TMI Blog2015 (12) TMI 1870X X X X Extracts X X X X X X X X Extracts X X X X ..... dend income - HELD THAT:- On going through the decision of the co-ordinate Bench of this Tribunal in the case of M.Baskaran [ 2015 (3) TMI 192 - ITAT CHENNAI] we find that the issue in appeal is squarely covered by the said decision wherein the Tribunal held that when the assessee has not earned dividend income, disallowance under section 14A is not warranted. - I .T.A.Nos.1523 & 1524/Mds/2015, I .T.A.Nos.1360/Mds/2015 - - - Dated:- 18-12-2015 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER Revenue by : Mr. P.Radhakrishnan, JCIT Assessee by : Mr. Saroj Kumar Parida, Advocate O R D E R Per Challa Nagendra Prasad, JM: These three appeals are filed by the Revenue and the assessee for the assessment years 2009-10 and 2011-12 against the orders of Commissioner of Income Tax (Appeals) -15, Chennai dated 30.03.2015 . The common issue in the appeals of the Revenue for the assessment year 2009-10 and 2011-12 is that the Commissioner of Income Tax (Appeals) erred in directing the Assessing Officer to delete the disallowance made under section 40A(7)(b) of the Act. 2. Both these appeals of the Revenue are time barr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITO Vs. Sak Soft Ltd. (121 TTJ 865) which decision has been followed by the Commissioner of Income Tax (Appeals), therefore he pleads for sustaining the order of the Commissioner of Income Tax (Appeals). 8. Departmental Representative supports the order of the Assessing Officer. 9. Heard both sides. Perused orders of lower authorities and the decision relied on. The Assessing Officer during the assessment proceedings excluded freight and clearing expenses and business development fee from export turnover while computing deduction under section 10B of the Act. On appeal, Commissioner of Income Tax (Appeals) following the Special Bench decision in the case of ITO Vs. Sak Soft Ltd. (313 ITR (AT) 353) directed the Assessing Officer to reduce the said amounts from the total turnover also for the purpose of computation of deduction under section 10A of the Act. We find no infirmity in the direction of the Commissioner of Income Tax (Appeals) as the same is inconformity with the decision of the Special Bench in the case of Sak Soft Ltd.(supra). Thus, this ground of appeal of the Revenue is dismissed. 10. The only ground in the appeal of the assessee is that Commissioner of Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. Hence, what Section 14A provides is that if there is any income which does not form part of the income under the Act, the expenditure which is incurred for earning the income is not an allowable deduction. For the year in question, the finding of fact is that the assessee had not earned any tax free income. Hence, in the absence of any tax free income, the corresponding expenditure could not be worked out for disallowance. The view of the CIT(A), which has been affirmed by the Tribunal, hence does not give rise to any substantial question of law. Hence, the deletion of the disallowance of Rs.2,03,752/- made by the Assessing Officer was in order. 8. The Gujarat High Court in the case of CIT Vs.Corrtech Energy Pvt.Ltd.(supra) held as under:- We have given our thoughtful consideration to the facts and the decision relied upon by the Id AR. The Hon'ble Punjab Haryana High Court in the case of CIT vs. Winsome Textile Industries Ltd. reported at (2009) 319 ITR 204(P H) has held that in the present case, admittedly, the assessee did not make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of CIT Vs. DeliteEnterprises(supra) held as under:- The Revenue is in appeal on the following questions:- Whether on the facts and in the circumstance of the case and in law the Hon 'bleTribunal was right in deleting the disallowance made by the Assessing Officer of interest paid by the Assessee Company on borrowed funds amounting to Rs.241.10 lakhs overlooking the fact that the borrowed funds were used by the Assessee Company to invest in the Capital of another Partnership Firm and since profits derived by the Assessee Company from a Partnership firm were exempt from tax u/s.10(2A) of the Incometax Act, the interest expense related to such tax free profits is to be disallowed u/s.14A of the Income Tax Act? (B) Whether on the facts and in the circumstance of the case and in law the Hon'ble Tribunal was right in holding that the Assessing Officer cannot consider notional interest on deposit received by the Assessee Company while arriving at the fair market value u/s.23(1) (a) of the Income-tax Act? 2. In so far as Question (A) is concerned, on facts we find that there is no profit for the relevant assessment year. Hence the question as framed would not aris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer has erred in invoking Section 14A of the Act, to disallow various interestpayments on capital account, security deposits and unsecured loans. This conclusion of ours finds support in the decision of Bombay Bench of the Tribunal in the case of Joint Commissioner of Income Tax v. Holland Equipment Co. B.V. reported in (2005) 3 SOT 810 (Mumbai) and the relevant portion of the order of the Bombay Bench of the Tribunal is reproduced below:- 'Regarding application of Section 14A of the Act, the contention of the learned Department Representative has to be rejected on the face of it inasmuch as the entire income of the assessee is taxable under the Act. Section 14A is applicable only when any part of the income is not to be included in the total income of the assesseeand the expenditure relating to that part of income is claimed by the assesseeas deduction. In such cases only, the expenditure relating to the exempted income can be disallowed and not otherwise. Since in the present casethe entire income is found to be taxable, no disallowance can be made under section 14A of the Act.' 10. Moreover, the AO has not established the nexus between invested funds and t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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