2020 (10) TMI 518

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....bject matter of the appeal pertains to the Assessment Year 2008-09. The appeal was admitted by a Bench of this Court to consider the following substantial question of law: "Whether the Tribunal was correct in deleting the disallowance, when the Board's Circular No.5/2014 dated 11.02.2014 clearly states that disallowance u/s 14A read with Rule 8D is to be made even where the tax payer in a particular year has not earned any exempted income?" 3. Facts giving rise to the filing of the appeal briefly stated are that the assessee was initially incorporated as Verigate Trading Private Limited. Subsequently, the assessee was taken over by UB Group of Mr.Vijay Mallya and was renamed as Kingfisher Radio Ltd. and thereafter, it was rename....

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.... preferred by the assessee inter alia on the ground that until and unless there is a receipt of exempted income from the concerned Assessment Years, provision of Section 14A of the Act cannot be invoked. In the aforesaid factual background, this appeal has been filed. 4. Learned counsel for revenue, while inviting the attention of this Court to the decision of the Supreme Court in the case of 'COMMISSIONER OF INCOME TAX, 5, MUMBAI VS. ESSAR TELEHOLDINGS LIMITED' (2018) 401 ITR 445 (SC) as well as Division Bench of this Court in the case of 'COMMISSIONER OF INCOME - TAX VS. SYNDICATE BANK' (2020) 115 TAXMANN.COM 287 (KAR), fairly submitted that sub-sections (2) and (3) were inserted in Section 14A by the Finance Act, 2006 and the aforesai....

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....k of Patiala cases that the AO, while passing the assessment order, had already restricted the disallowance to the amount which was claimed as exempt income by applying the formula contained in Rule 8D of the Rules and holding that section 14A of the Act would be applicable. In spite of this exercise of apportionment of expenditure carried out by the AO, CIT(A) disallowed the entire deduction of expenditure. That view of the CIT(A) was clearly untenable and rightly set aside by the ITAT. Therefore, on facts, the Punjab and Haryana High Court has arrived at a correct conclusion by affirming the view of the ITAT, though we are not subscribing to the theory of dominant intention applied by the High Court. It is to be kept in mind that in those....