Gujarat HC Grants Bail to Marriage Bureau Owner, Finds No Link to Alleged ‘Looteri Dulhan’ Gang  ||  Calcutta HC: Minor’s Consent has No Mitigating Effect in POCSO Sexual Assault Cases  ||  Orissa HC Commutes Death Sentence, Says Emotion Cannot Override Established Law  ||  Calcutta HC: Street Vendors Act Protects Lawful Vending, Not Illegal Encroachments  ||  P&H HC: Courts Cannot Reveal Identities of Children in Conflict With Law in Court Records  ||  Bombay HC: Government Cannot Fix ‘Politically Convenient’ Election Dates sets Goa Poll Timeline  ||  SC: Major Port Trusts Liable for Customs Duty on Pilfered Goods under Customs Act  ||  Supreme Court: General Fraud Allegations Cannot Extend Limitation under Section 74 CGST Act  ||  SC: ‘No Coercive Steps’ Order Cannot Restrain Filing of Charge Sheet  ||  Chhattisgarh HC: Maintenance for Autistic Child May Continue Beyond 18 Until Self-Sufficient    

Assistant Commissioner Of Income Tax vs. Madhava Holdings Private Limited - (Income Tax Appellate Tribunal) (17 Aug 2023)

Errors cannot be perpetuated on the name of consistency

MANU/IH/0192/2023

Direct Taxation

Aggrieved by the order passed by the learned Commissioner of Income Tax(Appeals), ("CIT(A)") in the case of Mandava Holdings Private Limited ("the assessee") for the assessment year 2018-19, Revenue preferred present appeal.

Only issue involved in present case is whether any disallowance under Section 14A of the Income Tax Act, 1961 (IT Act) read with rule 8D of the Income Tax Rules, 1962 could be made, if the assessee had not earned any exempt income during the year under consideration.

There is no dispute that the assessee is a non-banking finance company, making investment in the group companies to meet their business requirements. In such a situation, it is beyond doubt that whenever the investee company declares dividend, such dividend would invariably be earned by the assessee and the assessee alone. It is not a case where only by chance the shares would be in the hands of the assessee when such a dividend is declared. If the assessee holds these shares as stock-in-trade, to be liquidated whenever the share price goes up in order to earn profits, then it would be possible that during such holding, the investee company may declare dividend.

It is, therefore, clear that the purpose of assessee holding the shares is not to liquidate when the share price goes up and thereby to earn profit, but the assessee holds such shares in the group companies to meet the business requirements of such companies. Assessee is bound to receive the dividend when it is declared.

Further, it is the settled principle of law, as observed by the Apex Court in the case of Distributors (Baroda) (P.) Ltd. vs. Union of India that there is no heroism to perpetuate an error and to rectify such an error is a compulsion of the judicial conscious. Errors cannot be perpetuated on the name of consistency. Impugned order is set aside. Appeal of the Revenue is allowed.

Tags : INCOME   ASSESSMENT   DISALLOWANCE  

Share :        
Only issue involved in present case is whether any disallowanc... For read more news from newsroom.manupatra.com"data-action="share/whatsapp/share" class="ic_wtsp-grid">

Disclaimer | Copyright 2026 - All Rights Reserved