KALPESH SATYENDRA JHAVERI,J. - (1.) By way of this appeal, the appellant has assailed the judgment and order of the tribunal whereby tribunal has dismissed the appeal of the department.
(2.) Counsel for the appellant has framed following substantial question of law:- 1. Whether the Tribunal was legally justified in deleting the addition of Rs. 3,75,183/- made under section 14A read with Rule 8D following the Board's Circular 5/2014? 2. Whether the Tribunal was legally justified in considering the judgment of Hon'ble Supreme Court in the case of Godrej and Boyce Ltd. where the purpose of Section 14A read with Rule 8D has been interpreted?
(3.) Counsel for the appellant has taken us to the judgment of the Supreme Court in Godrej and Boyce Manufacturing Company Limited v. Dy. Commissioner of Income Tax and Ors. AIR 2017 SC 2675 wherein it has been held as under:- 24. The object behind the introduction of Section 14A of the Act by the Finance Act of 2001 is clear and unambiguous. The legislature intended to check the claim of allowance of expenditure incurred towards earning exempted income in a situation where an Assessee has both exempted and non-exempted income or includible or non-includible income. While there can be no scintilla of doubt that if the income in question is taxable and, therefore, includible in the total income, the deduction of expenses incurred in relation to such an income must be allowed, such deduction would be permissible merely on the ground that the tax on the dividend received by the Assessee has been paid by the dividend paying company and by the recipient Assessee, when Under Section 10(33) of the Act such income by way of dividend is a part of the total income of the recipient Assessee. A plain reading of Section 14A would go to show that the income must be includible in the total income of the Assessee. Once the said condition is satisfied, the expenditure incurred in earning the said income cannot be allowed to be deducted. The Section does contemplate a situation where even though the income is taxable in the hands of the dividend paying company the same to be treated as includible in the total income of the recipient Assessee, yet, the expenditure incurred to earn that income must be allowed on the basis that no tax on such income has been paid by the Assessee. Such a meaning, if ascribed to Section 14A, would be plainly beyond what the language of Section 14A can be understood to reasonably convey.;