2021 (2) TMI 340

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....No.2721/Chny/2018 for the assessment year 2014-15. 2. The assessee has raised the following substantial question of law for consideration: "1.Whether the provisions of Section 14A of the Income tax Act, 1961 is applicable for maintaining tax free portfolio/investments in the absence of tax-free/divident income from such investments?" 3. Heard Mr.A.S.Sriraman, learned counsel appearing for the appellant/assessee. 4. The assessee is wholly owned Government of Tamilnadu undertaking engaged in the activities of building, developing and operating of the East Coast Road for 113.2 kms under Build, Operate and Transfer (BOT) basis. The assessee filed its return of income for the assessment year under consideration (AY 2014-15) admitting an in....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....d that in the absence of satisfaction being recorded by the Assessing Officer in the course of completion of assessment, Section 14A of the Act cannot be mechanically applied and consequently, the disallowance of notional expenses under Rule 8D is not justified. 7. We have heard Mr.M.Swaminathan, learned Senior Standing Counsel appearing on behalf of the respondent/Revenue on the above submission. 8. We need not labour much to decide the substantial question of law framed, as identical issue was considered in the case of Commissioner of Income Tax, Chennai vs M/s.Celebrity Fashion Ltd. in T.C.A.No.26 of 2018 dated 21.09.2020. In the said appeal, which was filed by the Revenue, identical question of law was framed for consideration and the....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....4. 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 Bench, therefore, discussed the impact of Rule 8D of the Rules. 15. However, it is, our view, as indicated above, independent of the reasoning given in Redington (India) Ltd. case (supra) that Rule 8D cannot be read in a manner, which takes it beyond the scope and content of the main provision, which is, Section 14 A of the Act. 15.1 Therefore, as adverted to a....