TaxTMI 
TaxTMI 
2018 (5) TMI 509
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Assessing Officer(AO) U/S 14A r.w.r.8D of income tax act. In this case, the assessee filed return of income declaring total income of Rs. 19,27,290/-. The case was selected for scrutiny and during the assessment proceedings, the AO found that the assessee made investment of Rs. 8,02,00,000/- in M/s Vasantha Industries Ltd. (formerly known as M/s Vasantha Spinners Ltd.,). The AO also found that the assessee has taken secured loan from Kotak Mahindra Bank to the extent of Rs. 18,67,59,851/- and claimed expenditure of Rs. 1,06,35,394/- as interest on bank loan. The AO further noted that the assessee has not disallowed any expenditure relatable to the investments made as required u/s 14A of I.T.Act. The AO called for the explanation from the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rgued that though during the year under consideration, the assessee has not received any income which does not form part of total income, but the assessee made the investments which yields exempt income i.e. dividend and long term capital gains. Hence, argued that the AO has rightly made the disallowance which required to be upheld. Per contra, the Ld.AR relied on the decision of ITAT Hyderabad Bench in ITA No.343/Hyd/2017 in assessee's own case for the assessment year 2012-13 and argued that Hon'ble ITAT Hyderabad Bench has allowed the appeal of the assessee following the decision of Redington (India) Ltd vs ACIT reported in (2017)77 taxmann257 (Mad), since the facts are identical, the assessee's case is squarely covered by the decision of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd that the provisions of section 14A are applicable to expenditure which has been incurred for earning of exempt income irrespective of whether the investment is for business or non business purposes. Business income of certain business entities such as 10% EOU's or industries set up in free trade zones etc., are fully exempt from tax and any expenditure incurred for earning of such income is to be disallowed u/s 14 incurred for earning of exempt income irrespective of whether the investment is for business or non business purposes. Business income of certain business entities such as 10% EOU's or industries set up in free trade zones etc., are fully exempt from tax and any expenditure incurred for earning of such income is to be d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent in the case of CIT v. Walfort Share & Stock Brokers (P.) Ltd. [2010] 326 ITR 1/192 Taxman 211 has observed that section 14A desires to curb the practice to claim deduction of expenses incurred in relation to exempt income against taxable income and at the same time avail of the tax incentive by way of an exemption of exempt income without making any apportionment of expenses incurred in relation to exempt income. The provision thus is clearly relatable to the earning of actual income and not notional or anticipated income. The computation of total income in terms of section 5 is on real income and there is no sanction in law for the assessment of admittedly notional income, particularly in the context of effecting a di....