2020 (11) TMI 863

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....ax Act, 1961 read with Rule 8D of the Income Tax Rules, 1962. 2. The assessee in the present case is a cooperative bank which filed its return of income for the year under consideration on 30.09.2011 declaring a total income of Rs. 15,04,30,463/-. As noticed by the Assessing Officer during the assessment proceedings, the assessee bank had purchased mutual funds worth Rs. 310.22 crores during the year under consideration, but no disallowance on account of expenses incurred in relation to the said investments was offered by the assessee bank as required by the provisions of section 14A of the Act. In this regard, it was explained on behalf of the assessee bank that no exemption on account of any income was claimed by it in the return of in....

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....declaring total income of Rs. 15,04,30,463/-. The AO was having information that appellant has purchased mutual fund to tune of Rs. 310,21,92,701/-. The AO verified the investment and found that the investments were disposed off during the year under consideration. The AO also observed that the appellant has not declared any exempt income from this mutual fund and no disallowance has been made u/s. 14A for expenditure incurred. The AO relied on CBDT circular No. 5 of 2014 and invoked Rule 8D even where there is no exempt income. The AO relied on the decision of the Bombay High Court in case of Godrej & Boyce Vs. DCIT reported in 328 ITR 81 (Bom) and computed disallowance of Rs. 16,85,75,866/-. 5.4 During the appellate proceedings t....

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....ncome or even capital gain has been shown by the appellant. It has not been brought on record that there is investments which are capable of yielding exempt income and appellant is holding such investments. Under these circumstances, on facts disallowance u/s. 14A were not required. 5.6 The Bombay High Court in case of M/s Delite Enterprises(supra) has held that the question of disallowance of interest u/s. 14A would not arise as there is no profit for the relevant assessment year. The Delhi High Court in case of Cheminvest Ltd.(supra) has held that: Section 14A will not apply if no exempt income is received or receivable during relevant previous year. The appellant has not earned any exempt income, therefore, the case law relied u....