CIT v. Walfort Share & Stock Brokers (P.) Ltd.

326 ITR 1Supreme Court of India2010#116 most cited

What is CIT v. Walfort Share & Stock Brokers (P.) Ltd. authority for?

For attracting Section 14A disallowance, there must be a proximate cause relating the expenditure to actual tax-exempt income, and such disallowance is not automatic but requires positive material. Additionally, Section 94(7) on dividend stripping only ignores losses to the extent of dividend received for assessment years post-April 1, 2002, allowing the remaining loss.

543

judgments rely on this decision, according to BharatTax’s citation analysis of 367,154 Indian tax judgments — from 2011 to 2026.

Also referred to as

CIT v. Walfort Share & Stock Brokers P. Ltd. · 326 ITR 1 · Section 14A disallowance · proximate cause exempt income · not automatic disallowance · actual exempt income · Section 94(7) · dividend stripping · loss ignored to extent of dividend · tax-exempt income expenditure

Also reported as

192 Taxmann 21141 DTR 233

Sections most often in play

Section 14ASection 143(3)Section 94(7)Section 10(35)Section 133ASection 148Section 148ASection 48
Read the full judgment

Issues it is cited on

section 14a(1)strategic investmentsection 14a(2)section 10(34)disallowance under section 14adisallowance u/s 14asection 14asection 80iamercantile system of accountingsection 115jbsection 115jrevenue expenditure

Judgments citing CIT v. Walfort Share & Stock Brokers (P.) Ltd.

Mira Textiles & Industries (India) Ltd., Chennai vs. ITO, Chennai

In the result, the appeal of the assessee stands allowed

ITA 225/CHNY/2017[2012-13]Status: DisposedITAT Chennai22 Jun 2017AY 2012-13

Bench: Shri N.R.S. Ganesan & Shri Abraham P. George] आयकर अपील सं./I.T.A. No.225/Mds/2017 "नधा"रण वष" /Assessment Year : 2012-2013. Mira Textiles & Industries (I) Ltd, Vs. The Income Tax Officer, Flat F2, Upper Crest Apartments, Corporate Ward 4(3) No.11, School Street, Chennai. Koyambedu, Chennai [Pan Aaacm 4365R]

For Appellant: Shri. S. Vidya, C.AFor Respondent: Shri. Ashish Tripathi, JCIT
Section 14Section 14ASection 4Section 5

…tion shall be allowable in respect of expenditure incurred in relation to the earning of income exempt from taxation. As observed by the Supreme Court in the judgment in the case of Commissioner of Income Tax vs. Walfort Share and Stock Brokers (P) Ltd (2010) 326 ITR 1 '.... The mandate of s.14A is clear. It desires to curb the practice to claim deduction of expenses incurred in relation to exempt income against taxable income and at the same time avail of the ITA No. 225/Mds/2017. :- 5 -: tax incentive by way of an exemption of exempt income without making any apportionment of expenses incurred in relation to…

A.B. Hotels Ltd. (Radisson Hotel), New Delhi vs. ACIT, New Delhi

In the result the above three appeals filed by the assessee are allowed

ITA 4011/DEL/2014[2011-12]Status: DisposedITAT Delhi16 Jun 2017AY 2011-12

Bench: Shri R. K. Panda & Ms. Suchitra Kamble

For Appellant: Sh. Rajesh Malhotra, CAFor Respondent: Sh. R.C.Danday, Sr. D.R
Section 143(3)Section 24

…4A does not envisage any deemed or assumed disallowance and it could be only in relation to expenditure incurred and charged to the profit and loss account. The decision of the Hon’ble Supreme Court in the case of CIT vs. Walfort Share & Stock Brokers P. Ltd. 326 ITR 1 and the decision of Hon’ble Delhi High Court in the case of Maxopp Investment P. Ltd. Vs. CIT reported 347 ITR 272 (Del.) were brought to the notice of the CIT(A). 3.1 However, the Ld. CIT(A) was also not satisfied with the explanation given by the assessee and upheld the action of the AO by observing as under : “The submissions of the AR are consi…

A.B. Hotels Ltd. (Radisson Hotel), New Delhi vs. ACIT, New Delhi

In the result the above three appeals filed by the assessee are allowed

ITA 4010/DEL/2014[2009-10]Status: DisposedITAT Delhi16 Jun 2017AY 2009-10

Bench: Shri R. K. Panda & Ms. Suchitra Kamble

For Appellant: Sh. Rajesh Malhotra, CAFor Respondent: Sh. R.C.Danday, Sr. D.R
Section 143(3)Section 24

…4A does not envisage any deemed or assumed disallowance and it could be only in relation to expenditure incurred and charged to the profit and loss account. The decision of the Hon’ble Supreme Court in the case of CIT vs. Walfort Share & Stock Brokers P. Ltd. 326 ITR 1 and the decision of Hon’ble Delhi High Court in the case of Maxopp Investment P. Ltd. Vs. CIT reported 347 ITR 272 (Del.) were brought to the notice of the CIT(A). 3.1 However, the Ld. CIT(A) was also not satisfied with the explanation given by the assessee and upheld the action of the AO by observing as under : “The submissions of the AR are consi…

A.B. Hotels Ltd. (Radisson Hotel), New Delhi vs. ACIT, New Delhi

In the result the above three appeals filed by the assessee are allowed

ITA 4009/DEL/2014[2006-07]Status: DisposedITAT Delhi16 Jun 2017AY 2006-07

Bench: Shri R. K. Panda & Ms. Suchitra Kamble

For Appellant: Sh. Rajesh Malhotra, CAFor Respondent: Sh. R.C.Danday, Sr. D.R
Section 143(3)Section 24

…4A does not envisage any deemed or assumed disallowance and it could be only in relation to expenditure incurred and charged to the profit and loss account. The decision of the Hon’ble Supreme Court in the case of CIT vs. Walfort Share & Stock Brokers P. Ltd. 326 ITR 1 and the decision of Hon’ble Delhi High Court in the case of Maxopp Investment P. Ltd. Vs. CIT reported 347 ITR 272 (Del.) were brought to the notice of the CIT(A). 3.1 However, the Ld. CIT(A) was also not satisfied with the explanation given by the assessee and upheld the action of the AO by observing as under : “The submissions of the AR are consi…

Inducto Steel Ltd, Mumbai vs. ACIT Cen Cir 38, Mumbai

The appeal of the assessee is partly allowed

ITA 2555/MUM/2015[2006-07]Status: DisposedITAT Mumbai26 May 2017AY 2006-07

Bench: Shri Joginder Singh & Shri Manoj Kumar Aggarwalassessment Year: 2006-07 Inducto Steel Ltd. Acit, 156, Maker Chamber Vi, Cc-38, बनाम/ 220, Jamnalal Bajaj Marg, Aayakar Bhavan, Vs. Nariman Point, M.K. Road, Mumbai-400021 Mumbai-400020 ("नधा"रती /Assessee) (राज"व /Revenue) Pan. No. Aaaci1045E

Section 14A

…nt will take effect retrospectively from April 1, 1962 and will accordingly, apply in relation to the assessment year 1962-63 and subsequent assessment years." 2.11. As observed by the Supreme Court in the case of CIT v. Walfort Share and Stock Brokers P Ltd: 326 ITR 1 (SC), the insertion of section 14 A with retrospective effect reflects the serious attempt on the part of Parliament not to allow 12 deduction in respect of any expenditure incurred by the assessee in relation to income, which does not form part of the total income under the said act against the taxable income. The Supreme Court further observed a…

DCIT (Ltu), New Delhi vs. M/S. Hero Motors Ltd., New Delhi

The appeal is dismissed

ITA 4316/DEL/2014[2010-11]Status: DisposedITAT Delhi15 May 2017AY 2010-11

Bench: Shri N. K. Saini & Ms Suchitra Kamble

Section 14A

…gent reasons for the same and has to show why he is not satisfied with the correctness of the assessee’s claim. IN the present case AO failed to specify any cogent reasons with regard to expenditure. In case of CIT vs. Walfort Share and Stock Brokers (P) Ltd. 326 ITR 1 (SC) it was held that “For attracting Section 14A, there has to be proximate cause for disallowance, which is its relationship with the tax exempt income.” 8. In light of the ratio laid down in the abovementioned judgment of the Supreme Court and High Court, the finding given by the CIT(A) is upheld herewith. 9. In result, the appeal is dismissed…

Jaswant J Shah, Mumbai vs. Asst CIT Cen Cir 32, Mumbai

In the result appeal of the assessee in ITA No

ITA 2599/MUM/2014[2005-06]Status: DisposedITAT Mumbai08 May 2017AY 2005-06

Bench: Shri R.C.Sharma, Am & Shri Sandeep Gosain, Jm

Section 127Section 127(3)Section 133ASection 143(2)Section 143(3)Section 263

…free funds, no such presumption can be drawn. In view of the legal position enunciated above, the submissions made by the appellant to the extent these are not in line with the said position cannot be accepted. In CIT v. Walfort Share & Stock Brokers (P) Ltd. 326 ITR 1 (SC), the Hon'ble Supreme Court made it very clear that the permissible deductions Mr. Jaswantlal J Shah enumerated in Section 15 to 59 are now to be allowed only with reference to the income which is brought under one of the heads of income and is chargeable to tax. The Hon'ble Apex Court also clarified that if an income like dividend is not part…

Jaswant J Shah, Mumbai vs. Asst CIT Cen Cir 32, Mumbai

In the result appeal of the assessee in ITA No

ITA 2598/MUM/2014[2009-10]Status: DisposedITAT Mumbai08 May 2017AY 2009-10

Bench: Shri R.C.Sharma, Am & Shri Sandeep Gosain, Jm

Section 127Section 127(3)Section 133ASection 143(2)Section 143(3)Section 263

…free funds, no such presumption can be drawn. In view of the legal position enunciated above, the submissions made by the appellant to the extent these are not in line with the said position cannot be accepted. In CIT v. Walfort Share & Stock Brokers (P) Ltd. 326 ITR 1 (SC), the Hon'ble Supreme Court made it very clear that the permissible deductions Mr. Jaswantlal J Shah enumerated in Section 15 to 59 are now to be allowed only with reference to the income which is brought under one of the heads of income and is chargeable to tax. The Hon'ble Apex Court also clarified that if an income like dividend is not part…

Hcc Real Estate Ltd, Mumbai vs. DCIT 10(3), Mumbai

In the result, appeal of the assessee is partly allowed

ITA 2209/MUM/2015[2010-11]Status: DisposedITAT Mumbai21 Apr 2017AY 2010-11

Bench: Shri G.S. Pannu & Shri Ram Lal Negi: (A.Y : 2010-11)

For Appellant: Shri Vikrant Rajopadhye/For Respondent: Ms. Aarju Garodia
Section 143(3)Section 14A

…IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “J”, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER : (A.Y : 2010-11) M/s. HCC Real Estate Ltd. Vs. DCIT-10(3), Mumbai Hincon House, 11th floor, (Respondent) 274 Park, Lal Bahadur Shastri Marg, Vikhroli (W), Mumbai 400 083. PAN : AABCH6060P (Appellant) Appellant by : Shri Vikrant Rajopadhye/ Shri Arun Maheswari Respondent by : Ms. Aarju Garodia Date of Hearing : 21/01/2017 Date of Pronouncement : 21/04/2017 O R D E R PER G.S. PANNU, AM : The captioned appeal by the assessee is directed against the order of the CIT(…

Aditya Birla Finance Ltd, Mumbai vs. Addl CIT RG 2(1), Mumbai

Appeal of the assessee is partly allowed for statistical purposes

ITA 5732/MUM/2011[2008-09]Status: DisposedITAT Mumbai12 Apr 2017AY 2008-09

Bench: Shri Joginder Singh & Shri Rajendraassessment Year-2008-09 M/S Aditya Birla Finance Acit-2(1), Limited (One Indiabulls R. No.575, 5Th Floor, बनाम/ Center, Tower-1, 18Th Floor, Aayakar Bhavan, Vs. Jupiter Mill Compound, 841, M.K. Road, Senapati Bapat Marg, Mumbai-400020 Elphinstone Road, Mumbai-400012 Pan No.Aabcb5769M ("नधा"रती /Assessee) (राज"व /Revenue) Assessment Year-2008-09 Acit-2(1), M/S Aditya Birla Finance R. No.575, 5Th Floor, Limited (One Indiabulls बनाम/ Aayakar Bhavan, Center, Tower-1, 18Th Floor, Vs. M.K. Road, Jupiter Mill Compound, 841, Mumbai-400020 Senapati Bapat Marg, Elphinstone Road, Mumbai-400012 Pan No. Aabcb5769M (राज"व /Revenue) ("नधा"रती /Assessee) M/S Aditya Birla Finance Ltd.

Section 14ASection 260

…ent will take effect retrospectively from April 1, 1962 and will accordingly, apply in relation to the assessment year 1962-63 and subsequent assessment years." 3.9. As observed by the Supreme Court in the case of CIT v. Walfort Share and Stock Brokers P Ltd: 326 ITR 1 (SC), the insertion of section 14 A with retrospective effect reflects the serious attempt on the part of Parliament not to allow deduction in respect of any expenditure incurred by the assessee in relation to income, which does not form part of the total income under the said act against the taxable income. The Supreme Court further observed as un…

Shloka Traders P.Ltd, Mumbai vs. DCIT Cen Cir 13, Mumbai

ITA 4004/MUM/2014[2011-12]Status: DisposedITAT Mumbai05 Apr 2017AY 2011-12

Bench: Shri B.R. Baskaran (Am)& Shri Pawan Singh (Jm)

Section 10Section 115J

…upreme Court in the case of Mcdowell Ltd (supra) has been explained by the Hon’ble Apex Court in many of its subsequent decisions. The Ld A.R submitted that the Hon’ble Supreme Court has held in the case of CIT Vs. Walfort Share and Stock Brokers P Ltd (2010)(326 ITR 1) that the better use of the provisions of the Act cannot be called “abuse of law”. In that case, the assessee had purchased mutual fund units just before the record date fixed for declaration of dividend, since the dividend income was exempt. After declaration of the dividend, the net asset value of the mutual fund units would go down and upon sell…

D.C.I.T., Circle-4, Kolkata vs. M/S. Rossell India Ltd., Kolkata

In the result, Revenue’s appeal stands dismissed

ITA 2774/KOL/2013[2009-2010]Status: DisposedITAT Kolkata15 Mar 2017AY 2009-2010

Bench: Shri Aby.T Varkey & Shri Waseem Ahmedassessment Year:2009-10 Dcit, Circle-4, Kolkata V/S. M/S Rossell India Ltd. P-7, Chowringhee 21/1A/3, Darga Road, Square, Kolkata-69 Jindal Towers, Block B, 4Th Floor, Park Circus, Kolkta-700 017 [Pan Noaabcr 3736 J] .. अपीलाथ" /Appellant ""यथ"/Respondent

Section 10(34)Section 115JSection 143(3)Section 14A

…ailed to discharge his onus of establishing the fact that any expenditure over and above identified by the respondent was incurred in earning dividend income. Reliance is placed on the following judgments :- CIT vs. Walfort Share & Stock Brokers P Ltd. (2010) 326 ITR 1 (SC) CIT vs. Ashish Jhunjhunwala [GA No.2990 of 2013](Cal) DCIT vs. Allahabad Bank [ITA No.1282 of 2012 dated 01.06.2016 (Kol) ACIT vs. Pawan Kumar Jhunjhunwala (2016) 157 ITD 667 (Kol) CIT vs. Hero Cycles Ltd (2010) 323 ITR 518 (P&H) Godrej and Boyee Mfg. Co. Ltd. vs. DCIT (2010) 328 ITR 81 (Bom) As per Sec. 14A(2), provisions of Rule 8D comes in…

DCIT Cen Cir 4(4) Cen RG 4, Mumbai vs. Uma Polymers Ltd, Mumbai

In the result, appeal of the Revenue is dismissed whereas appeal of the assessee is allowed in part

ITA 3884/MUM/2015[2011-12]Status: DisposedITAT Mumbai03 Mar 2017AY 2011-12
Section 10(34)Section 143(3)Section 14A

…uestion of law. -Appeal is therefore rejected. In view of the above, the disallowance of Rs.40,74,100/- made by the AO under rule 8D (2)(ii) is deleted. 5.2 Hon'ble Supreme Court in their decision dated 6.7.2010 in CIT v. WalfortShare & Stock'Brokers (P.)Ltd.,326 ITR 1, inter alia, observed that the theory of apportionment of expenditure between taxable and non-taxable has, in principle, been now widened under section 14A. In the words of Hon'ble Supreme Court: "17 . The insertion of section 14A with retrospective effect is the serious attempt on the part of the Parliament not to allow' deduction in respect of an…

Uma Polymers Ltd, Mumbai vs. DCIT Cir 3(3), Mumbai

In the result, appeal of the Revenue is dismissed whereas appeal of the assessee is allowed in part

ITA 3329/MUM/2015[2011-12]Status: DisposedITAT Mumbai03 Mar 2017AY 2011-12
Section 10(34)Section 143(3)Section 14A

…uestion of law. -Appeal is therefore rejected. In view of the above, the disallowance of Rs.40,74,100/- made by the AO under rule 8D (2)(ii) is deleted. 5.2 Hon'ble Supreme Court in their decision dated 6.7.2010 in CIT v. WalfortShare & Stock'Brokers (P.)Ltd.,326 ITR 1, inter alia, observed that the theory of apportionment of expenditure between taxable and non-taxable has, in principle, been now widened under section 14A. In the words of Hon'ble Supreme Court: "17 . The insertion of section 14A with retrospective effect is the serious attempt on the part of the Parliament not to allow' deduction in respect of an…

ACIT, New Delhi vs. M/S. Mmtc Ltd., New Delhi

In the result ground No. 1 and 2 of the appeal of the revenue are dismissed

ITA 724/DEL/2014[2005-06]Status: DisposedITAT Delhi13 Feb 2017AY 2005-06

Bench: Shri H.S.Sidhu & Shri Prashant Maharishi

For Appellant: Sh. A K Saroha CIT DRFor Respondent: Shri Rohit Jain Adv
Section 14Section 143Section 148Section 14A

…iture as claimed by the assessee is not correct, he is required to determine the amount of such expenditure on the basis of a reasonable and acceptable method of apportionment. It would be appropriate to recall the words of the Supreme Court in Walfort [2010] 326 ITR 1 (SC) to the following effect (page 17) : "The theory of apportionment of expenditure between taxable and non- taxable has, in principle, been now widened under section 14A." So, even for the pre-rule 8D period, whenever the issue of section 14A arises before an Assessing Officer, he has, first of all, to ascertain the correctness of the claim of th…

Ajit Singh Arora, Mumbai vs. JCIT 20(1), Mumbai

ITA 4062/MUM/2014[2009-10]Status: DisposedITAT Mumbai10 Feb 2017AY 2009-10
For Appellant: Shri V.P. JoshiFor Respondent: Shri Rajesh Kumar Radav- DR
Section 143Section 14A

…t record the satisfaction before invoking the provisions of Rule 8D(2)(iii), that the total investment had reduced from Rs.13.53 crores to Rs.10.62crores.He referred to page No.47 and 48 of the PB.He relied upon the cases of Walfort Share & Stock Brokers Ltd.(326 ITR 1),Nicholas Piramal (India) Ltd. (69taxmann.com164).The Departmental.Represntative(DR)relied on the order of the FAA . 4.We have heard the rival submissions and perused the material before us.We find that assessee had not claimed any expenditure against exempt income,that AO had made a disallowance of Rs.6.04 lakhs invoking provisions of section 14A…

DCIT, Cir-4, Kolkata vs. M/S Jay Shree Tea & Industries Ltd., Kolkata

In the result, the appeal of the Revenue is dismissed

ITA 675/KOL/2014[2009-2010]Status: DisposedITAT Kolkata03 Feb 2017AY 2009-2010

Bench: Shri P.M. Jagtap & Shri S.S. Viswanethra Ravi

Section 14A

…014 Assessment year: 2009-2010 Page 3 of 6 making investment out of which the exempt income has been earned. In this connection, the reliance is placed on the judgement of Hon’ble Supreme Court in the case of CIT vs. Walfort Share & Stock Brokers Pvt. Ltd. [326 ITR 1} and the recent judgement of the Hon’ble ITAT, Mumbai in the case of Justice Sam P. Bharucha vs. The Addl. Commissioner of Income Tax 11(3), Mumbai in the [ITA 3889/Mum/2011] wherein it was held that unless a direct nexus is made out between the expenditure incurred and the exempted income earned, no disallowance can be made. Under the above circu…

Lebong Investments Pvt. Ltd., Kolkata vs. D.C.I.T., Circle-11, Kolkata

In the result, assessee’s appeal stands allowed

ITA 2652/KOL/2013[2009-2010]Status: DisposedITAT Kolkata18 Jan 2017AY 2009-2010

Bench: Shri N.V.Vasudevan & Shri Waseem Ahmedassessment Year :2009-10

Section 143(3)Section 14A

…IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH “C” KOLKATA Before Shri N.V.Vasudevan, Judicial Member and Shri Waseem Ahmed, Accountant Member Assessment Year :2009-10 Lebong Investments Pvt. V/s. Deputy Commissioner of Ltd., Camellia House, 14, Income Tax, circle-11, Gurusaday Road, Kolkata- Aayakar Bhawan, P/7 700 019 Chowringhee Road, [PAN No.AAACL 5002 E] Kolkata-700 069 .. अपीलाथ" /Appellant ""यथ"/Respondent Shri P.N. Rajendran, FCA अपीलाथ" क" ओर से/By Appellant None ""यथ" क" ओर से/By Respondent 15-11-2016 सुनवाई क" तार"ख/Date of Hearing 18-01-2017 घोषणा क" तार"ख/Date of Pronouncement आदेश /O R D E…

Sanofi Pasteur India P.Ltd, Mumbai vs. Asst CIT 8(3), Mumbai

In the result, appeal of the assessee is partly allowed and that of the revenue is dismissed

ITA 769/MUM/2013[2008-09]Status: DisposedITAT Mumbai11 Jan 2017AY 2008-09

Bench: Shri Mahavir Singh () & Shri Ashwani Taneja ()

Section 143(3)

…under the head "profits and gains of business". The word "profit" implies a comparison between the state of business at two specific dates, usually separated by an interval of "12 months". In the case of CIT v. Walfort Share and Stock Brokers(P.) Ltd. (2010) 326 ITR 1/ 192 Taxman 211 (SC) Hon'ble Supreme Court has held that the scheme of 12 I.T.A. No.647 &769/Mum/2013 Sections 30 to 37 is that profits and gains must be computed subject to certain allowance for 'deductions/ expenditure. The charge is not on gross receipts, it is on profits and gains. Profits have to be computed after deducting losses and expenses…

DCIT 8(3), Mumbai vs. Sanofi Pasteur India P. Ltd, Mumbai

In the result, appeal of the assessee is partly allowed and that of the revenue is dismissed

ITA 647/MUM/2013[2008-09]Status: DisposedITAT Mumbai11 Jan 2017AY 2008-09

Bench: Shri Mahavir Singh () & Shri Ashwani Taneja ()

Section 143(3)

…under the head "profits and gains of business". The word "profit" implies a comparison between the state of business at two specific dates, usually separated by an interval of "12 months". In the case of CIT v. Walfort Share and Stock Brokers(P.) Ltd. (2010) 326 ITR 1/ 192 Taxman 211 (SC) Hon'ble Supreme Court has held that the scheme of 12 I.T.A. No.647 &769/Mum/2013 Sections 30 to 37 is that profits and gains must be computed subject to certain allowance for 'deductions/ expenditure. The charge is not on gross receipts, it is on profits and gains. Profits have to be computed after deducting losses and expenses…