S. 14A Mere incorporation &receipt of share application money cannot be said to be commencement of business

By TG Team Income Tax Judiciary November 12, 2013

TaxGuru Citation: 2013 taxguru.in 1121
Case Name: Holcim (India) Pvt. Ltd. Vs DCIT (OSD) Cir. 12(1) (ITAT Delhi)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Related Assessment Year: 2008- 09
Courts: All ITAT, ITAT Delhi

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That mere incorporation and receipt of share application money cannot be said to be commencement of the business. Neither any interest income has been earned from against advances nor any goods or services been obtained. Moreover, the assessee has also not disclosed any dividend income from its investment . Therefore, he disallowed the expenses amounting to Rs. 8,75,35,452/- claimed in the P&L A/c.

Held that dis allowances made u/s 14A were unwarranted as assessee has not invested in shares for earning of dividend but acquired the controlling interest in the respective companies for doing the business. Ld. CIT(A) himself has admitted that assessee is doing the business and the business of the assessee company has been set up, therefore, there is no question that assessee has invested the funds for earning of dividend.—

INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH “C” NEW DELHI

BEFORE SHRI R.K. GUPTA: JUDICIAL MEMBER
AND
SHRI T.S. KAPOOR : ACCOUNTANT MEMBER

ITA Nos. 5123 & 5124/Del/2012

Asstt. Yrs: 2008-09 & 2007-08 respectively

Holcim (India) Pvt. Ltd.,

Vs.

DCIT (OSD) Cir. 12(1)

O R D E R

PER R.K. GUPTA, J.M :

These are assessee’s appeals against CIT(A)-XV, New Delhi’s separate orders dated 1-8-2012 for A.Y. 2007-08 and dated 2-8-2012 for A.Y. 2008-09. Both these appeals are heard together and disposed of by a common order for the sake of convenience.

2. Similar issues are involved in both appeals of the assessee i.e. against framing the dis allowance of total business expenditure incurred during these two years u/s 14A. For AY 2007-08 the dis allowance u/s 14A has been made at Rs. 8,61,50,315/- and for AY 2008-09 the dis allowance u/s 14A has been made at Rs. 6,60,93,678/- by the CIT(A).