2019 (5) TMI 318

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.... that the assessee has neither earned nor claimed any exempt income, the disallowance of Rs. 3,94,955/- u/s. 14A of the Income-tax Act, 1961 (hereinafter referred to as the "Act") read with Rule 8D of the Income-tax Rules, 1962 (hereinafter referred to as the "Rules") made by AO and confirmed by Ld. CIT(A) is erroneous. 3. The only question that has been poised before us is as to whether any disallowance u/s. 14A read with Rule 8D can be made by the AO/Ld. CIT(A) when the assessee has not earned any exempt income. According to assessee, the assessee had not earned any dividend income. However, the AO taking note that assessee has invested in unquoted equity shares and taking note of Circular no. 5 of 2014 issued by the CBDT, the AO was of ....

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....made irrespective of earning or not of any exempt income, I note that this contention of the Revenue is no longer res integra and has been dealt with by the Hon'ble Punjab & Haryana High Court in the case of Pr. CIT-1, Chandigarh Vs. Vardhman Chemtech (P) Ltd. (2019) 102 taxmann.com 132 (P&H), wherein their Lordships held as under: "10. We now advert to the judicial decisions relied upon by the learned counsel for the assessee. In Ratan Melting & Wire Industries' case (supra), it was held 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 cons....