2016 (11) TMI 710

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....74,497/- made by the AO u/s 14A of the IT Act, 1961. 2. The brief facts of the case are that the appellant is a NBFC engaged in asset financing and channel financing business with HDFC Bank. During the year under consideration, the appellant company had earned dividend income to the tune of Rs. 1,64,921/- and in its computation of income, it has disallowed expenses related to exempt income of Rs. 1,29,713/-. Considering the provision of section 14A of the Act, a show cause notice was issued by the AO to appellant as to why expenditure pertaining to earning of income which do not form part of the total income should not be disallowed u/s 14A read with Rule 8D. However, the AO not satisfied with the explanation of the appellant, completed ....

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....ities in which taxable and non taxable income is received but when no expenditure has been incurred in relation to the exempt income then principle of apportionment embedded in section 14A has no application. The object of section 14A is not allowing to reduce tax payable on the non exempt income by deducting the expenditure incurred to earn the exempt income. In the case under consideration , it is not the case of AO that the appellant has incurred any direct expenditure or any interest expenditure for earning the exempt income or keeping the investment in question. If there is expenditure directly or indirectly incurred in relation to exempt income, the same cannot be claimed against the income which is taxable. For attracting the provisi....

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....sideration. It may be mentioned that the ld. CIT(A) vide order dated 29.10.2014 and 14.11.2014 in the case of the appellant for the assessment year 2009-10 and 2011-12 in ITA No.471/11-12 and 485/13-14 deleted the addition made by the AO u/s 14A of the Act read with Rule 8D of the IT rules. I do not find any reason to differ with the findings of Ld. CIT(A) in this regard. 2.2 The ld AR submitted that the Hon'ble ITAT, Jaipur Bench vide order in appeal No. 122/JP/2015 dated 05.05.2016 in assessee's own case for A.Y. 2011-12 have allowed the relief to the appellant and since there is no change in the facts of the case, the same should be followed. 2.3 The relevant findings of the Coordinate Bench in decision referred supra is a....