The Dy. Commissioner of Income-tax, Corporate Circle-2(1), Chennai v. Envestor Ventures Ltd
[Citation -2019-LL-0927-129]
| Citation | 2019-LL-0927-129 |
|---|---|
| Appellant Name | The Dy. Commissioner of Income-tax, Corporate Circle-2(1), Chennai |
| Respondent Name | Envestor Ventures Ltd. |
| Court | ITAT-Chennai |
| Relevant Act | Income-tax |
| Date of Order | 27/09/2019 |
| Assessment Year | 2015-16 |
| Judgment | View Judgment |
| Keyword Tags | interest bearing loan • interest free loan • exempt income • interest cost • finance cost • dividend income • investment in share • source of investment • disallowance of expenses • restriction of disallowance |
| Bot Summary: | M/s. Envestor Ventures Ltd., the assessee, is in the business of Investment Promotion including facilitating Private Equity. Since the investment is capable of earning dividend, the AO required to show cause why the disallowance cannot be made u/s.14A. After considering the assessee s reply etc, the AO held that the assessee made investment of Rs.134,05,71,759/- during this assessment year. The Ld.CIT(A) relied on the decision of the Hon ble Supreme Court in the case of PCIT v. State Bank of Patiala reported in 2018 99 ITA No.568/Chny/2019 :- 3 -: taxmann.com 286 and held that the amount of disallowance u/s.14A could be restricted to the amount of exempt income only. Since the assessee earned dividend income of Rs.2,58,225/- only during the assessment year from M/s.Tech Solutions Ltd., he restricted the disallowance u/s.14A to Rs.2,58,225/- and thus, partly allowed the appeal. 3 The CIT(A) ought to have appreciated the fact that the CBDT circular No.5/201 wherein it is clarified that, disallowance u/s.14A r.w.r, 8D has to be made even the taxpayer in a particular year not earned any exempt income. Since the Ld. CIT(A) followed the decision of the Hon ble Supreme Court in the case of PCIT v. State Bank of Patiala, supra, we do ITA No.568/Chny/2019 :- 4 -: not find any reason to interfere with the order of the Ld.CIT(A) and hence dismiss the revenue s appeal. In the result, the appeal filed by the Revenue is dismissed. |