MAHESWARI PLAZA RESORTS LIMITED,HYDERABAD vs. ASST. COMMISSIONER OF INCOME TAX, CIRCLE-16(2), HYDERABAD

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ITA 694/HYD/2018Status: DisposedITAT Hyderabad08 September 2021AY 2013-142 pages
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What did the Tribunal hold?

The Tribunal upheld the disallowance of speculation loss as it was not pressed. For the Section 14A disallowance, the Tribunal directed that it should not exceed the amount of exempt income earned by the assessee.

What were the facts?

The assessee appealed against disallowances made by the lower authorities for speculation loss and under Section 14A read with Rule 8D. The ground related to speculation loss was not pressed by the assessee.

What were the issues?

Whether the disallowance under Section 14A read with Rule 8D can exceed the exempt income earned by the assessee.

Which sections of the Income-tax Act were involved?

Section 14A

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Income Tax Appellate Tribunal, Hyderabad ‘ B ‘ Bench, Hyderabad

Before: Shri S.S. Godara & Shri Laxmi Prasad Sahu

Hearing: 26/08/2021Pronounced: 08/09/2021
4.

Next comes section 14A r.w. Rule 8D disallowance of Rs.6,28,033 and Rs.1,03,061 assessment year-wise respectively. There is no dispute about the clinching fact that the assessee had indeed derived its corresponding exempt income in both these assessment years. We further note that the hon'ble Delhi high court’s decision in Joint Investment Pvt Ltd vs. CIT 372 ITR 694 (Del.) holds that the impugned section 14A r.w. Rule 8D disallowance does not exceed the amount of exempt income itself. We therefore partly decline Revenue’s arguments supporting the same to this limited extent. The Assessing Officer is directed to finalise his consequential computation in both these assessment years and shall make sure that the disallowance sum shall not exceed the assessee’s corresponding exempt income; as the case may be. (No other ground has been pressed before us). These two assessee’s appeals are partly allowed in above terms. A copy of the order may be placed in both the files.

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