TaxTMI 
TaxTMI 
2018 (8) TMI 2118
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....rd, the CIT (A) in para 4, 4.1 and 4.2 has noted the submissions of the assessee to the following effect : 4. The next issue in appeal relates to the disallowance made by the learned A. 0. by invoking the provisions of section 14A of the Act. The total disallowance made by the learned A.O. is Rs. 3,81,32,243/-. Initially, while filing the return of income, the appellant computed the aforesaid disallowance at Rs. 88,97,809/- and has revised the same to Rs. 1,06,18,0881- in the revised computation of income filed in course of assessment proceedings. It is relevant at this stage to point out that the appellant had made the following investments in shares of other companies or capital in partnership firms, income whereof is exempt from tax. Apart from the following there are no other investments made in tax exempt income. The relevant particulars are given as under: SI. No Name of the Company / Concern Investment as on 31st March 2009 Investment as on 31st March 2010 1 Shares of Sterling Urban Developments Private Limited 85,00,000 85,00,000 2 Shares in Sterling Gera Residence Private Limited 44,00,000 44,00,000 3 Shares in St....
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..../s.14A amounting to Rs.2,75,14,155/- : It has been held by the Hon'ble ITAT Bangalore in appellant's own case for assessment year 2009-10 in ITA No.1417/Bang/2012 dated 23.06.2015 that in the absence of exempt income, no disallowance made u/s.14A of the Act can be made. In the light of the above judicial decision of Hon'ble jurisdictional ITAT which is squarely applicable in the instant appeal, and in view of the fact that the decision is binding, and since judicial discipline requires that wisdom of higher authorities prevail, the AO is directed to recomputed deduction allowable to appellant by following above judicial decision. 04. At the outset, the Ld AR for the Revenue has submitted that this issue has been adjudicated by the Tribunal in favour of the assessee, by decision dt.23.06.2015, wherein at para 15, it was held as under : 15. We have heard the contentions and perused the orders. CIT (A) relied on his own order for A. Y. 2008-09 in directing the AO to set off the loss from 80IB unit with the profits of non-80IB projects. This Tribunal on appeal filed by the Revenue, in its order dt 31.01.2013, held as under : 5.3.1 We have heard both parties and hav....
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....erstwhile provisions of section 80 I(6) of the Act. In other words, the restriction contemplated under section 80 I (6) of the Act, is the same as the restriction contemplated under section 80 IA(5) of the Act. It is in this context that the Hon'ble Apex Court in the case of Synco Industries Ltd (supra) held after an elaborate analysis of the provisions at paras 12 and 13 of its order which are extracted and reproduced hereunder : "12. The contention that under section 80-I(6) the profits derived from one industrial undertaking cannot be set off against loss suffered from another and the profit is required to be computed as if profit making industrial undertaking was the only source of income, has no merits. Section 80-I(1) lays down that where the gross total income of the assessee includes any profits derived from the priority undertaking / unit / division, then in computing the total income of the assessee, a deduction from such profits of an amount equal to 20 per cent has to be made. Section 80-I(1) lays down the broad parameters indicating circumstances under which an assessee would be entitled to claim deduction. On the other hand section 80-I(6) deals with dete....
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....ch deductions in order to arrive at the total income of the assessee and therefore while interpreting section 80-I(1), which also refers to gross total income one has to read the expression 'gross total income' as defined in section 80B(5). Therefore, this court is of the opinion that the High Court was justified in holding that the loss from the oil division was required to be adjusted before determining the gross total income and as the gross total income was 'Nil' the assessee was not entitled to claim deduction under Chapter VI-A which includes section 80-I also. 13. The proposition of law, emerging from the above discussion is that the gross total income of the assessee has first got to be determined after adjusting losses, etc., and if the gross total income of the assessee is 'Nil' the assessee would not be entitled to deductions under Chapter VI-A of the Act." 5.3.3 The above decision of the Hon'ble Apex Court squarely supports the case of the assessee that the provisions of section 80 IA(5) of the Act would not restrict the operation of the provisions of section 70(1) of the Act with respect to the set off of the loss. The operation of the provision o....
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....se of the assessee for AY 2009-10, where the Tribunal has deleted the disallowance on the premise that no exempt income has accrued to the assessee from the investment made in the sister concerns. Therefore, following the decision of the coordinate bench in the case of the assessee, for earlier year and also following the judgment of the Hon'ble Delhi High Court, in the matter of Chem Chem Investment [2015] 61 taxmann.com 118 (Delhi) we dismiss the appeals of the Revenue. Chem Investment(supra) it was held as under : 15. Turning to the central question that arises for consideration, the Court finds that the complete answer is provided by the decision of this Court in CIT v. Holcim India (P.) Ltd. [2015] 57 taxmann.com 28. In that case a similar question arose, viz., whether the ITAT was justified in deleting the disallowance under Section 14A of the Act when no dividend income had been earned by the Assessee in the relevant AY? The Court referred to the decision of this Court in Maxopp Investment Ltd's. case (supra) and to the decision of the Special Bench of the ITAT in this very case i.e. Cheminvest Ltd. v. ITO [2009] 121 ITD 318. The Court also referred to three dec....
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....dia Ltd. is in the form of a strategic investment. Since the business of the Assessee is of holding investments, the interest expenditure must be held to have been incurred for holding and maintaining such investment. The interest expenditure incurred by the Assessee is in relation to such investments which gives rise to income which does not form part of total income. 19. In light of the clear exposition of the law in Holcim India (P.) Ltd's. case (supra) and in view of the admitted factual position in this case that the Assessee has made strategic investment in shares of Max India Ltd.; that no exempted income was earned by the Assessee in the relevant AY and since the genuineness of the expenditure incurred by the Assessee is not in doubt, the question framed is required to be answered in favour of the Assessee and against the Revenue. 20. Since the Special Bench has relied upon the decision of the Supreme Court in Rajendra Prasad Moody's case (supra), it is considered necessary to discuss the true purport of the said decision. It is noticed to begin with that the issue before the Supreme Court in the said case was whether the expenditure under Section ....