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TMI Blog2024 (1) TMI 1000X X X X Extracts X X X X X X X X Extracts X X X X ..... 3-14, 2016-17, and 2017-18. 2. Brief facts of the case are that the assessee is engaged in the business of property development and filed its return of income for the assessment years under appeal. The first ground raised by the assessee for consideration is whether the income earned out of sale of property has to be treated as business income or capital gains. During the course of assessment proceedings, the Assessing Officer asked the assessee to explain the nature of lands sold and the reason as to why it should not be taxed under the head 'Business'. The assessee explained that these lands were purchased long back in 1994-95 and till now they are held only as investments, and that only recently, the assessee has decided to use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el for the assessee has submitted that the land was purchased way back in 1994-95. Up to the assessment year 2008-09, the lands were held as investment and not as stock in trade. Therefore, the income arising out of sale of property has to be treated as income from capital gains and not as a business income. 4. On the other hand, the ld. DR has submitted that the assessee has not filed any details as to when the asset was converted into stock-in-trade. Therefore, the Assessing Officer has treated income as business income. 5. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. The case of the assessee is that the assessee was holding the asset for long period and theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 14A of the Act. The assessee has admitted to have earned dividend income of Rs..1,01,938/- and Rs..29,16,801/- in the assessment years 2012-13 and 2013-14 respectively. However, the Assessing Officer determined the disallowance under section 14A of the Act at Rs..58,02,576/- and Rs..49,07,221/- for the assessment years 2012-13 and 2013-14 respectively. On appeal, the ld. CIT(A) upheld the disallowance made under section 14A of the Act. 6.1 We have heard the rival contentions, perused the materials available on record and gone through the orders of authorities below. The exempt income earned during the assessment years 2012-13 and 2013- 14 amounts to Rs..1,01,938/- and Rs..29,16,801/- respectively. However, by applying the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, what has been provided as computation method in rule 8D cannot go beyond the roof limit of section 14A itself under any circumstances. Held, that the Tribunal was right in restricting the disallowance under section 14A of the Act to the extent of exempt income earned during the previous year relevant to the assessment year 2015-16." 6.2 By referring to various case law including the decision in the case of Joint Investments Private Ltd. v. CIT [2015] 372 ITR 694 (Delhi), the decision in the case of Maxopp Investment Ltd. v. CIT [2018] 402 ITR 640 (SC), the Hon'ble Madras High Court has held that the disallowance under section 14A of the Act should be restricted to the extent of exempt income earned during the previous year. Respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y exempt income in the relevant assessment year under appeal against the investments. In this circumstances, in the case of CIT v. Chettinad Logistics (P) Ltd. [2017] 80 taxmann.com 221 (Madras), the Hon'ble Jurisdictional High Court has observed and held that when there was no dividend income earned in the relevant assessment year, the disallowance made by the Assessing Officer in view of the provisions of section 14A of the Act read with Rule 8D was completely contrary to the provisions of that section as Rule 8D only provides for a method to determine the amount of expenditure incurred in relation to income, which does not form part of total income of the assessee. Against the decision of the Hon'ble High Court, the Department preferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t issue is whether the fees paid to Registrar of Companies for enhancing the working capital of the company should be treated as revenue expenditure or capital expenditure. We have perused the order of the Hon'ble Supreme Court in the case of Punjab State Industrial Development Corporation Limited v. CIT (supra), wherein, the Hon'ble Supreme Court has held that "the fee paid to the Registrar for expansion of the capital base of the company was directly related to capital expenditure incurred by the company and although incidentally that would certainly help in the business of the company and may also help in profit making, it still retains the character of capital expenditure since the expenditure was directly related to the expansion of ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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