Click Here For Best Books On Taxation & Law. Upto 60% Off On Select Titles. Free Shipping & Pay On Delivery!
 

Click Here To Subscribe To Our Free Newsletter

Home › All Judgements › DCIT vs. Nalwa Investments Ltd (ITAT Delhi)

DCIT vs. Nalwa Investments Ltd (ITAT Delhi)

Posted on by editor — No Comments ↓
COURT:
CORAM:
SECTION(S):
GENRE:
CATCH WORDS:
COUNSEL:
DATE: (Date of pronouncement)
DATE: May 29, 2011 (Date of publication)
AY:
FILE:
CITATION:

Click here to download the judgement (nalwa_jindal_14A_271_1_c.pdf)


No s. 271(1)(c) penalty for failure to disallow u/s 14A

For AY 2005-06 the assessee had investments in shares of Rs. 37 crores on which it earned tax-free dividend. The assessee also had borrowings of Rs. 33 crores on which it paid interest of Rs. 1.10 crores. However, no disallowance u/s 14A was made. The AO computed the disallowance at Rs. 95 lakhs and levied penalty under Explanation 1 to 271(1)(c) on the ground that there was no satisfactory explanation for not attributing expenses to tax-free income. This was deleted by the CIT (A). On appeal by the department, HELD dismissing the appeal:

Though the computation of s. 14A disallowance was not made, the figures of dividend and interest were stated in the P&L A/c. Even the tax auditors did not state that s. 14A disallowance should be made. As there is no allegation by the AO that there was collusion between the auditor and the assessee to ignore s. 14A, it cannot be said that the explanation was not bona fide. Further, as Rule 8D was not enacted at the time, segregation of expenditure relatable to tax-free income would be disputable and lead to bona fide difference in opinion. So, penalty u/s 271(1)(c) cannot be levied.

Note: The same view has been taken in ACIT vs. Jindal Equipment Leasing (included in the file).

Related Posts:

  • United Investments vs. ACIT (ITAT Kolkata) If one carefully analyzes various sub-sections of Section 10 then it is evident that each sub-section enlists specific specie of receipt to which exemption from tax is granted if certain conditions are fulfilled. We therefore find that Section 10 enlists various species of receipts which are otherwise revenue in nature…
  • JDC Traders Pvt. Ltd vs. DCIT (ITAT Delhi) If we accept the argument of the learned DR that u/s 154 of the Act, ld. AO is empowered to deal with the escapement of income in respect of which the reasons were not recorded even after the assessment reopened under section 147 of the Act is completed, it would…
  • Deepak Nagar vs. DCIT (ITAT Delhi) These facts clearly demonstrate that the assessee is a habitual investor and being a qualified professional [Chartered Accountant], is well aware of market trends of shares in the stock market. The entire assessment has been framed by the Assessing Officer without conducting any enquiry from the relevant parties or independent…
  • Radhika Roy / Prannoy Roy vs. DCIT (ITAT Delhi) Where an individual or after 1 st day of October 2009, receives any property other than immovable property for a consideration, which is less than the aggregate fair market value of the property by an amount exceeding INR 50,000/- , the aggregate of fair market value of such property as…
  • Sajan Kumar Jain vs. DCIT (ITAT Delhi) In our considered opinion, once a valid return of income was available on record, which was already processed issuing notice u/s 142(1) of the Act asking the assessee to furnish fresh notice in itself is invalid making subsequently proceedings void ab initio.
  • Kapil Kumar Agarwal vs. DCIT (ITAT Delhi) In J. R. Suhramanya Bhat (supra). Karnataka High Court noticed language of Section 54 which stipulated that the assessee should within one year from the dale of transfer purchase, or within a period of two years thereafter, construct a residential house to avail of concession under the said Section. The…

Related Judgements

  1. Om Metals Infraprojects vs. CIT (ITAT Jaipur) 

    Where the assessee entered into an agreement with the Vidharbha Irrigation department for supply, erection and installation of dam gates and the question arose whether it was “developing an infrastructural facility” so as to be eligible for deduction u/s 80-IA(4) or it was a mere contractor, HELD:
     
    (i) Though the…
  2. Hindalco Industries vs. DCIT (ITAT Mumbai) 

    The department has the option u/s 166 to assess either the non-resident principal or the representative assessee. Once the choice is made and the income is brought to tax in the hands of the principal, the same income cannot be again assessed u/s 163 in the hands of a…
  3. Besix Kier Dabhol SA vs. DDIT (ITAT Mumbai) 

    The argument of the revenue that the abnormal debt-equity ratio attracts the “Thin Capitalization Rule” and that the “debt” should be characterized as “equity” for purposes of considering whether interest is deductible is not acceptable. Several countries have detailed “thin capitalization rules” (e.g. Belgium). However, there are no such…
  4. Serdia Pharmaceuticals (I) Pvt Ltd vs. ACIT (ITAT Mumbai) 

    On merits, the CUP method is the ‘most appropriate method’ to determine the arm’s length price in the cases of generic drug manufacturers so long as comparables are available. As the API imported by the assessee was a generic drug and not patent protected, the CUP method could be…
  5. Ahmedabad Urban Development Authority vs. ACIT (ITAT Ahmedabad) 

    S. 194C defines “work” to include “carriage of goods and passengers by any mode of transport other than railways” while s. 194-I defines “rent” to mean payment for use of “plant” (which is defined in s. 43 to include vehicles). As the cars were owned and maintained by the…

Leave a Reply

Your email address will not be published. Required fields are marked *

*