TaxTMI 
TaxTMI 
TaxTMI 
2015 (1) TMI 1107
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....e with permission. 2. Facts of the case in brief are that the Return of Income declaring a total income of Rs. NIL and a book profit u/s. 115JB of Rs. 1,11,215/- was filed by the assesee on 30.9.2009. The return was processed u/s. 143(1) of I.T. Act, 1961. The case was selected for compulsory scrutiny under CASS norms. Notice u/s. 143(2) was issued on 11.8.2009, which was duly served upon the assessee. Subsequently, notice u/s. 142(1) of the I.T. Act, 1961 alongwith questionnaire was issued to the assessee on 21.7.2010 which was duly served upon the assessee. In response to these notices, the required details were filed. During the year under consideration, the assessee company was engaged in the business of manufacture and exports of embroidered fabrics and financer. Copy of profit and loss account, balance sheet and suit report u/s. 44AB of the I.T. Act, 1961 was furnished by the assessee during the course of assessment proceedings. Thereafter, the AO completed the assessment vide its order dated 21.12.2010 and made the various additions. 3. Against the above assessment order dated 21.12.2010, the assessee appealed before the Ld. CIT, who vide impugned order dated 21.5.2013 has....
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.... claimed that there have been no movement in the investment portfolio and therefore, no administrative expense could be attributed for managing the portfolio. The AO did not find the reply of the assessee as acceptable and applied the provisions of Section 14A r.w.r. 8D and made a disallowance of Rs. 9,37,902/-. We find that Ld. CIT(A) after considering the submissions of the assessee observed that the Hon'ble Bombay High Court in the case of M/s Godrej & Boyce Manufacturing Co. Ltd. Vs DCIT reported at 328 ITR 8 after dwelling on the above issue in great details and considering decisions of various Courts and Tribunals on the matter including that ITAT, Mumbai (Special Bench) in the case of ITO vs. Daga Capital Management Pvt. Ltd. (2009) 117 ITD 169. The Hon'ble High Court has also upheld the validity of Rule 8D w.e.f. AY 2008-09. We find that Ld. CIT(A) after considering the above, confirmed the addition of Rs. 9,37,902/- made by the AO. 8. We find that their lordships of the Hon'ble Jurisdictional High Court in the case of CIT Vs Holcim India (P) Ltd. in ITA Nos. 486 & 299/2014 vide order dated 05.09.2014 dismissed the appeal of the revenue and observed in para 14 as under: "....
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....India (P.) Ltd. order dated 05.09.2014 are of the considered view that no disallowance u/s 14A of the Act can be made if there is no income earned. In that view of the matter we delete the disallowance made by the AO and confirmed by the ld. CIT(A). Therefore, this ground of appeal is allowed in favor of the assessee and against the Revenue. 10. As regards issue involved in ground no. 2 and 3 regarding addition of Rs. 6,66,012/- and the disallowance of 20% out of various expenses amounting to Rs. 34,51,270/-. After hearing both the parties and perusing the records available with us especially the written statement filed by the assessee as well as the order of the revenue authority, we are of the view that assesee filed its return of income on 30.9.2008 and the AO issued the show cause notice as per the order dated 16.12.2010 requiring the assessee to file the reply on 21.12.2010. The requirement of the assessee has been reproduced by the AO in paras 4 of his order is reproduced below for the sake of convenience. "4. In this case a show cause was issued as per order sheet dated 16.12.2010 and required to file reply on 21.12.2010. The show cause reproduced as under:- a) Why disall....
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....ng the investment 'portfolio. Hence, the applicability of the provisions of Section 14A of IT Act is completely denied. 5.3 You were pleased to give a copy of the AIR extracts relevant to the company. Our staff has been able to co-relate the same with the bills raised by the company in respect of the said parties. Some of the bills relate to the Financial Year preceding to the relevant previous year. A chart giving details and corresponding bills are enclosed. In case of Holiday Exports, it may be submitted that - the company has not had any transaction with the party during the year under assessment. On enquiry, the personnel of Holiday Exports have informed that perhaps by mistake the PAN No. of our company was mentioned in the quarterly returns electronically uploaded/filed by the said party. A copy of the e-mail from the party is enclosed. A formal letter if required can also be filed. You have already cross verified other entries appearing in the AIR with the relevant records/details of the company, such as Cash Book etc.. 5.4 You had also required the company to explain the difference in accounts between the following parties and their accounts in our books of accounts.....