2017 (2) TMI 1014

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....invoke provisions of Rule 8D read with Section 14A of Income Tax Act, 1961. 2. Disallowance of Rs. 82,53,393/- On the facts and circumstances of the case and in law, the Learned CIT (A) erred in confirming addition u/s 37 in respect of sundry balances written off. 3. The short facts of the case are as under. The assessee company has filed the return income on 28.09.2010 declaring total income of Rs.Nil/-. Assessee received exempt income being dividend income/share of profit of exempt u/s 10 (2A) of the I.T. Act. Assessee has made investments in shares / mutual funds. Assessee was asked to explain as to why disallowance should not be made u/s. 14A of the I.T. Act read with rule 8D of the Act. The assessee has contended that the assesse....

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.... Amount equal to one-half percent of the average of the value of investment, income from which does not or shall not form part of the total income as appearing in the Balance Sheet of the assessee on the first day and last of the previous year 11,29,49,590*0.5% Rs.564,747/-     Total Rs. 14,78,690/-   5. Matter carried out to CIT(A) and CIT(A) has dismissed the appeal of the assessee. 6. During the course of the hearing the Ld.A.R. Submitted that the issue in controversy is covered by the decision of the assessee's own case in A.Y. 2009-10 wherein the similar issue had come up before the tribunal and tribunal in assessee's own case in A.Y.2009-10 has allowed the claim of the assessee and deleted the addition. Th....

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....e has not earned any dividend from exempted income and when the tribunal has allowed the claim of the assessee in earlier orders in ITA No.7433/Mum/2012 wherein the tribunal has following the decision of Delhi High Court has allowed as under:- "We have carefully perused the orders of the authorities below. It is an admitted fact that during the year under consideration, the assessee has not earned any income which is exempt from tax. In a recent decision Hon'ble Delhi High Court in the case of Cheminvest Ltd. (IT Appeal No.749/2014 dated 02.09.2015 arising out of the order of the Delhi Benches of the Tribunal in ITA No. 87/Del/2008), it has held that no disallowance u/s. 14A can be made in a year in which no exempt income has been earned o....

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....ere given. Therefore AO has added the income of the assessee and CIT(A) has confirmed the same. 13. During the course of the hearing Ld.A.R submitted that the similar addition was made in A.Y.2009-10 and tribunal has restored this issue to the file of A.O. Therefore the Ld.A.R fairly considered that this issue may be restored to the file of A.O to verify that whether the said party is debitor or creditor. Therefore they have to be verified and if the amount has been write-off in the subsequent year same cannot be added in this year. Therefore this issue may be restored to the file of A.O. Ld.D.R fairly submitted that this issue may be restored to the file of A.O as per the decision of the tribunal. 14. We have heard the rival contentions ....