TaxTMI 
TaxTMI 
2017 (12) TMI 807
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.... Facts in brief of the case are that the assessee company made investment in shares of its own subsidiary M/s Lite Eat out Foods Private Limited, amounting to Rs. 9,69,67,027/- as on 31/03/2012. The assessee did not earn any dividend income during the year under consideration. According to the Ld. Assessing Officer, not earning any dividend income was not a bar for implementing the section 14A of the Income-tax Act, 1961 (in short 'the Act') read with Rule 8D of Income-tax Rules, 1962 (in short 'the Rules') in disallowing the expenses in relation to future tax free dividend income. The Ld. Assessing Officer relied upon the circular No. 5/2014 of the Central Board of Direct Taxes (CBDT), wherein it had been clarified that section 14A of the Act provides for disallowance of expenditure even in the situation, when the taxpayer has not earned any exempt income in any particular year. Accordingly, applying the Rule 8D of the Income-tax Rules, 1962, the Ld. Assessing Officer disallowed an amount of Rs. 1,33,31,898/- and added back to the total income of the assessee. 2.1 The Ld. CIT(A) following the decision of the Hon'ble Delhi High Court in the case of Holcim (India) Private Limited....
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....oncerning the amount of deduction inadmissible in terms of section 14A has been mentioned as Nil. The related party investments are also mentioned in the Schedules forming part of the accounts of the auditors' report. However the appellant company is not an investment company but is in the business of hospitality and therefore the interest expenditure of Rs. 3.03 crores that has been incurred during the year cannot be said to have been incurred for holding and maintaining investments. The decisions rendered by the Delhi High Court in Holcim India Pvt. Ltd and Cheminvest Ltd. were rendered in the context of holding companies who had invested in shares of subsidiary companies and therefore, it was held that the interest expenditure was incurred was for purposes of maintaining the investment and which may or may not give rise to tax free income. However, the present legal position established by the jurisdictional High Court in the case of Cheminvest Ltd. (61 taxmann.com 118) that has been relied upon by the Ld. AR is that no disallowance can be made if no exempt income has been earned during the year and this decision has followed an earlier decision in the case of Holcim India P....
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.... 8. Taking note of the hierarchical character of the judicial system in India, it is of paramount importance that the law declared by this Court should be certain, dear and consistent. It is commonly known that most decisions of the courts are of significance not merely because they constitute an adjudication on the rights of the parties and re-solve the dispute between them, but also because in doing so they embody a declaration of law operating as a binding principle in future cases. In this latter aspect lies their particular value in developing the jurisprudence of the law. 9. The doctrine of binding precedent has the merit of promoting a certainty and consistency in judicial decisions, and enables an organic development of the law, besides providing assurance to the individual as to the consequence of transactions forming part of his daily affairs. And, therefore, the need for a clear and consistent enunciation of legal principle in the decisions of a Court." 8. Further the Apex Court in the case of Collector of Central Excise v. Dunlop India Ltd. 154 ITR 172 has observed as under:- "We desire to add and as was said in Cassell and Co. Ltd. v.....
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....nder Art.215, every High Court shall be a court of record and shall have all the powers of such a court including the power to punish for contempt of itself. Under Art. 226, it has a plenary power to issue orders or writs for the enforcement of the fundamental rights and for any other purpose to any person or authority, including in appropriate cases any Government, within its territorial jurisdiction. Under Art. 227, it has jurisdiction over all courts and tribunals throughout the territories in relation to which it exercises jurisdiction. It would be anomalous to suggest that a tribunal over which the High Court has superintendence can ignore the law declared by that court and start proceedings in direct violation of it. If a tribunal can do so, all the subordinate courts can equally do so, for there is no specific provision, just like in the case of Supreme Court, making the law declared by the High Court binding on subordinate courts. It is implicit in the power of supervision conferred on a superior tribunal that all the tribunals subject to its supervision should conform to the law laid down by it. Such obedience would also be conducive to their smooth working: otherwise, the....