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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI ABY T VARKEY & SHRI AMARJIT SINGH
आदेश / O R D E R Per Amarjit Singh (AM): These 4 appeals filed by the assessee are directed against the different orders passed by the ld. CIT(A) u/s 250 of the Act for A.Ys. 2012-13 to 2015-16. Since all these appeals are based on similar issue and identical facts therefore, for the sake of convenience all these appeals are adjudicated together by taking as a lead case and its finding will be applied mutatis mutandis to the other appeals wherever it is applicable. ITA No. 1461/Mum/2023 P a g e | 2 & 1468/Mum/2023 Shrey Technologies Pvt. Ltd. Vs. DCIT, CC-8(2) “1. On the facts and in the circumstances of the case and in law the Commissioner of Income-tax (Appeals)-50 Mumbai has erred in passing the appeal order by confirming of addition of Rs. 2,01,077/ under section 14A as calculated r.w.s rule 8 of the income tax act 1961. 2 On the facts and in the circumstances of the case and in law the Commissioner of Income-tax (Appeals)-50 Mumbai has erred in rejecting submission of the appellant that it has not incurred any expenditure on invested amount in the subsidiary company as promoters nothing can be disallowed u/s 14A.
Appellant therefore pray that assessing officer may be directed to delete disallowances expenses of Rs.2,01,077 u/s 14A. Even state bank of India already filed personal insolvency case against promoters of appellant. The appellant craves leave to amend, alter or delete any of the above grounds of appeal
.”
2. The solitary issue in the ground of appeal filed by the assessee is of addition of Rs.201,077/- u/s 14A r.w.Rule 8D of the Income Tax Rules 1962.
3. The fact in brief is that assessment u/s 153A r.w.s 143(3) of the Act was completed on 13.12.2019. During the course of assessment the assessing officer noticed that assessee had earned exempt income of Rs.15,30,360/- and no disallowance has been made u/s 14A r.w.Rule 8D of the I.T Rule. On query, the assessee explained that disallowance u/s 14A r.w.Rule 8D should not be made since, the exempt income of Rs.15,30,360/- entirely was dividend income and there was no expenditure incurred to earn the same. However, the AO has not agreed with the submission of the assesse. The assessing officer stated that assessee has earned dividend income of Rs.15,30,360/- and also claimed administrative expenditure in the profit and loss account at Rs.15,70,894/- which included amount of Rs.15,00,000/- remuneration given to the director of the assessee company. The assessing officer was of the view that decision regarding investment were taken by the director, therefore, there was nexus between the remuneration paid to director and exempt income earned from making the investment. Therefore, the assessing officer has made disallowance P a g e | 3 & 1468/Mum/2023 Shrey Technologies Pvt. Ltd. Vs. DCIT, CC-8(2) under Rule 8D(2)(iii) of the Rule equal to 0.5% of the average investment being administrative expenditure to the amount of R.2,19,077/-.
4. Aggrieved, the assessee filed the appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee.
Heard both the sides and perused the material on record. It is undisputed fact that assessee had earned exempt income in the form of dividend of Rs.15,30,360/- during the year under consideration. The assessing officer has categorically discussed in the assessment order that assessee had incurred administrative expenditure in the form of remuneration paid to the director of the company to the amount of Rs.15,00,000/-. Therefore, the assessing officer has made disallowance at Rs.201,077/- being 0.5% average investment after taking into consideration that decision regarding managing of investment are taken by directors of the assessee company. The assessing officer has not made any other disallowance under Rule 8D(2)(ii) in respect of interest expenditure since assessee has not made any investment out of the borrowed funds. Looking to the above facts and circumstances we don’t find any infirmity in the decision of ld. CIT(A), therefore, the ground of appeal
of the assessee stand dismissed.
6. In the result, the appeal of the assessee is dismissed. ITA No. 1463/Mum/2023
7. The solitary issue in the ground of appeal filed by the assessee is of addition of Rs.2,01,077/- made u/s 14A r.w. Rule 8D of the Income Tax Rules 1962.
8. Since the facts and issue involved in this appeal are similar to the ITA No.1461/Mum/2023 as mutatis mutandis this appeal of the assesse is also dismissed.
P a g e | 4 & 1468/Mum/2023 Shrey Technologies Pvt. Ltd. Vs. DCIT, CC-8(2) ITA No. 1465/Mum/2023 9. The solitary issue in the ground of appeal filed by the assessee of addition of Rs.1,96,186/- u/s 14A r.w. Rule 1962 of the Income Tax Rule 1962.
10. Since the facts and issue involved in this appeal are similar to the ITA No.1461/Mum/2023 as mutatis mutandis this appeal of the assesse is also dismissed. ITA No. 1468/Mum/2023
11. The fact in brief is that assessment u/s 153A r.w.s 143(3) of the Act was finalised on 13.12.2019. During the course of assessment the assessing officer noticed that assessee had claimed sundry balance written off of Rs.103,038/- in the profit and loss account under the head other expenses. During the course of assessment the assessing officer asked the assesse to furnish the detail when these amount was offered as income. However, no detail was furnished during the course of assessment, therefore, the assessing officer has disallowed the amount of Rs.103,038/- u/s 36(2)(i) of the Act.
12. The assesse filed the appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee.
13. Heard both the sides and perused the material on record. The assessee had claimed sundry balance written off of Rs.103,038/- under the head other expenses in the profit and loss account. The assessee has submitted before the ld. CIT(A) that the AO has not considered all the relevant required document. During the course of appellate proceedings before us the ld. Counsel has filed paper book comprising copies of audited balance sheet and profit and loss account along with audit report. In the audit report as placed at page no. 49 of the paper P a g e | 5 ITA Nos. 1461,1463,1465 & 1468/Mum/2023 Shrey Technologies Pvt. Ltd. Vs. DCIT, CC-8(2) book the auditor has explained that amount of Rs.103,038/- written off is pertained to the part of debtor which has already been offered for taxation. This amount was part of un-receivable debtors written off and corresponding income was already offered for taxation. Looking to the facts and circumstances we consider that the claim of the assesse is required to be verified from the relevant documents after affording opportunity to the assessee. Therefore, we restore this issue of claim of deduction u/s 36(2)(i) of Rs.103,038/- to the file of the AO for deciding a fresh after verification/examination of the relevant supporting details to be furnished by the assessee. Therefore, this appeal of the assessee is allowed for statistical purpose.
14. In the result, the appeal of the assessee vide ITA No. 1463/Mum/2023, ITA No. 1465/Mum/2023 are dismissed and ITA No. 1468/Mum/2023 is allowed for statistical purposes. Order pronounced in the open court on 18.07.2023 Sd/- Sd/- (Aby T Varkey) (Amarjit Singh) Judicial Member Accountant Member Place: Mumbai Date 18.07.2023 Rohit: PS