TMI Blog2021 (10) TMI 573X X X X Extracts X X X X X X X X Extracts X X X X ..... to earn exempt income. AO is therefore, required to record its satisfaction that it has not incurred any expenditure in order to earn exempt income. Assessee has claimed before the AO that it has not incurred any expenditure towards earning exempt income, which has been reproduced by the Assessing Officer in para 5 of its order - from scrutiny of the order passed by the Assessing Officer, it is evident that the Assessing Officer has not recorded satisfaction with regard to claim of the assessee that it has not incurred any expenditure in order to earn exempt income. Therefore, the condition precedent for invoking Rule 8D of the Rules as per Section 14A of the Act is not fulfilled. For the aforementioned reasons, the first substantial que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AVIND, ADV.) JUDGMENT ALOK ARADHE J., This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act for short) has been preferred by the assessee against the order dated 18.07.2012 passed by Income Tax Appellate Tribunal (hereinafter referred to as 'the tribunal' for short). The subject matter of the appeal pertains to the Assessment year 2008-09. The appeal was admitted by a bench of this Court on the following substantial questions of law: (i) Whether the tribunal was justified in law in not holding that the learned Assessing Officer has not recorded satisfaction as per provisions of Section 14A of the Act consequently the addition of ₹ 59,11,624/- under Section 14A is liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and additions were made on account of 50% of sales promotion expenses, disallowance under Section 14A read with Rule 8D of the Rules, disallowance of interest on advance for capital goods and ESI contributions under Section 36(1)(va) of the Act to the extent of ₹ 22,42,507/-, ₹ 59,11,624/-, ₹ 23,72,716/- and ₹ 32,71,855/- respectively. 3. The assessee filed an appeal before the Commissioner of Income Tax (Appeals) who by an order dated 30.11.2011 upheld the additions made by the Assessing Officer, except disallowance of interest on advance for capital goods. The assessee thereupon preferred an appeal before the tribunal. The tribunal by an order dated 18.07.2012 partly deleted the addition made with regard to sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RAL BANK LTD. VS. ACIT IN ITA NO.318/2016 DATED 19.01.2021, 'PCIT VS. STERLING DEVELOPERS P.LTD. IN ITA NO.685 OF 2015 DATED 04.02.2021 (KAR.), 'CIT S. QUEST GLOBAL ENGINEERING SERVICES PVT. LTD IN ITA NO.133 OF 2015 DATED 15.02.2021 (KAR.), 'CIT VS. ALLIANCE INFRASTRUTURE PROJECTS PVT. LTD', ITA NO.74/2015 DATED 21.06.2021 (KAR.), 'PRAGATHI KRISHNA GRAMIN BANK VS. JCIT', (2018) 95 TAXMANN.COM 41 (KAR.), 'PCIT VS. CARAF BUILDERS CONSTRUCTION (P.) LTD.', (2019) 112 TAXMANN.COM 322 (SC), 'CIT VS. MICROLABS LTD.', (2017) 79 TAXMANN.COM 368 (KAR.), 'CIT VS. RELIANCE UTILITIES POWER LTD.', (2009) 178 TAXMAN 135 (BOM.) and 'CIT VS. HDFC BANK LTD.', (2014) 49 TAXMANN.COM 355 (BOM.). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act. (3) The provisions of sub-section (2) shall also apply in relation to a case where an assessee claims that no expenditure has been incurred by him in relation to income which does not form part of the total income under this Act : Provided that nothing contained in this section shall empower the Assessing Officer either to reassess under section 147 or pass an order enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld income in the nature of profit from partnership firm which is exempt under Section 10(2A) of the Act. The Commissioner of Income Tax (Appeals) and the tribunal recorded a finding that even in a case where there is no tax free income actually received, disallowance under Section 14A of the Act has to be made. In the instant case, the assessee had not received any share or profit from the partnership firm during the year and in fact the partnership firm had incurred the loss of ₹ 11,97,926/- and no exempt income was earned by the assessee. In the absence of any exempt income during the year, there could not be any disallowance under Section 14A of the Act. [ SEE: STERLING DEVELOPERS (P) LTD. AND QUEST GLOBAL ENGINEERING SERVICES PV ..... X X X X Extracts X X X X X X X X Extracts X X X X
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