TaxTMI 
TaxTMI 
2024 (10) TMI 930
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....019 and assessment year 2020-2021. 2. First we take up ITA No.270/Chny/2024 for assessment year 2018-2019 as lead case for adjudication wherein only surviving issue is with regard to disallowance u/s 14A of the Act r.w. Rule 8D of the IT Rules. Our decision on this issue will equally apply to other appeals being ITA Nos. 271/Chny/2024 also. 3. Brief facts of the case are that: NLC India Limited (formerly Neyveli Lignite Corporation Limited) (NLCIL/Appellant) is a Navratna, Government of India enterprise registered under the Indian Companies Act 1956, engaged in mining of lignite and power generation. NLCIL is a Central Government Public Sector Undertaking (PSU) functioning under the administrative control of the Ministry of Coal. N....
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....own funds to make the investments. Further, no expenditure was incurred in earning the dividend Income. Therefore, the Assessee did not consider any amount as disallowance under Section 14A of the IT Act. The Ld. Assessing Officer has made addition of Rs. 24,21,37,000/- w.r.t. Section 14A of the IT Act. 4. Aggrieved with the assessment order, appeal has been filed before the ld.CIT(A). The ld. CIT(A) partly upheld the disallowance u/s 14A and restricted the disallowance to Rs. 19,47,35,738/- following the judgment of the jurisdictional High Court in the case of Marg Ltd. Vs CIT (2020) 120 taxmann.com 84 (Madras) and deleted the other additions made by the AO. Now assessee is in further appeal before us. 5. Before us, the ld. Counsel s....
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....sallowance under Section 14A could not have been made. The Assessee wishes to rely on PCIT v. Ashok Apparels (P.) Ltd., (2019 106 taxmann.com 63 (Bombay) for the above proposition. 6. Per contra the ld. CIT-DR Mr. R. Clement Ramesh Kumar, vehemently supported the impugned order of the ld. CIT(A). He further contended that during the year the appellant has incurred 204.98 crore as interest expenses, and debited in its books of accounts. In addition to that certain other expenses which includes director salary, rent, communication cost, legal & professional expenses, travelling, printing, stationery etc., have also been debited in the books of account which would have incurred necessarily towards earning exempt income. However, the appella....
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....ich held as under: ''17. In a situation where the assessee has mixed fund (made up partly of interest free funds and partly of interest bearing funds) and payment is made out of that mixed fund, the investment must be considered to have been made out of Page 9 of 22 the interest free fund. To put it another way, in respect of payment made out of mixed fund, it is the assessee who has such right of appropriation and also the right to assert from what part of the fund a particular investment is made and it may not be permissible for the Revenue to make an estimation of a proportionate figure. For accepting such a proposition, it would be helpful to refer to the decision of the Bombay High Court in Pr. CIT v. Bombay Dyeing and Mfg. Co....
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....ssessee possesses sufficient interest free funds as against investment in tax free securities then, there is a presumption that investment which has been made in tax free securities, has come out of interest free funds available with assessee. In such situation Section 14A of the Act would not be applicable. Similar views have been expressed by other High Courts in CIT Vs. Suzlon Energy Ltd.5, CIT Vs. Microlabs Ltd.6 and CIT Vs. Max India Ltd.7 Mr. S Ganesh the learned Senior Counsel while citing these cases from the High Courts have further pointed out that those judgments have attained finality. On reading of these judgments, we are of the considered opinion that the High Courts have correctly interpreted the scope of Section 14A of the A....
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....entury economist, it needs to be observed here that in taxation regime, there is no room for presumption and nothing can be taken to be implied. The tax an individual or a corporate is required to pay, is a matter of planning for a tax payer and the Government should endeavour to keep it convenient and simple to achieve maximization of compliance. Just as the Government does not wish for avoidance of tax equally it is the responsibility of the regime to design a tax system for which a subject can budget and plan. If proper balance is achieved between these, unnecessary litigation can be avoided without compromising on generation of revenue. 30. In view of the forgoing discussion, the issue framed in these appeals is answered agains....