2014 (9) TMI 1094

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....ilized for purchase of shares u/s. 14A of the Income tax Act, 1961 while computing the total income of the Assessee. 2. During hearing of this appeal, we have heard Shri J.P. Bairagra, ld. Counsel for the Assessee and Shri Asghar Zain V.P., ld. DR. The crux of the argument advanced on behalf of the Assessee is that since the Assessee company has not claimed any exempt income, therefore, there is no question of disallowance of expenditure for which reliance was placed upon the decisions in the case of M/s. Siva Industries and Holding Ltd. Vs. ACIT (Chennai Tribunal), CIT vs. Shivam Motors Pvt. Ltd. (ITA No.88 of 2014) and ITA No.1717/Mad/2013 order dated 31/07/2014 in the case of ACIT vs. Mr. M. Baskaran . 2.1 On the other hand the ld.....

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....me of the Assessee under the Act and if the answer is in the affirmative then the expenditure cannot be allowed irrespective of the fact that it was allowable under different provisions of the Act. Further, disallowance has to be of the entire amount of the expenditure so related and cannot be reduced by the receipt of interest which has no relation to such expenditure. However, Hon'ble Allahabad High Court in the case of M/s. Shivam Motors Pvt. Ltd. (2014-TIOL-754- HC-ALL-IT) vide order dated 6-05-2014 while deciding an identical question u/s. 14A vide para 10 held as under:- "10. As regards the second question, sec.14A of the Act provides that for the purposes of computing the total income under the Chapter, no deduction shall be....

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....xtile Industries lts. Reported at (2009) 319 ITR 204 (P&H) has held that in the present case, admittedly, the Assessee did not make any claim for exemption. In such a situation, sec.14. A could have no application. In this case also, the Assessee has not claimed any exempt income in this year. Therefore, respectfully following the judgement of Hon'ble Punjab & Haryana High Court in the case of CIT vs. Winsome Textiles Industries Ltd. (supra), we hereby allow this ground and direct the AO to delete the addition.........." 3.3 In another case Hon'ble Bombay High Court in CIT vs. Delite Enterprises (Tax Appeal No.110 of 2009 order dated 26 Feb. 2009), Hero Cycles Ltd. (320 ITR 518) and M/s. Lakhani Marketing Incl (ITA No.970 of 2008) dated ....