2016 (8) TMI 1148

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.....Y. 2009-10 on 04.03.2010. Pursuant to search action in the assessee's case on 13.02.2010, a notice under section 153A of the Income Tax Act, 1961 (in short 'the Act') was issued to the assessee on 07.12.2011. In response thereto, the assessee requested that the return filed on 04.03.2010 declaring Nil income be treated as filed in response to the said notice issued under section 153A of the Act. The case was taken up for scrutiny and the assessment was completed under section 143(3) r.w.s. 153A of the Act vide order dated 28.03.2013, wherein the assessee's income was assessed at Nil under the normal provisions due to set off of brought forward losses and 'book profits' under section 115JB of the Act was computed at Rs. 7,85,57,540/....

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....td. (2015) 378 ITR 33 (Del) dated 02.09.2015 which has been followed by a Coordinate Bench of this Tribunal in the case of Fair Exports (India) Pvt. Ltd. in ITA No. 1880, 1881 & 899/Mum/2011 and others dated 17.05.2016. 3.2.2 The learned A.R. further submitted that disallowance under section 14A of the Act r.w. Rule 8D of the I.T. Rules also ought not to have been made by the authorities below since the entire investments in shares/ securities made by the assessee amounting to Rs. 52,15,95,000/- were made entirely in subsidiary companies as strategic investments to have control over those companies and not for investment purposes or with the intention of earning of dividend/tax exempt income. In support of this proposition, the learned A.R....

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....the provisions of section 14A of the Act envisages that there should be actual receipt of income not includible in the total income. Therefore, the provisions of section 14A of the Act will not apply when no exempt income is received or receivable by the assessee during the relevant previous year. This proposition has been upheld by the Hon'ble Delhi High Court in the case of Cheminvest Ltd. vs. CIT (2015) 278 ITR 33 (Del) vide order dated 02.09.2015 wherein at para 23 thereof their Lordships have held as under: - "23. In the context of the facts enumerated hereinbefore the court answers the question framed by holding that the expression "does not form part of the total income" in section 14A of the Act envisages that there should be ....

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....and for the year under consideration since the assessee has not earned any exempt income. We therefore set aside the decision of the authorities below and direct the AO to delete the disallowance of expenditure amounting to Rs. 74,31,010/- under section 14A of the Act. 3.5.1 Further the learned A.R. for the assessee has submitted that, even otherwise, the said disallowance under section 14A w.r. Rule 8D ought not to have been made as the entire investment in shares made by the assessee of Rs. 52,15,95,000/- was strategic investment in group companies for control over these companies and not for investment purpose with the intention of earning of tax exempt dividend income. On a perusal of the details on record, i.e. the impugned order of ....