TMI Blog2021 (3) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of CIT v. Celebrity Fashion Ltd. [ 2020 (9) TMI 1022 - MADRAS HIGH COURT] has similarly held that no disallowance can be made u/s 14A in absence of exempt income. - Decided in favour of assessee. - ITA No. 5205/MUM/2019 - - - Dated:- 9-2-2021 - Shri C.N. Prasad (Judicial Member) And Shri N.K. Pradhan (Accountant Member) For the Revenue : Ms. Shreekala Pardeshi, DR For the Assessee : None ORDER PER N.K. PRADHAN, A.M. This is an appeal filed by the Revenue. The relevant assessment year is 2016-17. The appeal is directed against the order of the Commissioner of Income Tax (Appeals)-4, Mumbai [in short CIT(A) ] and arises out of the assessment completed u/s 143(3) the Income Tax Act 1961, (the Act ). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14A of the Act and thereby not appreciating that Section 14A does not use the work income of the year but income under the Act which clearly indicates that for invoking provisions of Section 14A, it is not necessary that the assessee should have earned exempt income during the financial year under consideration? iv. Whether on the facts and circumstances of the case and in law, the Ld, CIT(A) has erred in deleting the disallowance u/s. 14A of the Act without considering that in cases involving deduction u/s. 57(iii) o the I.T. Act, it was held by the Courts that actual earning of the income is not sine qua non for deciding the deduction of expenditure laid out or expended wholly or exclusively for the purpose of earning the income. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in the case of Cheminvest Ltd. v. CIT (ITA No. 749 of 2014) and the Tribunal in M/s Nitishree International Pvt. Ltd. v. ITO (ITA No. 4603/Del/2014), the assessee submitted before the Ld. CIT(A) that since no exempt income has been earned by the assessee, no disallowance u/s 14A r.w. Rule 8D should be made. The Ld. CIT(A) by following the above two decisions deleted the disallowance of ₹ 2,68,65,924/- made by the AO. 5. Before us, the Ld. DR relies on the order passed by the AO. 6. We have heard the Ld. DR and perused the relevant materials on record. The fact remains that no exempt income was earned by the assessee during the financial year 2015-16 relevant to the AY 2016-17. That when there is no exempt income e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration of Section 14A, the Delhi High Court followed decisions of certain other High Courts. Section 14A of the said Act provides that for the purpose of computing the total income, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under the said Act. In other words, Section 14A provides that if there is an income which does not form a part of the total income under the said Act, the expenditure which is incurred for earning the income is not an allowable deduction. Therefore, during the relevant year, if the assessee has not earned any tax free income, the corresponding expenditure incurred cannot be taken into consideration for dis-allowance. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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