No Dis allowance U/s. 14A if no exempt income earned during the year

FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-

This is an appeal filed by the Revenue against the order of learned Commissioner (Appeals)-I, New Delhi dated 2-12-2015 for the assessment year 2012-13 on the following solitary ground :

“1. On the facts and in the circumstances of the case, the learned Commissioner (Appeals) has erred in deleting the dis allowance under section 14A of expenditure of Rs. 64,00,223 by ignoring the fact that there was material to establish the direct nexus between the expenditure incurred and the income not forming part of total income.”

2. The brief facts of the case are that the assessee filed return of income on 27-9-2012 showing loss of Rs. 2,06,37,666. The assessee company is engaged in the business of providing operating voice and broad band/network service in the field of telecommunication and Information technology and entertainment. The case was selected for scrutiny and statutory notices were issued to the assessee. The total business profit in the year was Rs. 7,86,19,745 and the same had been adjusted against the earlier year’s loss. During the assessment proceedings, the assessing officer observed from the balance sheet of the assessee that the assessee had invested in quoted and unquoted equity shares and income from which is exempt from tax. The details are as under :