|
The Tax Publishers2020 TaxPub(DT) 3056 (Del-Trib) INCOME TAX ACT, 1961
Section 14A
Since assessee-company had not received any dividend income in assessment year, therefore, no disallowance could be made under section 14A in absence of exempted income as decided in case of Cheminvest Ltd. v. CIT-VI 2015-TIOL-2070-(Del) : 2015 TaxPub(DT) 3520 (Del-HC).
|
Disallowance under section 14A - Expenditure incurred against earning of exempted income - No exempted income was earned by assessee -
Assessee-company was engaged in business of investment/dealing in shares and securities and financing activities. It made huge investment relating to exempt income and had not received any dividend income out of the same. AO, however, was of the view that there were several judicial precedents that irrespective whether income has been earned or not during the year from such investments, expenditure relating to such exempt income/investment should be disallowed under the provisions of section 14A. AO after recording explanation of assessee and several case Laws made the disallowance under section 14A read with rule 8D. Held: Department referred to Board Circular on the proposition that even under such circumstances when no dividend income has earned, addition could be made under section 14A because AO was bound by the mandatory provisions of rule 14A read with rule 8D(2). Since it was an admitted fact that no dividend income was earned by assessee, therefore, it was an undisputed fact that assessee company had not received any dividend income in assessment year. This issue was also decided by High Court in case of Cheminvest Ltd. v. CIT-VI 2015-TIOL-2070-(Del) : 2015 TaxPub(DT) 3520 (Del-HC) that “section 14A will not apply if no exempt income is received or receivable during the relevant previous year.”
Followed:Cheminvest Ltd. v. CIT-VI 2015-TIOL-2070-(Del) : 2015 TaxPub(DT) 3520 (Del-HC) and CIT v. Holcim India P. Ltd. [ITA.No.486/2014 and ITA No.299/2014 dt. 5-9-2014] : 2014 TaxPub(DT) 3780 (Del-HC)
REFERRED :
FAVOUR : In assessee's favour
A.Y. : 2014-15
SUBSCRIBE FOR FULL CONTENT |