TaxTMI 
TaxTMI 
2022 (8) TMI 904
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....concerning AY 2015-16. 2. As per its grounds of appeal, the Revenue has challenged the action of the CIT(A) in reversing the disallowances made by the Assessing Officer under Section 14A amounting to Rs. 1,65,16,139/-. 3. The CIT(A) has dealt with the issue hereunder: "6 I have carefully considered the AO's viewpoint contained in the Assessment Order and the submission made by the appellant including relevant judicial decisions in the matter. The appellant, during the year under consideration has made investment amounting to Rs. 5,02,00,95,000/- in the optionally convertible preference shares of M/s. Hindustan Clean Energy Ltd. but has not received any exempt income from such investment. The AO's view is that ....
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....L & FS Energy Development Company Ltd. [2017] 84 taxmann.com 186 (Delhi), the Hon'ble High Court of Delhi has held that if there is no exempt income earned in the assessment year in question, question of disallowance of the expenditure incurred to earn exempt income in terms of Section 14A read with Rule 8D would not arise. It has further been held that the words "in relation to income which does not form part of the total income under the Act for such previous year" in the Rule 8D(1) indicate a correlation between the exempt income earned in the AY and the expenditure incurred to earn it. In other words, the expenditure as claimed by the Assessee has to be in relation to the income earned in 'in such previous year'. 6.3 In th....
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....t in view of the Circular of the CBDT dated 11th May 2014, the decision of this Court in Cheminvest Ltd. (supra) requires reconsideration." Also the Hon'ble jurisdictional High Court in Joint Investment Pvt. Ltd. vs. CIT (2015) 372 ITR 694 (Del.) has held that disallowance u/s. 14A cannot exceed the exempt income. Further, recently SLP filed against the order of High Court in the case of CIT vs. Chettinad Logistics (P) Ltd. [2017] 80 taxmann.com 221/248 Taxman 55 (Mad.) in which it was held that where no exempt income was earned in relevant assessment year by assessee, section 14A could not be invoked, was dismissed by Hon'ble Supreme Court in favor of assessee in its decision dated 02.07.2018 [95 taxmann.com 250(SC)]. 6.4 In vi....
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....ine and Chemicals Ltd. (2016) 66 taxmann.com 356 (Guj). The aforesaid judicial fiat was reiterated by the Hon'ble Delhi High Court in the case of Joint Investments Pvt. Ltd. vs. CIT reported in 372 ITR 692 (Delhi) wherein Hon'ble Delhi High Court has categorically ruled that disallowance under S. 14A of the Act cannot exceed the amount of tax exempt income. Notably, the SLP filed against the decision of Hon'ble Madras High Court in Chettinad Logistics (supra) has been dismissed by Hon'ble Supreme Court in CIT vs. Chettinad Logistics (P.) Ltd. (2018) 95 taxmann.com 250 (SC). Hence, in conformity with the judicial precedents, we find substantial merit in the conclusion drawn by the CIT(A) which essentially holds that Section 1....