TaxTMI 
TaxTMI 
TaxTMI 
2021 (1) TMI 28
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.... business of manufacturing, trading and job work of men's suits, jackets and trousers and trading of shirts. For the assessment year 2012-13 they have filed their return of income on 24/9/2012 declaring a nil income after setting of losses brought forward to the tune of Rs. 88, 36, 327/-from the earlier years but computed the book profits under section 115 JB of the Act at Rs. 72, 42, 919/-and pay taxes of Rs. 13, 80, 138/-under section 115 JB of the Act. During the course of assessment proceedings, learned Assessing Officer found that the assessee company had invested in shares for the purpose of long term capital gains and therefore invoking the provisions under 14A of the Act read with Rule 8D of the Rules made an addition of Rs. 8, 44, 0 22/-. Further on a perusal of the details of creditors, the learned Assessing Officer found that the assessee has been showing static creditors in the name of 4 parties since 2008, but in view of the fact that more than 5 years elapsed, learned Assessing Officer opined that the same is a fictitious liability and added a sum of Rs. 6, 77, 24, 250/-to the income of the assessee. 3. Aggrieved by such additions assessee preferred appeal before t....
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....of the decision of the Hon'ble Apex Court in the case of Rajendra Prasad Moody. Per contra, it is the submission of the Ld. AR that when once the Revenue does not dispute that the assessee did not earn any exempt income during the particular year, the provisions under section 14A of the Act read with Rule 8D of the Rules cannot be invoked in view of the decision of the Hon'ble jurisdictional High Court in the case of Cheminvest Ltd (supra) and other decisions. 5. In the assessment order itself, learned Assessing Officer recorded that the assessee has been pleading that no exempt dividend income was earned by the assessee during the year and therefore the provisions under section 14A of the Act read with Rule 8D of the Rules cannot be invoked. Reliance is based on the decision reported in CIT vs. Holcim India Pvt. Ltd. 90 CCH 81 (Del) (HC), wherein it was held that Section 14A cannot be invoked when no exempt income was earned. Further, Hon'ble Jurisdictional High Court in PCIT vs. IL & FS Energy Development Company Ltd. (2017) 99 CCH 0190 DelHC, (2017) 297 CTR 0452 (Del) decided on 16th August, 2017 9. Mr. Zoheb Hossain, learned Senior Standing Counsel for the Revenue, submitte....
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....26 ITR 1 (SC), the mandate of Section 14A of the Act is to curb the practice of claiming deduction of expenses incurred in relation to exempt income being taxable income and at the same time avail of the tax incentives by way of exemption of exempt income without making any apportionment of expenses incurred in relation to exempt income. Consequently, the Court is not persuaded that in view of the Circular of the CBDT dated 11th May 2014, the decision of this Court in Cheminvest Ltd. (supra) requires reconsideration. 20. In M/s. Redington (India) Ltd. v. The Additional Commissioner of Income Tax, Company Range - V, Chennai (order dated 23rd December, 2016 of the High Court of Madras in TCA No. 520 of 2016), a similar contention of the Revenue was negated. The Court there declined to apply the CBDT Circular by explaining that Section 14A is "clearly relatable to the earning of the actual income and not notional income or anticipated income." It was further explained that, "The computation of total income in terms of Rule 8D is by way of a determination involving direct as well as indirect attribution. Thus, accepting the submission of the Revenue would result in the imposition o....
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....penditure is made should fructify into any benefit by way of return in the shape of income. The plain natural construction of the language of s. 57(iii) irresistibly leads to the conclusion that to bring a case within the section, it is not necessary that any income should in fact have been earned as a result of the expenditure." 21. There is merit in the contention of Mr. Vohra that the decision of the Supreme Court in Rajendra Prasad Moody (supra) was rendered in the context of allowability of deduction under Section 57(iii) of the Act, where the expression used is "for the purpose of making or earning such income." Section 14A of the Act on the other hand contains the expression "in relation to income which does not form part of the total income." The decision in Rajendra Prasad Moody (supra) cannot be used in the reverse to contend that even if no income has been received, the expenditure incurred can be disallowed under Section 14A of the Act." 23. The decisions of the ITAT in ACIT v. Ratan Housing Development Ltd. (supra) and Relaxo Footwear Ltd. v. Addl. CIT (supra), to the extent that they are inconsistent with what has been held hereinbefore do not merit acceptance. ....
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....ted 19 for 2016 where the latest status of the impugned far and advances were declared with a specific reference to serial No. 26 (ii) where a sum of Rs. 7 89.14 Lacs was shown due to the pressing the creditors of the company which include advance payment against the order received from trust exports, right point Ltd and Thakral investment Holdings Pvt. Ltd. 9. Ld. CIT(A) also verified various documents relating to these entities and made an observation that if the loan amount was not received in the course of trading transactions, but was treated as unsecured loans and duly return of, it could not be brought to tax under section 41 as has been held by the Hon'ble jurisdictional High Court in the case of CIT vs. Velocient technologies Ltd (2015) 60 taxman.com 353 (Delhi) wherein it was held that the basic and primary requirement under section 41 (1) of the Act is that loan amount should have been received in the course of trading transactions or it had arisen out of ordinary transactions; that when the amounts in question were never retreated as a trading receipts but as unsecured loans, provisions of section 41 (1) of the Act would not apply. 10. Ld. CIT(A) further observed that....