2020 (11) TMI 709

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.... 'A' Bench ('the Tribunal' for brevity) for the assessment year 2014-15. 2. The appeal has been admitted on 03.6.2019 on the following substantial questions of law: "i. Whether, on the facts and in the circumstances of the case, the Tribunal was right in deleting the disallowance made under Section 14A read with Rule 8D on the ground that when there was no earning of exempt income during the assessment year, then the provisions of Section 14A cannot be invoked ? And ii. Whether the Tribunal was right in law in not considering the fact that even in the amendment to Rule 8D brought in Finance Act, 2016 with regard to the quantum of expenditure that could be disallowed under Rule 8D whereby the same has bee....

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....der, the assessee filed an appeal before the Commissioner of Income Tax Appeals-3, Chennai [for brevity, the CIT(A)] and it was allowed. The Revenue challenged the said order before the Tribunal by filing an appeal, which was dismissed by the impugned order. 6. It is not disputed by the Revenue that an identical substantial question of law was considered by this Court in the decision in the case of CIT Vs. Celebrity Fashion Ltd. [reported in (2020) 119 Taxmann.com 426], to which, one of us (TSSJ) was a party, wherein it was held that in terms of Section 14A of the Act, only expenditure, which was proved to be incurred in relation to earning of tax free income, could be disallowed and such provision could not be extended to disallow expen....

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.... Court in the case of Chettinad Logistics Pvt. Ltd., and such a contention was rejected by rendering the following findings : '13. Mr.Senthil Kumar, seeks to distinguish the judgment in Redington (India) Ltd. case (supra) based on the fact that Rule 8D had not kicked-in by AY 2007-08, which was the AY being considered in the said case. 14. According to us, this was not the argument, put forth, before the Division Bench. As a matter of fact, the Revenue relied heavily on Rule 8D. 14.1 Mr.Ravikumar, who appeared for the Revenue, in that matter and who is present in this Court, informs us that he had in fact argued that the Rule was clarifactory in nature and would apply retrospectively, and that, the Division Be....