TaxTMI 
TaxTMI 
2014 (12) TMI 966
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....t Rs. 6,21,615/- instead of Rs. 6,39,558/- without properly appreciating the fact that disallowance made u/s 14A donation and disallowance u/s 43B increased business income and hence whole of the carry forward loss was available for set off during the year. 2. ld. Assessing Officer erred in making disallowance under the provisions of Section 14A of Rs. 38,19,498/- which includes disallowance u/r 8D(2)(ii) of Rs. 33,09,986/- u/r 8D(2) (iii) of Rs. 5,09,512/-, without properly appreciating the fact that appellant did not have any income during the year which is being claimed exempt. 3. The ld. CIT(A) erred in confirming disallowance u/s 14A without appreciating the fact that investments held by the appellant are capable of earning taxab....
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.... of Rs. 38,20,860/-, therefore, the carry forward business losses to the extent of Rs. 6,39,538/- should have been set off instead of Rs. 6,21,615/-. Principally we agree with the contention of the assessee that the carry forward losses ought to have been set off to the extent of the available business income. When the Assessing Officer has made the addition of more than 38 lakhs then to that extent the carry forward business losses of the assessee should have been set off. However the said setting off carry forward business losses now depends on the finality of the addition made by Assessing Officer u/s 14A as well as other additions which the assessee has challenged in ground no. 2&3. Thus in view of the facts and circumstances of the cas....
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.... Before us, the Ld. Authorized Representative of the assessee has submitted that the assessee has not earned any dividend income in the A.Y. under consideration as no dividend was declared by the group companies in which the investment was made. Therefore, the provisions of section 14A are not applicable in the case of the assessee. In support of his contention he has relied upon the Judgment of Hon'ble Delhi High Court in the case of CIT Vs. Holcim India. P. Ltd. (ITA NO. 485/2014 & 299/2014, and submitted that the Hon'ble High Court after considering the various decisions such as the decision of Punjab & Haryana High Court, decision of Gujarat High Court as well as decision of Hon'ble Allhabad High Court on the point, held that when the a....
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....me is earned by the assessee on such investment. At the outset we note that the Hon'ble Delhi High Court in the case of CIT Vs. Holcim India. P. Ltd. (supra) has discussed this issue in para 14 and 15 as under:- "14. On the issue whether the respondent-assessee could have earned dividend income and even if no dividend income was earned, yet Section 14A can be invoked and disallowance of expenditure can be made, there are three decisions of the different High Courts directly on the issue and against the appellant-Revenue. No contrary decision of a High Court has been shown to us. The Punjab and Haryana High Court in Commissioner of Income Tax, Faridabad Vs. M/s. Lakhani Marketing Incl., ITA No. 970/2008, decided on 02.04.2014, made re....
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....owance of Rs. 2,03,752/- made by the Assessing Officer was in order", 15. Income exempt under Section 1 0 in a particular assessment year, may not have been exempt earlier and can become taxable in future years. Further, whether income earned in a subsequent year would or into in the subsequent assessment year. For example, long term capital would not be taxable, may depend upon the nature of transaction entered gain on sale of shares is presently not taxable where security transaction tax has been paid, but a private sale of shares in an off market transaction attracts capital gains tax. It is an undisputed position that respondent assessee is an investment company and had invested by purchasing a substantial number of shares and thereb....