2019 (2) TMI 1054

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....961 (for short 'the Act'). 2. Since the identical issue is involved in all these appeals, they are taken up together and disposed off by this common order for the sake of convenience. 3. The only identical issue to be decided in all these appeals is as to whether the disallowance u/s 14A of the Act could validly be made in respect of investments made by the assessee in its subsidiary / group companies. 4. None appeared on behalf of the assessee and no adjournment petition was even preferred by the assessee. On last occasion, the notice was sought to be served through the department and the Revenue had placed evidence on record that notice of hearing of all these appeals were served on the assessee by affixture by the Inspector of I....

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.... those shares of the investee company was not to earn dividend. We have two scenarios in these sets of appeals. In one group of cases the main purpose for investing in shares was to gain control over the investee company. Other cases are those where the shares of investee company were held by the assessees as stock-in-trade (i.e. as a business activity) and not as investment to earn dividends. In this context, it is to be examined as to whether the expenditure was incurred, in respective scenarios, in relation to the dividend income or not. 34) Having clarified the aforesaid position, the first and foremost issue that falls for consideration is as to whether the dominant purpose test, which is pressed into service by the assessees ....

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....e the ambit of the applicability of section 14A.. xxx xxxxxx The theory of apportionment of expenditure between taxable and non-taxable has, in principle, been now widened under section 14 A." 35) The Delhi High Court, therefore, correctly observed that prior to introduction of Section 14A of the Act, the law was that when an assessee had a composite and indivisible business which had elements of both taxable and non-taxable income, the entire expenditure in respect of said business was deductible and, in such a case, the principle of apportionment of the expenditure relating to the non-taxable income did not apply. The principle of apportionment was made available only where the business was divisible. It is to find a cur....