TMI Blog2021 (9) TMI 1125X X X X Extracts X X X X X X X X Extracts X X X X ..... that the requirement for attracting the provisions of section 14A(1) of the Act is proof of the fact that the expenditure sought to be disallowed had actually been incurred in earning the dividend income - Decided against revenue. - ITA No. 6668/Del/2017 - - - Dated:- 21-9-2021 - R.K. Panda, Member (A) And Kul Bharat, Member (J) For the Appellant : Gaurav Pundir, Sr. DR For the Respondents : Arun Kishore, C.A. ORDER Per Kul Bharat, JM This appeal filed by the Revenue is directed against the order dated 25.08.2017 of the learned CIT(A)-28, New Delhi, relating to Assessment Year 2013-14. The Revenue has raised following grounds of appeal:- 1. Whether on facts and in circumstances of the case, the Ld. CIT(A) is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and the Assessment u/s. 143(3) of the Act was framed vide order dated 28.03.2016. The Assessing Officer while framing the assessment invoked the provisions of section 14A of the Act and computed the disallowance under Rule-8D of the Income Tax Rules, 1962 (hereinafter 'the Rules') of ₹ 2,12,03,476/-. 4. Aggrieved against this, the assessee preferred appeal before the Ld. CIT(A), who after considering the submissions deleted the disallowance. The Ld. CIT(A) while deleting the disallowance noticed the assessee had earned meager sum of ₹ 148 as exempt but no expenditure against earning such income has been claimed. 5. Aggrieved by this order, the Revenue is in appeal before the Tribunal. 6. The Ld. DR vehemently ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll as submissions of appellant that the assessee has earned a meager sum of ₹ 148/- as exempt but no expenditure against it has been claimed by it which can be made subject matter of Section 14A of the Act. However, Assessing Officer has taken into consideration the investment by appellant during the year as well as the preceding year and by applying the provisions of Section 14A of the Act r.w. Rule 8D, mechanically worked out the disallowance at ₹ 2,12,03,476/-. During the appellate proceedings, for not disallowing any expenditure, appellant has relied on many decisions of different Courts. In such situation, when the facts of the case are to be interpreted in the light of decisions of various Courts, firstly we have to go thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble Supreme Court (Supra) CBDT, Circular No. 5/2014 , dated 11.02.2014, along with the other decisions, has affirmed the findings of its earlier decision in the case of Cheminvest Vs. CIT 378 ITR 33 and held that no disallowance u/s. 14A of the Act is called for in the year in which the assessee has not earned income which was exempt. It is further held by Hon'ble Court that the CBDT Circular dated 11.02.2014 cannot override the express provisions of Section 14A r.w. Rule 8D of the IT Act. There are several other decisions of different Courts and Tribunals, as mentioned by appellant in its submissions, wherein it has been held that if there is no exempt income claimed by assessee, no disallowance of any expenditure can be made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Jurisdictional High Court in different cases, as mentioned above. Hence, the action of AO is not justified and sustainable. In view of this discussion, the disallowance of ₹ 2,12,03,476/- made by AO is hereby deleted and grounds taken by appellant are allowed. 9. The Revenue could not contradict the finding that the assessee has only earned exempt income to the tune of ₹ 148/-. The Revenue has also not rebutted the finding that no expenditure was incurred in earning for the dividend income. It is also contended that the Assessing Officer has not demonstrated the nexus between expenses incurred with the earning of the exempt income. The Hon'ble Supreme Court in the case of Godrej and Boyce Manufacturing Company Ltd. v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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