2020 (10) TMI 607

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....Tax Act, 1961 (the Act) r.w. Rule 8D of the Income Tax Rules 1962 (the Rules ) with regard to the normal computation of income as well as the computation of book profit u/s 115JB of the Act. 2. In AY 2008-09, the assessee filed before the AO its reply vide letter dated 02.11.2010 that no dividend has been received during the year under consideration and hence no disallowance u/s 14A r.w. Rule 8D be made. We refer here to para 5.3 of the assessment order dated 24.11.2010. However, the AO made a disallowance of Rs. 1,82,70,787/-. In AY 2009-10, the assessee filed before the AO a reply stating that no exempt income has been earned during the year under consideration and hence no disallowance u/s 14A r.w. Rule 8D be made. We refer here to par....

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....k profit u/s 115JB of the Act. For AY 2010-11, the Ld. CIT(A) deleted the disallowance of Rs. 1,49,77,348/- made by the AO under Rule 8D(2)(ii) by following the decision of the Hon'ble Bombay High Court in Reliance Utilities & Power Ltd. (supra). However, he confirmed the disallowance made by the AO of Rs. 8,84,193/- under Rule 8D(2)(iii). The Ld. CIT(A) deleted the addition made by the AO in the calculation of book profit u/s 115JB of the Act. For AY 2012-13, the Ld. CIT(A) confirmed the disallowance of Rs. 4,85,695/- made by the AO in the normal computation of income as well as computation of book profit u/s 115JB of the Act. 4. Before us, the Ld. DR submits that even though, no exempt income is earned, still then disallowance can be m....

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....deration. The Tribunal, therefore, followed the decision of Delhi High Court in case of CIT vs. Holcim India (Pvt.) Ltd. (2014) 272 CTR 282. In such decision, the Delhi High Court ruled that when there is no exempt income earned by the assessee, no disallowance under Section 14A of the Act can be made. It is pointed out to us that this Court in Principal CIT vs. M/s. Rivian International (P) Ltd., by order dated 21.11.2017, following the judgment of Delhi High Court in case of Holcim India (P) Ltd. (supra), has adopted the same principle making following observations :- "3. We have given careful consideration to the submissions. On facts, it appears from the impugned judgment that the assessee had made investment in shares of closely hel....

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....see also brought to our notice the fact that the Supreme Court in case of CIT vs. Chettinad Logistics (P) Ltd. has dismissed the Revenue's SLP against the judgment of the Delhi High Court in Holcim India (P) Ltd. (supra), taking a similar view." 5.1 Thus when there is no exempt income earned by the assessee, no disallowance under Section 14A of the Act can be made. Similar is the decision by the Hon'ble Bombay High Court in Pr. CIT v. M/s Ballarpur Industries Ltd. (ITA No. 51 of 2016) and the decision by the Hon'ble Punjab & Haryana High Court has held in CIT v. Winsome Textiles Industries Ltd. (2009) 319 ITR 204 (P&H). 6. The Special Bench of the Tribunal in the case of ACIT v. Vireet Investment (P.) Ltd. (2017) 82 taxmann.com 415 (....