TaxTMI 
TaxTMI 
2025 (3) TMI 2246
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..../ or rescind all or any of the grounds of appeal on or before final hearing, if necessity so arises." 3. The brief facts of the case are that the assessee is a limited company incorporated on 3rd February, 1993, is registered as a NBFC, duly engaged in the business of investment, finance and dealing in shares and securities . Return of income for the year under appeal was filed declaring a total income of Rs. 23,58,640/- which was assessed at Rs. 34,33,130/- (with an addition of Rs. 10,74,492/- u/s 14A of the Act 61.) 3.1 In course of assessment proceedings, detailed submissions and explanations has been filed by the assessee in response to various queries raised by the AO explaining the fact that no disallowance are called for in respect of investment made in unquoted / unlisted shares (of group concerns) and also in respect of investments which fetches taxable income. It was further explained that the assessee company is holding investment in form of equity shares of various companies, but has not earned any exempted income during the year in respect of the said investments in listed or unlisted concerns, and in the absence of any exempted income earned during the year, the....
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....nt (reported 402 ITR 640), and in the case of Godrej and Boyce Mfg. Co. Ltd. 328 ITR 81 (Bombay) and has dismissed the appeal by observing as under: (relevant portion reproduced) "8. The actual earning or receipt of exempt income in a particular year is not the determinative factor. The appellant cannot be permitted to claim any expenditure against such exempt income as that would amount to conferring double benefit to the appellant - first, the income earned would be exempt from tax and second, the appellant would also claim deduction of expenses incurred to earn such exempt income. This would defeat the legislative intent and purpose behind the special provision of section 14A which has an overriding effect over any other provision of the Income-tax Act. The decisions relied upon by the appellant have been rendered in the context of the facts of those cases and cannot be applied as a straitjacket formula. The binding nature of the judgments of the Hon'ble Supreme Court in Maxopp Investment and Godrej & Boyce (supra) has not been considered in the cases relied upon by the appellant. 9. In view of the above discussion, I am of the considered opinion t....
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....n submission) "The appellant places heavy reliance on the decision rendered by the Honourable Madras High Court in Redington (India) Ltd v, Addl. Cl I, [ICA No.520 of 2016, dt.23.12.2016, wherein it is held that where there is no exempt income in relevant year, there cannot be a disallowance of expenditure U/S.14A to any assumed income. Recently Honourable Income Tax Appellate Tribunal, Bangalore Bench in the case of M/S Deepak Cales Inda Limited, vs Addl.C.LT., Bangalore delivered on on 4 June, 2019 in ITA 1285/1286/Bangalore 2016, relied upon this decision of the Honourable Madras High Court has held that: " Respectfully following the aforesaid decision of the Hon'ble Madras High Court in the case of Redington (India) Ltd., we delete the disallowances made by the AO under section 14A r.w. Rule 8D(2)(iii) of the Rules since the assesses has not earned any exempt income during these two Assessment Years 2011-12 and 2012-13. Consequently, the grounds raised by the assesses are allowed." 8. Regarding the CBDT circular No 5 of 2014, dated 11th February, 2014, relied upon by the Ld. first appellate authority, that section 14A was applicable even w....
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.... first appellate authority by invoking the provisions of section 14A may please be deleted. 9. Ld. DR relied on the order of the Ld. CIT (A) and the AO and submitted that in the instant case satisfaction of the AO is recorded regarding the incorrect claim of the assessee with respect to the books of accounts and as such he has correctly proceeded to determine the disallowance u/s 14A (as per prescribed procedure laid out in Rule 8D of the IT Rules 62) and he prayed that the order of the Ld. CIT(A) may please be upheld. 10. We have heard the rival submissions and considered the materials on record and we find that (the observation of the AO in the assessment order (para 6.4) that the investment in shares and mutual funds has generated exempted income during the year under appeal is factually incorrect), and in the instant case there is no exempt income for the year under appeal, and in absence of any exempted income, the provisions of section 14A is not applicable. 10.1 On this issue, respectfully following the law laid down by the Hon'ble Apex court in the case of (i) CIT vs Chettinad Logistics Pvt Ltd [2018] 95 taxmann.com 250(SC), (ii) Cheminvest Ltd vs CIT, 378 ITR 33, ....