TaxTMI 
TaxTMI 
2016 (7) TMI 1130
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....siness considered by the appellant in the return of income. 2.1 That in the facts and circumstances of the case & in law, the Ld. CIT(A) grossly erred in not appreciating that the amount so surrendered would be part of the stock of the appellant's business, therefore it ought to be considered for computing income from business, and could not be taxed under residuary head income from other source. 2.2 That in the facts and circumstances of the case & in law, the Ld. CIT(A) ought to direct the Ld. AO to take into consideration the amount so surrendered as part of closing stock and allowed to carried forward to succeeding year as opening stock in view of the decision in the case of Mahendra Mills Ltd. vs P. B. Desai Appellate Assistant Commissioner, [1975] 99 ITR 135 (SC). 3. That on the facts and circumstances of the case & in law, the Ld. CIT (A) grossly erred in confirming the addition by the Ld. AO of Rs. 64,41,401/-(3,81,13,064/- - 3,16,71,663/-), when the amount of Rs. 3,81,13,064/- has been directed to be charged under the head other sources. 4. That on the facts and circumstances of the case & in law, the Ld. CIT (A) grossly erred in not appreciating that such an a....
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....de any disallowance under section 14A in respect of the investment eligible for earning exempt income. According to the Assessing Officer, Rule 8D of the Income Tax Rules was applicable over the facts of the assessee, and thus he disallowed amount of Rs. 69,02,691/- under section 14A of the Act read with Rule 8D of the Income Tax Rules. Aggrieved with the findings of the learned Assessing Officer, the assessee filed appeal before the learned Commissioner of Income-tax (Appeals), who in his impugned order accepted that trading results of the assessee, however upheld the addition of Rs. 64,41,401/- out of the total addition of Rs. 85,07,286/- made by the Assessing Officer to the trading results of the assessee. He also upheld the disallowance made by the Assessing Officer under section 14A read with Rule 8D of the Income Tax Rules. Aggrieved, the assessee is in appeal before the Tribunal raising the grounds reproduced above. 3. The ground no. 1 being general in nature, not required to adjudicate upon by us. 4. In grounds no. 2 to 2.2, the assessee has challenged the direction of the learned Commissioner of Income-tax (Appeals) to assess the surrendered undisclosed investment in....
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....be the same as loss under the head profit and gains of business will be eligible for adjustment against the 'income from other sources' as per the provisions of section 71 of the Act. The learned Commissioner of Income-tax (Appeals) has not mentioned as why the excess stock declared by the assessee should be assessed under the head income from other sources. In our opinion the excess stock was as a result of business activity of the assessee and there was nothing wrong in adding the same with the closing stock of the business and therefore the direction of the learned Commissioner of Income-tax (Appeals) in assessing the surrendered stock under the head income from other sources is not justified and accordingly, we direct to assess the same under the head profit and gains of business and give benefit to allow carry forward this stock as opening stock of the succeeding year. The grounds no. 2 to 2.2 of the appeal are accordingly allowed. 5. In grounds No. 3 and 4, the assessee has challenged confirmation of the addition of Rs. 64,41,401/- by the learned Commissioner of Income-tax (Appeals). 5.1 Before us, the learned Authorized Representative of the assessee submitted that the....
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....he sides and perused the material on record. In the present case it is an admitted fact that the assessee had not earned any dividend income during the year under consideration. Now this issue is no longer Res-Integra as held by the Hon'ble jurisdictional High Court in Holcim (P) Ltd (supra) and by Punjab and Haryana High Court in M/s Lakhani Marketing Incl (Supra). We take a look at section 14 A(1) of the Act which is reproduced as under below: "For the purposes of computing the total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act." From a bare perusal of the section it is clear that before making the disallowance the following conditions are to exist as noted by co-ordinate Bench in M/s Kee Pharma Ltd. ITA NO 5108/Del/2012: (i) There must be income taxable under the Act; (ii) The said income must not form part of the total income under the Act; (iii) There must be an expenditure incurred by the assessee; and (iv) The said expenditure must have a relation to the income which does not form part of the total income und....
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....of the CIT(A), nor the statement of the assessee before AO that assessee is not in receipt of any dividend income and hence according to us, the Assessing Officer has erred in invoking Section 14A of the Act, to disallow various interest payments on capital account, security deposits and unsecured loans. This conclusion of ours finds support in the decision of Bombay Bench of the Tribunal in the case of Joint Commissioner of Income Tax v. Holland Equipment Co. B. V. reported in (2005) 3 SOT 810 (Mumbai) and the relevant portion of the order of the Bombay Bench of the Tribunals reproduced below:- "Regarding application of Section 14A of the Act, the contention of the learned Department Representative has to be rejected on the face of it inasmuch as the entire income of the assessee is taxable under the Act. Section 14A is applicable only when any part of the income is not to be included in the total income of the assessee and the expenditure relating to that part of income is claimed by the assessee as deduction. In such cases only, the expenditure relating to the exempted income can be disallowed and not otherwise. Since in the present case, the entire income is found to b....
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....sessee had made investment in shares out of its own funds, the assessee had taken loans on which interest was paid and all the money available with the assessee was in common kitty, as held by this Court in CIT vs. Abhishek Industries Limited , (2006) 205 CTR (P&H) 304 : (2006) 286 10 ITA Nos.1150 & 1151/Del./2013 ITR 1 (P&H) and therefore, disallowance under section 14A was justified. 7. We do not find any merit in this submission. Judgment of this Court in Abhishek Industries (supra) was on the issue of allowability of interest paid on loans given to sister concerns, without interest. It was held that deduction for interest was permissible when loan was taken for business purpose and not for diverting the same to sister concern without having nexus with the business. Observations made therein have to be read in that context. In the present case, admittedly, the assessee did not make any claim for exemption. In such a situation, section 14A could have no application." Similarly, 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....