NIRAJ KUMAR ASSOCIATES PVT.LIMITED,PASHAN vs. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE - 2, PUNE

This is an appeal filed by the assessee directed against the order of ld. Commissioner of Income Tax (Appeals)-3, Pune (‘CIT(A)’ for short) dated 30.08.2017 for the assessment year 2014-15.

The only issue raised in the present appeal relates to the quantum of disallowance u/s 14A of the Income Tax Act, 1961 (‘the Act’ for short). 3. The brief facts of the case are as under :- The appellant is a company incorporated under the provisions of the Companies Act, 1956. It is engaged in the business of development of residential and commercial projects. The return of income for the assessment year 2014-15 was filed on 16.03.2015 declaring total income of Rs.39,54,618/-. Against the said retuned income, the assessment was completed by the Assistant Commissioner of Income Tax, Circle-2, Pune (‘the Assessing Officer’ for short) at a total income of Rs.1,11,12,370/-. While doing so, the Assessing Officer made disallowance of claim on account of Premium on cancellation of booking of Rs.20,67,465/- and further addition of Rs.50,90,283/- u/s 14A of the Act in addition to suo motto disallowance of Rs.1,41,66,358/-. 4. Being aggrieved an appeal was preferred before the ld. CIT(A) contesting only addition made u/s 14A of the Act. The appellant had disputed the methodology of computation of disallowance u/s 14A on the ground that while computing the value of the amount of investment, the investments which yielded the exempt income net of the credit balances should be considered. The ld. CIT(A) had not concurred with the assessee and accordingly dismissed the appeal. 5. Being aggrieved by the above decision of the ld. CIT(A), the appellant is before us in the present appeal. 6. Before us, the ld. AR contended that the method of computation of average value of investment by Assessing Officer is incorrect. Alternatively, he submitted that the amount of disallowance u/s 14A cannot be exceed the exempt income and in support of this he relied on the decision of the Hon’ble Delhi High Court in the case of Joint Investments Pvt. Ltd. vs. CIT, 372 ITR 694 (Delhi) and the decision of Mumbai Bench of the Tribunal in the case of Daga Global Chemicals P. Ltd. vs. ACIT, 46 ITR 70.