DCIT CENTRAL CIRCLE-31, NEW DELHI vs. BHILWARA ENERGY LTD., NEW DELHI

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ITA 773/DEL/2020Status: DisposedITAT Delhi14 February 2023AY 2014-152 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the disallowance under Section 14A cannot exceed the exempt income earned. The Revenue's appeal was dismissed, upholding the CIT(A)'s relief to the assessee.

What were the facts?

The assessee suo moto disallowed Rs. 9.9 crores under Section 14A read with Rule 8D in its return of income. The assessee later pleaded that this disallowance was made in error and sought remission. The exempt income earned was only Rs. 2,093.

What were the issues?

Whether the suo moto disallowance made by the assessee under Section 14A read with Rule 8D was justified when it significantly exceeded the actual exempt income earned.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHIBENCH ‘A’, NEW DELHI

Before: Sh. C. M. GargDr. B. R. R. Kumar

Hearing: 08.02.2023Pronounced: 14.02.2023

Per Dr. B. R. R. Kumar, Accountant Member:

1.

The present appeal has been filed by Revenue against the order of the ld CIT(A)-33, New Delhi dated 16.09.2019.

2.

The Revenue has raised the following grounds of appeal:

“1. Whether on the facts and circumstances of the case, the ld CIT(A) has erred in law and on facts in allowing relief to the assessee on the suo moto disallowance made by the assessee u/s 14A read with rule 8D of the Income Tax rules, 1962 in his return of income filed on 25.11.2015.”

3.

The assessee filed return of income declaring a loss of Rs.16.13 crores. The assessee company suo moto disallowance an amount of Rs. 9.9 crores consisting of interest of Rs. 9.5 crorees and other expenses of Rs. 40 lakhs on account of disallowance u/s 14A read with Rule 8D. Before the AO, the 2 Bhilwara Energy Ltd assessee pleaded that the amount has been wrongly disallowed suo moto and hence, remission be granted from the returned income.

4.

The ld. CIT(A) after considering the following judgments:

 Holcim India Pvt. Ltd. in & 299/2014 (Del)  Cheminvest Ltd. in ITA No. 749/2014 (Del)  Joint Investment Pvt. Ltd Vs. CIT in ITA No. 117/2015 (Del)

5.

The fact that the exempt income received by the assessee of Rs. 2,093(Rupees Two thousand and ninety three only) not been in dispute. The disallowance in any case cannot be more than the exempt income earned. The state cannot clutch the undue benefit of the mistake committed by the tax payer. Hence, we decline to interfere with the order of the ld CIT(A).

6.

In the result, the appeal of the Revenue is dismissed.

Order Pronounced in the Open Court on 14/02/2023.

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