TMI Blog2018 (12) TMI 1932X X X X Extracts X X X X X X X X Extracts X X X X ..... amalgamating companies in FY 2008-09, therefore, we are inclined not to interfere with the order passed by the Ld. CIT(A) and for the reasons discussed above and the reasons given by the Ld. CIT(A) we concur and, therefore, we uphold the same and dismiss the Revenue s ground of appeal for AY 2012-13. Disallowance u/s. 14A of the Act read with Rule 8D - HELD THAT:- As brought to our notice that the assessee has not earned any dividend income which is exempt from tax, so according to Ld. AR, no disallowance could have been made applying sec. 14A read with Rule 8D of the Rules. We note that Hon ble High Court of Delhi in the case of CIT Vs. Cheminvest Ltd. [ 2015 (9) TMI 238 - DELHI HIGH COURT] has held after taking note that assessee company in that case also did not earn any dividend income. Thus as per law, the receipt of the income exempted from tax is necessary for any disallowance u/s 14A of the Act read with Rule 8D. If there is no exempted income received during the year, there can be no disallowance made applying section 14A of the Act read with Rule 8D. Hence, in the instant case of the assessee company, question of any disallowance does not arise, as it has not re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the AO has made the addition in the hands of the amalgamated company (assessee company) i.e. M/s. Mahaluxmi Marketing Pvt. Ltd. and that too in the AY 2012-13 for introduction of share investments of 14 different private limited companies which was already existing in their respective books from FY 2008-09 (AY 2009-10), which according to Ld. CIT(A) is neither justified nor legal. According to Ld. CIT(A), the share capital introduced in the FY 2008-09 of the 14 amalgamating companies to the assessee company in the AY 2012-13 cannot be made in the hands of the amalgamated company and has held as under: 6. I have considered findings of the AO in the assessment order and I have also considered written submission as well as different case laws on this issue brought on record by the AR. During the appellate proceedings the AR has argued and put main emphasis on following technical issues, though he has filed written submission and argued on merit also. The main technical objections raised by the AR are i) That, all the alleged investments being share capital and premium were raised in FY 2008-09. In such case can there any addition on investments in AY 2012-13. ii) Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses. The AR has also brought on record many other case laws on this issue which are discussed in the order of Jurisdictional Kolkata bench of ITAT in the case of ITO Ward 12(1), Kolkata vs M/s Standard Leather Pvt Ltd in ITA No.2620/Kol/2013 dt.07-09-2016. They are as under: In the case of Dy CIT vs Amod Petrochem (P) Ltd (2008) 23 (I) ITCL 145 (Guj-HC) : (2008) 217 CTR (Guj) 401, it was held that as per section 68, there should be cash credits in the previous year. The section provides for a deeming fiction of treating the sum found credited in the books of an assessee maintained for any previous year, being charged to income- tax as the income of the assessee of that previous year, provided (i) the assessee offers no explanation as to the nature and source of the credits, or (ii) the explanation offered by the assessee is not, in the opinion of the Assessing Officer, satisfactory. The crux of the issue, therefore is, there have to be credits of any sum in the books of an assessee maintained for any previous year, only then the sum so credited can be brought to tax as the income of the assessee of that previous year; in other words, first of all, there have to be cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the Hon'ble Supreme Court has decided the ratio in the case of Saraswati Industrial Syndicate Ltd (supra) that the amalgamated company is a new legal entity and a different assessee. Therefore, it could not be taxed for any remission/ cessation of liability of amalgamating companies in earlier years. But in this case the AO has made addition in the hands of the amalgamated company i.e. M/s Mahalaxmi Merketing Pvt Ltd and that too in assessment year 2012-13 for introduction of share investments in different 14 companies in financial year 2008-09 which is neither justified nor legal. In my view perhaps the AO could have reopened cases of 14 amalgamating companies of the year in which share investments were made and could find possibilities of making investigations, if any. But the AO has not done so. Rather he has made additions in the hands of amalgamated company which is not permissible in the eyes of law. Thus, keeping in view the ratio decided by the Apex Court in the case laws of Saraswati Industrial Syndicate Ltd. (supra) and in the case of CIT Vs. Hukumchand Mohanlal (supra). Respectfully following the ratio decided by the Apex Court in cases discussed above, asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under: ''Section 14A of the Income-tax Act 1961 - Expenditure incurred in relation to income not includible in total income (Applicability) - Assessment year 2004-05 - Whether section 14A envisages that there should be an actual receipt of income which is not includible in total income; hence, section 14A will not apply where no exempt income is received or receivable during relevant previous year - Held, yes [Para 23] [In favour of assessee](cited below) 23. In the context of the facts enumerated hereinbefore the Court answers the question framed by holding that the expression 'does not form part of the total Income in Section 14A of the envisages that there should be an actual receipt of income, which is not includible in the total income, during the relevant previous year for the purpose of disallowing any expenditure incurred in relation to the said income. In other words, Section 14A will not apply if no exempt income is received or receivable during the relevant previous year. Therefore, from the above judicial pronouncements it is clear that as per law, the receipt of the income exempted from tax is necessary for any disallowance u/s 14A of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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