TaxTMI 
TaxTMI 
2016 (6) TMI 1082
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....er alia that :- "2. That the learned Commissioner of Income Tax (Appeal), erred in rejecting assessee's contention that the sections 14A r. w. rule 8D was not applicable to the appellant company, because the company neither borrowed any amounts nor earned any Dividend Income during the year by the assessee company, thereby confirming the addition of Rs. 1,72,92,279/-, made by the assessing officer u/s 14A of the Income Tax Act, resulting in reduction to returned Loss to that extent. 3. Without to the prejudice to appellant contention that rule 8D is not applicable, the learned Commissioner of Income Tax (Appeals) erred in holding that disallowance under Rule BD has been correctly worked out in accordance with the provisions of Rule 8D....
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.... before the Tribunal by way of filing the present appeal. 4. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. 5. Ld. AR for the assessee challenging the impugned order contended inter alia that since the assessee company is engaged in the business of trading in shares provisions contained u/s 14A are not applicable to the assessee company; that since the assessee has not earned any dividend income during the year under assessment to be exempted u/s 10 of the Act, provisions contained u/s 14A read with Rule 8D of the Rules are not applicable. 6. During the appellat....
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.... of exempt income." 7. Undisputedly, annual accounts, tax audit report and books of account furnished by the assessee company has not been disputed by the AO. It is also not in dispute that assessee has also claimed no expenditure incurred to earn the exempt dividend income during the year under consideration, but the AO worked out the disallowance u/s 14A Income-tax Act, 1961 (for short 'the Act') accordance with sub-rule (2) and (3) read with Rule 8D of the Rules to the following effects :- 8. Ld. CIT (A) affirmed the findings returned by the AO by making following observations :- "9.1. .......On examination of the facts of the case, it is observed that the appellant company has received dividend income during immediately prece....
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....should be made. Such analogy of the appellant from the cited case does not have much force since admittedly the appellant has incurred direct and indirect expenses in managing the investments which shall yield exempt dividend income......" 9. Now, the sole question arises for determination in this case is, "as to whether section 14A read with Rule 8D is applicable when the assessee company has neither borrowed any money to be invested in shares nor earned any exempt dividend income during the year under assessment?" 10. Bare perusal of the impugned order passed by the ld. CIT (A) shows that he has affirmed assessment order on three grounds - one : that the assessee company has received dividend income during the immediately preceding ass....