TaxTMI 
TaxTMI 
2016 (1) TMI 574
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....m the lead assessment year 2005- 06 as under:- "1. Whether on the facts and circumstances of the case and in law the CIT (A) was right in holding that presence of exempt income is necessary for disallowance of expenditure u/s 14A? 2. Whether on the facts and circumstances of the case and in law the CIT (A) was right in holding that investments were made out of the non-interest bearing funds and as no expenditure has been incurred for earning the exempt income without appreciating the fact that the assessee has not proved nexus between the owned interest fee funds and investment? 3. Whether on the facts and circumstances of the case and in law the CIT (A) was right in holding that the reopening of case is not in ac....
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....ions of section 14A of the IT Act could be invoked even in the absence of exempt income. After invoking the provisions of section 14A of the IT Act, the AO has worked out the disallowance as per the rule prescribed as under:- "4.7 In view of the above discussions, the proportionate interest expenditure attributable to income which does not form part of total income is disallowed u/s.14A. Hence, the proportionate interest expenses attributable to investment in exempt income u/s. 14A of the I. T. Act is computed as under: A) Total interest Rs. 1,12,14,87,815/- B) Total investment on First day of the year Rs. 39,41,87,000/- C) Average of total assets Rs. 31,60,61,38,802/- The amount to be d....
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....IT Vs. Delite Enterprises decided the matter in favour of the appellant. ...... 5.2 Similarly in the case of Ascent Tradecom P. Ltd., Mumbai VS ACIT in ITA Nos. 5779/Mum/2006 & ITA No.208/Mum/2009, it was held on identical facts as under:- .............. 5.3. Also in the case of Corrtech Energy Pvt. Ltd. vs. DCIT in ITA No.208/Ahd/2012 it has been held as under: -.... 5.4 Thus respectfully following the decision of jurisdictional High Court in the case of Delight Enterprises and the Hon'ble Punjab & Haryana High Court in the case of CIT Vs Winsome Textile Industries Ltd. (supra) it has been held that section 14A could have no application as the assessee has not claimed any exempt income in the year under considera....
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.... We have heard both the sides at some length and carefully perused the orders of the authorities below in the light of the precedence cited. As far as the exemption for the years under consideration were concerned, it was an admitted factual position that the AO has not mentioned any such amount. Meaning thereby, there was no exempt income earned by the assessee for the years under consideration. In reply to one of our questions, the learned AR, Mr. K. P. Dewani has also made a statement at Bar that no dividend was declared, hence, there was no earning of exempted dividend income. He has also clarified that for the purpose of invocation of the provisions of section 14A of the IT Act, the AO has applied the formula only in respect of disallo....
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....tuation when that very order of the Tribunal which was the basis for invocation of the provisions of Section 14A of the IT Act got reversed by the Hon'ble Delhi High Court, hence, the very said basis do not survive any more. As a result, we hereby confirm the findings of the learned CIT (A) on this issue. We hereby also hold that in view of the numbers of decisions on this issue in favour of the tax payers, we find no force in this ground of appeal of the Revenue. The same is dismissed. 8. Rest of the grounds of appeal are in respect to disallowance of proportionate interest income as well as reopening of the assessment u/s 147 of the IT Act. When, a view has already been taken by us that the additions in question do not survive, therefo....