2019 (6) TMI 1674

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.... are that, the Assessing Officer while completing the assessment made disallowance u/s. 14A r.w. Rule 8D at Rs. 1,45,59,762/-, being interest under Rule 8D(2)(ii) of Rs. 1,36,54,550/- and expenses under Rule 8D(2)(iii) of Rs. 9,05,212/-. The Ld.CIT(A) deleted the disallowance on the ground that assessee has not earned any exempt income and therefore no disallowance is warranted. Against this order the Revenue is in appeal before us. 3. None appeared on behalf of assessee. Since the issue is decided by various courts in favour of the assessee the same is being disposed off on hearing the Ld.DR. 4. Ld. DR vehemently supported the orders of the authorities below. 5. Heard Ld. DR, perused the orders of the authorities below. On a perusal of ....

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....se of the assessee for the present assessment year in the absence of receipt of any tax exempt income from the investments made by it. In view of the same, the A.O. is directed to delete the disallowance of Rs.1,45,59,7627- made u/s 14A of the Act in computation of total income as per the normal provisions of the Act and the book profit as per section 115JB of the Act. This ground of appeal is accordingly allowed." 6. It is an undisputed fact that during this Assessment Year assessee did not receive any exempt income. When no exempt income is received by the assessee, whether there can be any disallowance u/s. 14A has been considered by the Coordinate Benches of this Tribunal and it has been consistently holding that if there is no exempt ....

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....e have also carefully perused that very decision of the Tribunal namely Cheminvest Ltd. (supra) was reversed by the Hon'ble Delhi High Court, copy placed in the compilation. The Hon'ble Delhi High Court in ITA No.749/2014 vide order dated 02-09-2015 titled as "Cheminvest Ltd. Vs CIT" has decided the substantial question of law that whether disallowance u/s 14A of the Act can be made in a year in which no exempt income has been earned or received by the assessee. The Final verdict was as under: -  "23. In the context of the facts enumerated hereinbefore the Court answers the question framed by holding that the expression 'does not form part of the total income' in Section 14A of the envisages that there should be an actual receipt of ....

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....ich holds that the expression "does not form part of the total income" in Section 14A of the Income Tax Act, 1961 envisages that there should be an actual receipt of the income, which is not includible in the total income, during the relevant previous year for the purpose of disallowing any expenditure incurred in relation to the said income. The Income Tax Appellate Tribunal held that the provisions of Section 14A of the Income Tax Act, 1961 would not apply to the facts of this case as no exempt income was received or receivable during the relevant previous year. It is not the case of the Assessing Officer that any actual income was received by the assessee and the same was includible in the total income. In the facts of the case, the Auth....