steps were taken to file this appeal with tribunal. The learned counsel for the assessee prayed that this delay of 133 days in filing this appeal late with tribunal be condoned and this appeal be adjudicated on merits in accordance with law. The sum and substance of affidavit and prayers for condonation of delay is that there is no malafide in filing this appeal late with tribunal and there was a sufficient cause shown for filing this appeal late with tribunal. The Ld.DR, on the other hand, fairly stated that it is left to discretion of the Bench to take a decision so far as condonation of delay in admitting this appeal is concerned. In our considered view based ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g disallowance , vide assessment order dated 25.11.2016 passed by AO u/s 143(3) of the 1961 Act:- Exempted income - 0 (i) The amount of expenditure directly relating to income which does not form part of total income 0 (ii) A. Amount of expenditure by way of interest other than the amount of interest included in clause (i) incurred during the previous year ₹ 10,17,46,593/- B. The average value of investment, income from which does not or shall not form part of the total income, as appearing in the Balance Sheet of the assessee, on the first day and the last day of the previous year ₹ 4,64,52,000/- Value of investment on the first day of the previous year ₹ 4,11,60,000/- Value of investment on the last day of the previous year ₹ 5,17,44,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed counsel for assessee would submit that in view of no exempt income earned by assessee, no disallowance of expenditure is warranted u/s.14A of 1961 Act. The assessee has relied upon decision of Hon ble Madras High Court in the case of CIT v. Chettinad Logistics (P.) Ltd. reported in [2017] 80 taxmann.com 221 (Madras), wherein, Hon ble Madras High Court has held that no disallowance of expenditure can be made by invoking provisions of Section 14A of the 1961 Act , when there is no exempt income earned by taxpayer. The SLP filed by Revenue before Hon ble Supreme Court in CIT v. Chettinad Logistics (P.) Ltd., reported in [2018] 95 taxmann.com 250 (SC) , has since been dismissed by Hon ble Supreme Court. Similarly, it was submitted that no addition can be made to book profit u/s.115JB as the assessee has not incurred any expenditure in relation to earning of an exempt income. It is claimed that no expenditure has been incurred and debited to P L A/c which is incurred in relation to earning of an exempt income. On merits, Ld.DR submitted that disallowance of expenditure u/s.14A is to be made even if no exempt income is earned by the assessee. The learned DR would rely on orders of aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Redington(India) Limited v. Addl. CIT reported in (2017) 392 ITR 633(Mad.) wherein similar view is taken and infact Hon ble Madras High Court in case of Chettinad Logistics Private Limited(supra) relied upon this decision of Hon ble Madras High Court in case of Redington India(supra) to hold and decide the issue in favour of tax-payer. The decision of Hon ble Delhi High Court in case of Cheminvest Limited v. CIT reported in (2015) 378 ITR 33(Delhi) is relevant. The decision of Hon ble Bombay High Court in the case of PCIT v. Ballarpur Industries Limited ITA no. 51 of 2016,vide judgment dated 13.10.2016 has also held that when no exempt income is earned by taxpayer, no disallowances of expenditure u/s 14A are warranted. Thus, keeping in view decision of Hon ble jurisdictional High Court cited above, we are of considered view that no disallowance of expenditure by invoking provisions of Section 14A of the 1961 Act is warranted as assessee has not earned any exempt income during the year under consideration and hence we hereby order deletion of disallowances of expenditure made by AO by invoking provisions of Section 14A of the 1961 Act read with Rule 8D of the 1962 Rules, which addit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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