Case Law Details
Brief of the Case
ITAT Mumbai held in the case of M/s Krishna Knitwear Technologies Ltd. & M/s Krishna Lifestyle Technologies Ltd. vs. DCIT/ACIT that it is not in dispute that assessee has not earned any dividend income or any kind of exempt income from the investments made. The Hon’ble Delhi High Court in the case of Cheminvest Ltd. 378 ITR 33 has held that the decision of the Supreme Court in Rajendra Prasad Moody [1978] 115 ITR 519 was rendered in the context of allowability of deduction under Section 57(iii), where the expression used is ‘for the purpose of making or earning such income’. On other hand section 14A contains the expression ‘in relation to income which does not form part of the total income’. The said decision cannot be used in the reverse to contend that even if no income has been received, the expenditure incurred can be disallowed u/s 14A. Thus, respectfully following the ratio laid down by the Hon’ble Delhi High Court, no disallowance u/s 14A is called for, once there is no exempt income received or receivable by the assessee.
Facts of the Case
In the case of M/s Krishna technology Ltd., the AO has worked out the disallowance of Rs. 74,44,794/- out of interest expenditure and Rs. 8,52,630/- on account of indirect expenditure after taking 0.5% of the average investment. In the case of Krishna Lifestyle Technologies Ltd, the AO has disallowed Rs. 1,37,22,383/- out of interest expenditure and Rs. 1,70,14,940/- being 0.5% on the average investment by invoking the provisions of section 14 r. w. Rule 8D.
Contention of the Assessee
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