DCIT, CIRCLE-3(1), NEW DELHI vs. APL APOLLO TUBES LTD., DELHI

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ITA 648/DEL/2020Status: DisposedITAT Delhi13 February 2023AY 2014-154 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 upheld the CIT(A)'s decision, relying on jurisdictional High Court judgments. It held that disallowance under Section 14A read with Rule 8D cannot exceed the exempt income claimed by the assessee.

What were the facts?

The Revenue appealed against the CIT(A)'s order which restricted the disallowance under Section 14A to the amount of exempt income earned by the assessee. The Assessing Officer had made a higher disallowance.

What were the issues?

Whether disallowance under Section 14A can exceed the exempt income earned by the assessee.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, DELHI BENCH: A: NEW DELHI

Before: SHRI CHANDRA MOHAN GARG & SHRI B.R.R. KUMAR

Hearing: 08.02.2023Pronounced: 13.02.2023

Date of Hearing : 08.02.2023 Date of Pronouncement : 13.02.2023 ORDER PER CHANDRA MOHAN GARG, J.M.

This appeal filed by the revenue is directed against the order dated 11.11.2019 of the Ld. CIT(A)-I, New Delhi relating to Assessment Year 2014-15.

Page 2 of 7 2. The grounds of appeal raised by the revenue read as under:

1. On the facts and circumstances of the case, Ld. CIT(A) has erred in restricting the addition of Rs. 4,93,31,099/- made by the A.O. u/s. 14A r.w.s. 8D to Rs. 2,65,74,425/- even when the assessee has revised disallowance three times but no such disallowance was made in ITR.

3.

The learned Senior DR submitted that the Ld. CIT(A) has erred in restricting the addition made by the AO u/s. 14A of the Income Tax Act 1961 (for short ‘the Act’)r.w.s. 8D of Income Tax Rules 1962 (for short ‘the Act’) to Rs. 2,65,74,425/- even when the assessee has revised disallowance three times but no such disallowance was made in the ITR in the Income Tax of return filed by the assessee for relevant A.Y. 2014-15.

4.

Therefore the impugned first appellate order may kindly be set aside by restoring that of the AO.

5.

Replying to the above the learned counsel of the assessee by placing reliance on the judgment Hon’ble jurisdictional High Court of Delhi in the case of Joint Investment Pvt. Ltd., vs Commissioner of Income Tax reported as 372 ITR 694 (Del) submitted that the disallowance under said provisions cannot exceed to the actual

Page 3 of 7 exempt income claim by the assessee for the relevant financial period. Further placing copy of the order dated 30.07.2021 ITAT Delhi Bench in assessee’s own appeal for A.Y. 2013-14 and submitted that the Tribunal in the identical facts and circumstances has held that no disallowance is called for in absence of exempt income earned claimed by the assessee dismissing the appeal and ground no. 2 of the revenue. Therefore the Ld. CIT(A) was right in restricting the disallowance to the exempt income of the assessee.

6.

On careful consideration of rival submissions we respectfully note that in the case of Joint Investment Pvt. Ltd. vs Commissioner of Income Tax (supra) Their Lordship speaking for jurisdictional High Court has held that the disallowance u/s. 14A r.w.r. 8D of the Rules cannot be more than the exempt income claimed by the assessee. From the relevant part of first appellate order para 7 to 7.3.2 we observed that the Ld. CIT(A) has followed the order of Hon’ble Punjab & Haryana High Court in the case of PCIT vs State Bank of India to hold that the amount of disallowance u/s. 14A is to be restricted to the exempt income claim by the assessee and not Page 4 of 7 a higher figure. The preposition rendered by Hon’ble jurisdictional High Court in the case of Chem Investment also rendered similar preposition which is squarely applicable to the before us in favour of the assessee. Therefore we are unable to see any valid reason to interfere with the findings arrived by the Ld. CIT(A) while restricting the disallowance to Rs. 2,65,74,425/- that is to the exempt income claimed by the assessee. Therefore sole ground of revenue being devoid of merits is dismissed.

10.

In the result appeal of the revenue is dismissed.

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