TMI Blog2021 (1) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... , the law of limitation does not run agnistthe assessee to conclude that there is an irrevocable cessation of the liability of the assessee. We do not find any reason to interfere with the findings of the Ld. CIT(A). Appeal of the Revenue is dismissed. - ITA No.-4541/Del/2017 - - - Dated:- 30-12-2020 - Shri Prashant Maharishi, Accountant Member And Shri K.N. Chary, Judicial Member For the Revenue : Sh. Jagdish Singh Dahiya, Sr. DR For the Assessee : Sh. Vinod Kumar Bindal, CA, Ms. Rinky Sharma, CA ORDER PER K. NARASIMHA CHARY, JM Aggrieved by the order dated 6/4/2017 in appeal No. 122/16-17 passed by the learned Commissioner of Income Tax (Appeals)-18, New Delhi ( Ld. CIT(A) ) for the assessment year 2012-13 in the case of M/s Meyer Apparel Ltd (earlier known as M/s Givo Ltd), Revenue preferred this appeal challenging the deletion of the addition of ₹ 8, 44, 0 22/-made by the assessing officer by invoking 14A of the Income Tax Act, 1961 (for short the Act ) read with Rule 8D of the Income Tax Rules1962 ( the Rules ) and also reducing the book profit under section 115 JB of the Act; deleting the addition of ₹ 6, 77, 24, 250/-made by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foreign advances were declared and specific reference was made to serial number 26 (ii) where a sum of ₹ 7 89.14 Lacs was shown due to the pressing creditors of the company which include advance payment against the order received from trust export to the tune of ₹ 3 32.65 Lacs, around point Ltd to the tune of ₹ 79.80 Lacs and Thakral investment Holdings Pvt. Ltd to the tune of ₹ 79.8 Lacs and also the note in respect of each of the foreign advances and other documents produced by the assessee in respect of all the 4 entities and their liability towards them, reached a conclusion that in view of the fact that the genuineness of the creditors or the creditworthiness is not under any suspicion and the genuineness of the transaction also stands proved. He accordingly deleted such an addition also. Hence this appeal by the Revenue. 4. Insofar as the issue relating to the location of the provisions under section 14A of the Act read with Rule 8D of the Rules is concerned, Ld. DR argued that the Ld. CIT(A) failed to consider the legislative intent of introducing the provisions under section 14 A by finance act 2001 as clarified by the CBDT circular No. 5/2014, d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 23rd May 2008 of ITAT Lucknow) Relaxo Footwear Ltd. v. Addl. CIT [2012] 50 SOT 102 (Del). xxx xxx xxx xxx xxx xxx 19. In the considered view of the Court, this will be a truncated reading of Section 14 A and Rule 8D particularly when Rule 8D (1) uses the expression such previous year . Further, it does not account for the concept of real income . It does not note that under Section 5 of the Act, the question of taxation of notional income does not arise. As explained in Commissioner of Income Tax v. Walfort Share and Stock Brokers Pvt. Ltd [2010] 326 ITR 1 (SC), the mandate of Section 14A of the Act is to curb the practice of claiming deduction of expenses incurred in relation to exempt income being taxable income and at the same time avail of the tax incentives by way of exemption of exempt income without making any apportionment of expenses incurred in relation to exempt income. Consequently, the Court is not persuaded that in view of the Circular of the CBDT dated 11th May 2014, the decision of this Court in Cheminvest L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y income should in fact have been earned as a condition precedent for claiming the expenditure. The Court explained: What s. 57(iii) requires is that the expenditure must be laid out or expended wholly and exclusively for the purpose of making or earning income. It is the purpose of the expenditure that is relevant in determining the applicability of s. 57(iii) and that purpose must be making or earning of income. s. 57(iii) does not require that this purpose must be fulfilled in order to qualify the expenditure for deduction. It does not say that the expenditure shall be deductible only if any income is made or earned. There is in fact nothing in the language of s. 57(iii) to suggest that the purpose for which the expenditure is made should fructify into any benefit by way of return in the shape of income. The plain natural construction of the language of s. 57(iii) irresistibly leads to the conclusion that to bring a case within the section, it is not necessary that any income should in fact have been earned as a result of the expenditure. 21. There is merit in the contention of Mr. Vohra that the decision of the Supreme Court in Rajendra Prasad Moody (supra) was rend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fund of its advance amount which the assessee company could not do so due to its financial crunch. In respect of M/s Kanwaljeet Singh Dhillon, Singapore the assessee is duty bound to refund the advance amount for a just the same against the future supplies to such party. All these parties filed the confirmation letters confirming the receivables. 8. Ld. CIT(A) considered all these aspects in detail. Since the learned Assessing Officer took the view that not only the credits have been continued for long span of time without being repaid, but the crystallisation of foreign currency to rupee times was made without any approval of the RBI, Ld. CIT(A) sought clarification from the assessee and obtaining the copy of application before the BIFR dated 19 for 2016 where the latest status of the impugned far and advances were declared with a specific reference to serial No. 26 (ii) where a sum of ₹ 7 89.14 Lacs was shown due to the pressing the creditors of the company which include advance payment against the order received from trust exports, right point Ltd and Thakral investment Holdings Pvt. Ltd. 9. Ld. CIT(A) also verified various documents relating to these entities and ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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