KREDENCE MULTI TRADING LIMITED,MUMBAI vs. ASSISTANT COMMISSIONER OF INCOME TAX-6(3)(2), MUMBAI

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ITA 474/MUM/2023Status: DisposedITAT Mumbai24 April 2023AY 2014-153 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The tribunal held that the disallowance under Section 14A read with Rule 8D cannot exceed the exempt income earned. Therefore, the disallowance was restricted to the extent of exempt income.

What were the facts?

The assessee earned dividend income exempt from tax and made a suo-moto disallowance under Section 14A. The Assessing Officer made a further disallowance under Rule 8D, which was upheld by the CIT(A).

What were the issues?

Whether the 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

Income Tax Appellate Tribunal, MUMBAI BENCH “H” BENCH

Before: SHRI VIKAS AWASTHY & SHRI AMARJIT SINGHvk-vk-la- 474@eaqcbZ@2023 ¼fu-oa- 2014&15½

Hearing: 19/04/2023Pronounced: 25/04/2023

vihykFkhZ }kjk@Appellant by : Shri Rahul Hakani, Adv. izfroknh }kjk@Respondent by : Smt. Anne Varghese, Sr. AR lquokbZ dh frfFk@Date of hearing : 19/04/2023 ?kks”k.kk dh frfFk@Date of pronouncement : 25/04/2023 vkns’k/ ORDER

PER VIKAS AWASTHY, JM:

1.

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (hereinafter referred to as “the CIT(A)”) dated 21.12.2022, for the assessment year 2014-15.

P a g e | (A.Y.2014-15) KREDENCE MULTI TRADING LTD.

2.

Shri Rahul Hakani appearing on behalf of the assessee submits that the grievance of assessee in appeal is against disallowance of Rs.33,57,250 u/s 14A of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) r.w.r. 8D of the Income Tax Rules,1962 (hereinafter referred to as “the Rules”). The Ld. Authorised Representative (AR) submits that during the period relevant to the assessment year under appeal, the assessee has earned dividend income exempt from tax Rs.2,83,358/-. The assessee has made suo-moto disallowance of Rs.1,09,357/- u/s 14A of the Act. The Assessing Officer (AO) invoking the provisions of Rule 8D and made further disallowance of Rs.33,57,250/-. The CIT(A) has upheld the disallowance made by the AO. The Ld. AR submitted that short prayer of the assessee is that disallowance u/s 14A of the Act may be restricted to the exempt income earned.

3.

On the other hand, Smt. Anne Varghese representing the Department vehemently defended the impugned order and prayed for dismissing appeal of the assessee. Both sides heard. It is an undisputed fact that the assessee has earned exempt income of Rs.2,83,358/- during the relevant period. The AO has computed total disallowance u/s 14A r.w.r. 8D at Rs.34,66,606/-. The assessee has suo-moto disallowed Rs.1,09,357/- u/s 14A of the Act. It is no more res-integra that disallowance u/s 14A r.w.r. 8D cannot be more than the exempt income earned during the relevant period. Therefore, we direct the AO to restrict disallowance to the extent of exempt income earned by the assessee during the period relevant to the assessment year under appeal. Needless to say, the AO shall consider suo-moto disallowance already made by the assessee while computing total disallowance.

P a g e | (A.Y.2014-15) KREDENCE MULTI TRADING LTD.

4.

In the result, appeal of the assessee is allowed, in terms aforesaid.

Order pronounced in the open court on Tuesday the 25th day of April 2023.

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