TaxTMI 
TaxTMI 
2018 (10) TMI 1037
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....sion Bench, Chandigarh (hereinafter referred to as "the Tribunal") in ITA No. 488/Chd/2015, claiming the following substantial questions of law:- 1. Whether in the facts and circumstances of the case and in law, the Hon'ble ITAT was right in holding that the provisions of Section 14A as clarified by CBDT Circular No.5 of 2014, were not attracted as the assessee has not earned any exempt income during the year despite the fact that the assessee had invested a huge sum from which no income was shown while there was a considerable financial outgo on interest/financial charges on borrowed funds? 2. Whether in the facts and circumstances of the case and in law, the Hon'ble ITAT was right in relying on the decision in th....
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....ce made under Section 14A of the Act. 4. Learned counsel for the revenue has submitted that the Tribunal has erred in law while upholding the decision of the CIT(A) as it is clarified vide CBDT Circular dated 11.2.2014 that Section 14A of the Act provides for disallowance of expenditure even where taxpayer has not earned any exempt income. In support of her contention, learned counsel has relied upon the following judgments: I. Commissioner of Income Tax, West Bengal III, Calcutta v. Rajendra Prasad Moody, Calcutta, AIR 1979 SC 373; II. Maxopp Investment Ltd. v. Commissioner of Income Tax (2018) 402 ITR 640 (SC); III. Commissioner of Income Tax v. Walfort Share and Stock Brokers (2010) 326 ITR 1 (SC); and ....
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....espect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act. (2) The Assessing Officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act. (3) The provisions of sub-section (2) shall also apply in relation to a case where an assessee claims that no expenditure has been ....
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....he expenditure shall be deductible only if any income is made or earned. There is in fact nothing in the language of Sec. 57(iii) to suggest that the purpose for which expenditure is made should fructify into any benefit." 9. It was laid down in Maxopp Investment Ltd's case (supra) that the provisions of Section 14A of the Act can be applied to the case of a person who was a dealer in shares. It was concluded by the Apex Court in Walfort Share and Stock Brokers' case (supra) that the basic principle of taxation was to tax the net income, i.e. gross income minus the expenditure and on the same analogy the exemption was also in respect of net income and where the gross income would not form part of total income, its associated or r....
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....eld by the Supreme Court that 'circulars and instructions issued by the Board are no doubt binding in law on the authorities under the respective statutes, but when the Supreme Court or the High Court declares the law on the question arising for consideration, it would not be appropriate for the court to direct that the circular should be given effect to and not the view expressed in a decision of this court or the High Court. So far as the clarifications/circulars issued by the Central Government and of the State Government are concerned they represent merely their understanding of the statutory provisions. They are not binding upon the court. It is for the Court to declare what the particular provision of statute says and it is not fo....
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....relying upon the judgment of this Court in Commissioner of Income Tax v. Lakhani Marketing Inc. (2014) 111 DTR 149 (P&H) had held that Section 14A of the Act cannot be resorted to in the year in which no exempt income had been earned. However, the revenue relied upon the CBDT Circular dated 11.2.2014 to contend that Section 14A of the Act can be invoked even in the year in which no exempt income had been earned. Accordingly, the Tribunal had dismissed the appeal of the revenue holding that unless and until there is receipt of exempted income for the concerned assessment year, Section 14A of the Act is not attracted. 12. The Tribunal vide order dated 22.4.2016 regarding the ground of deletion of disallowance amounting to Rs. 40,28,526/- u....