BLUE BLENDS (I) P.LTD,MUMBAI vs. DCIT RG 4(1), MUMBAI

The only grievance of the assessee relates to disallowance of Rs.5,42,831/- u/s.14A r.w.r.8D against earning of exempt dividend income of Rs.352/-.

Rival contentions have been heard and record perused. Facts in brief are that the assessee company is a sick company since the F.Y.1999-2000 and was so declared-sick company by the BIFR. It did not incur any direct or indirect expenditure during the year under consideration to earn an income not includible in taxable income. All its 2 investments are strategic investments in its sister or associates concerns for its business purposes which were made before more than 15 to 20 years back for which no borrowed funds were used. We also found that it has not made any new investments in last 5-10 years and all of its movable and immovable assets are charged to its secured institutional lenders and banks. During the year under consideration it got a dividend of Rs.352/- on 18 Shares it holds in Assian Paints Ltd for which it has not incurred any direct or indirect expenses and cost of its investment in Asian Paints Ltd. Is Rs. 3900/- only out of its total investments of Rs.107409142/-.

From the record, we found that assessee has not incurred any expenditure for earning dividend of Rs.352/-. Accordingly, we do not find any justification for the disallowance made u/s.14A amounting to Rs.5,42,831/-.

The assessee is also aggrieved for disallowance on depreciation of Rs.13,09,788/- claimed on certain assets on its manufacturing unit. The AO disallowed claim of depreciation on the plea that certain units of assessee company were closed. However, the assessee has not make any claim of depreciation on its plant and machinery and electronic installation. The AO asked the details of unit-wise claimed by the assessee and disallowed claim of Rs.13,09,788/-, which was confirmed by the CIT(A).

Ld. AR placed on record decision of Hon’ble Delhi High Court in the case of Oswal Agro Mills, 238 CTR 113, wherein it was also held that