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Income Tax Appellate Tribunal, DELHI BENCH ‘E’ : NEW DELHI
PER SHAMIM YAHYA, ACCOUNTANT MEMBER :
This appeal by the assessee arises out of the order of ld. CIT (A)-6, Delhi dated 18.02.2019 and pertains to assessment year 2015-16. 2. The grounds of appeal taken by the assessee read as under :-
1. That on the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred in not admitting the additional ground of appeal raised at the time of appellate proceedings in respect of disallowance u/s 14A claiming that the disallowance is to be restricted to the extent of dividend income received of Rs.5,04,930/-. The omission of the ground of appeal was not willful or
The Ld. CIT(A) has erred in not admitting the Additional Ground of Appeal as the question of disallowance u/s 14A is a question of law which arose from the facts in the assessment and the appellate proceedings having a bearing on the Tax Liability of the appellant company.
3. That the Ld. CIT(A) has failed to appreciate the fact that the total dividend income exempt is Rs.5,04,930/- and thus disallowance u/s 14A cannot exceed Rs.5,04,930/- as held by Hon'ble Delhi High Court in the case of Joint Investment Pvt. Ltd. vs CIT (2015) 372 ITR 694(DEL) & further by Hon'ble Supreme Court in the case of Pro CIT vs. State Bank of Patiala. Thus, disallowance u/s 14A of Rs. 5,34,75,577/- made in the computation of income is incorrect and hence relief of Rs.5,29,70,647/- is prayed for.”
3. The AO in this case made disallowance of Rs.59,47,00,326/- under section 14A of the Income-tax Act, 1961 (for short 'the Act') invoking the Rule 8D. Upon assessee’s appeal, ld. CIT (A) considered the submission that assessee has sufficient own funds and the dividend income earning during the year which is exempt as Rs.5,04,930/-. He also referred to CIT (A)’s order in assessee’s own case for earlier year and finally conclude as under :-
“5.2.3 In the year under consideration also, the facts of the case are same. It is seen that total investment to shareholders funds is in the ratio of 56.67%. It is a fact that dividend income earned during the year which is exempt is Rs. 5,04,930/ - whereas the disallowance made by the assessee on its own was Rs. 5,34,75,577/-. It has been held by the Hon'ble Delhi High Court in the case of Joint Investments Pvt. Ltd. (supra) that disallowance under section 14A cannot exceed the exempt income earned which in the case under consideration is Rs.5,04,930/ - against which the appellant has itself disallowed Rs. 5,34,75,577/-. This position has also been affirmed by the Hon'ble Supreme Court in the case Pr.CIT vs. State Bank of Patiala (supra). Hence, no further disallowance is called for under section 14A. The further disallowance of Rs.59,47,00,326/- is deleted.” the ld. CIT (A) has dismissed as not admitted. The additional ground raised before the ld. CIT (A) reads as under :-
“The Ld. AO has failed to appreciate that the total dividend income exempt is Rs.504930/- and thus disallowance u/s 14A cannot exceed Rs.504930 as held by Hon’ble Delhi High Court in the case of Joint Investment Pvt. Ltd. vs CIT (2015) 372 ITR 694 (Delhi) & further by Hon’ble Supreme Court in the case of Pr.CIT vs. State Bank of Patiala. Thus, disallowance u/s 14A of Rs.5,34,75,577/- made in the computation of income is incorrect and needs to be disallowed to the extent of dividend income Rs.5,04,930/- only. Thus relief of Rs.5,29,70,647/- is prayed to be allowed.”
Ld. CIT (A) has dismissed this ground as unadmitted by observing as under :-
“2.2 I have considered the application for admitting additional ground. Section 250(5) provides that the Commissioner (Appeals) may, at the hearing of an appeal, allow the appellant to go into any ground of appeal not specified in the grounds of appeal, if the Commissioner (Appeals) is satisfied that the omission of that ground from the form of appeal was not wilful or unreasonable. The additional ground being urged is not a legal ground and is based on the facts of the case. It has been held by the Hon'ble ITAT Mumbai in the case of Batliboi & Co. Ltd. Vs DCIT (67 ITD 397) and Hon'ble ITAT, Indore in the case of S. Kumars Tyre Mfg. Co. Ltd. Vs DCIT (61 ITD 326) that if nothing has been brought on the record by the appellant to show that how the omission of the said ground from the form of appeal was not wilful or unreasonable, the additional ground cannot be admitted. Further, in the case of Addl. CIT Vs Gurjargravures P. Ltd. (111 it 1) it has been held by the Hon'ble Supreme Court that where a claim has not been made before the AO, the claim cannot be entertained in the appellate proceedings. This is apparent from the details submissions made before the AO during assessment proceedings and while responding to a query regarding disallowance under section 14A (pages 69 to 72 of the paper book), no such plea was raised before the AO.”
6. Against this order, assessee is in appeal before us. We have heard both the parties and perused the records. ./2019 7. Ld. Counsel for the assessee submitted that the additional ground was a legal ground and it should have been accepted by the ld. CIT (A) and duly adjudicated. In support of the proposition, he canvassed recent decision of Hon’ble Delhi High Court in the case of PCIT vs. Era Infrastructure (India) Ltd. (2022) 448 ITR 674 (Delhi). 8. Having heard both the parties, we find that the ld. CIT (A) has dismissed the additional ground on the ground that it is not a legal ground. We do not find ourselves in agreement with the above proposition. The ground is in fact a legal ground as duly adjudicated by Hon’ble jurisdictional High Court in the case of Era Infrastructure (India) Ltd. (supra). Moreover, it does not require reference to any fact which is not on record. The Hon’ble Apex Court in the case of Goetze India Ltd. vs. CIT 2006-TIOL-198-SC-IT has held that ITAT has power to admit and consider ground raised
otherwise than by revised return. Hence, we remit the issue to the file of ld. CIT (A). Ld. CIT (A) is directed to decide the issue afresh and pass a speaking order on the additional ground as per law. Needless to say, the assessee shall be provided an opportunity of being heard.
9. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on this 2nd day of February, 2023.