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Judgment
CM APPL No. 11275/2015 (for exemption)
Exemption allowed subject to all just exceptions.
The application is disposed of.
ITA No. 368/2015
This appeal is directed against the impugned order dated 18th November 2014 passed by the Income tax Appellate Authority (''ITAT'') in ITA No. 4096/Del/2013 relating to the Assessment Year 2009-10.
The dispute concerns the addition of Rs. 79,87,255 made by the Assessing Officer ''AO'') under Section 14A of the Income Tax 1961 (''Act'') read with Rule 8 (D) (ii) of the Income Tax Rules. In an appeal filed before the Commissioner of Income Tax (Appeals) [''CIT (A)''] the above addition made by the AO was deleted. It was held that no disallowance could be made if the investment is made out of interest free fund. However, the CIT (A) confirmed the action of the AO in disallowing a sum of Rs. 13,53,411 under Section 14A of the Act read with Rule 8 D (iii) of the Income Tax Rules.
Aggrieved by the order of the CIT (A), the Revenue as well as the Assessee filed appeals. By the impugned order, the ITAT allowed the appeal of the Assessee while dismissing the appeal of the Revenue. Relying on the decisions in Maxopp Investment Ltd. Vs. Commissioner of Income Tax, New Delhi, (2012) 247 CTR 162 : (2012) 347 ITR 272 : (2011) 203 TAXMAN 364 and Auchtel Products Limited v. ACIT 22 Taxman.com (1999) (Mum.) the ITAT came to the conclusion that it was incumbent on the AO to have recorded that he is not satisfied with the correctness of the claim of the Assessee in respect of such expenditure which did not part of the income. It was held that in order to disallow the expenditure under Section 14A there must be a live nexus between expenditure incurred and income not forming part of total income. Consequently, the ITAT came to the conclusion that the disallowance made by the AO was not justified.
Learned counsel for the Appellant has sought to rely on the Circular No. 5 of 2014 dated 11th February 2014 whereby the CBDT issued a clarification that for invoking disallowance under Section 14A of the Act it is not material that the Assessee should have earned such exempted income during the financial year under consideration. She candidly admitted that the said circular was not placed before the ITAT in the appeal filed by the Revenue. The Court is not prepared to permit the Appellant to urge a ground that was not raised before the ITAT.
Having considered the submissions of learned counsel for the Appellant and having examined the impugned order of the ITAT, the Court is not satisfied that any substantial question of law arises for determination in the facts and circumstances of the present case.
The appeal is dismissed.