SUMA SHILP LTD,PUNE vs. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE - 6, PUNE

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ITA 1681/PUN/2017Status: DisposedITAT Pune03 July 2020AY 2012-134 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 disallowance under Section 14A cannot exceed the amount of exempt income. Since the suo motu disallowance offered by the assessee was greater than the exempt income, no further disallowance was permissible.

What were the facts?

The assessee claimed dividend income as exempt and offered a suo motu disallowance under Section 14A. The AO made a further disallowance, which was confirmed by the CIT(A). The assessee appealed this disallowance.

What were the issues?

Whether disallowance under Section 14A can exceed the amount of exempt income, and if the assessee's suo motu disallowance was sufficient.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE – VIRTUAL COURT

Before: SHRI R.S. SYAL & SHRI PARTHA SARATHI CHAUDHURY

For Appellant: Shri Nikhil Pathak
For Respondent: Shri Maruti W Maddewad

PER R.S.SYAL, VP : This appeal by the assessee arises out of the order passed by the CIT(A)-4, Pune on 01-03-2017 in relation to the assessment year 2012-13.

2.

The only issue raised in this appeal is against the confirmation of disallowance of Rs.8,94,157/- made by the Assessing Officer (AO) under section 14A of the Income-tax Act, 1961 (hereinafter also called `the Act’) read with Rule 8D of the Income-tax Rules, 1962.

3.

Succinctly, the facts of the case are that the assessee is engaged in the business of leasing, wind power generation, trading in shares, promoters & builders. It filed revised return declaring gross income at Rs.5.50 crore. It also earned dividend income of Rs.1,83,420/-, which was claimed as exempt. The assessee offered suo moto disallowance u/s.14A for a sum of Rs.3,00,000/-.

1.

Invoking the provisions of section 14A r.w. rule 8D of the Income- tax Rule, 1962, the AO computed the total disallowance at Rs.11,94,157/-. After allowing the benefit of amount already offered by the assessee, he made further disallowance of Rs.8,94,157/-, which came to be affirmed in the first appeal. The assessee is aggrieved by the sustenance of such disallowance.

4.

We have heard both the sides through Virtual Court and gone through the relevant material on record. The Hon'ble Delhi High Court in Cheminvest Ltd. vs. CIT (2015) 378 ITR 33 (Del) has held that if there is no exempt income, there can be no question of making any disallowance u/s 14A of the Act. Similar view has been taken by the Hon'ble Delhi High Court in CIT vs. Holcim India P. Ltd. (2014) 90CCH 081-Del-HC. Taking this proposition further, the Hon’ble jurisdictional High Court in Pr. CIT VS. HSBC Invest Direct (India) Ltd. (2020) 421 ITR 125 (Bom) has held that disallowance u/s 14A cannot exceed the amount of exempt income.

Adverting to the facts of the instant case, it is seen that the amount of suo motu disallowance offered by the assessee (Rs.3.00 lac) is greater than the amount of exempt income (Rs. 1.83 lac). That being the position, there can be no question of any further disallowance u/s 14A of the Act. We, therefore, overturn the impugned order on this count and delete the further disallowance sustained in the first appeal.

5.

In the result, the appeal is allowed. Order pronounced in the open Court on 03rd July, 2020.

Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; �दनांक Dated : 03rd July, 2020 GCVSR आदेश क� क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order is forwarded to: अ�ेिषत आदेश आदेश आदेश अपीलाथ� / The Appellant; 1. ��यथ� / The Respondent; 2.

3. The CIT(A)-4, Pune 4. The Pr.CIT-3, Pune िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे 5. “ए” / DR ‘A’, ITAT, Pune; 6. गाड� फाईल / Guard file. आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER, आदेशानुसार // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune

Date 1. Draft dictated on 02-07-2020 Sr.PS 2. Draft placed before author 02-07-2020 Sr.PS 3. Draft proposed & placed JM before the second member 4. Draft discussed/approved JM by Second Member. 5. Approved Draft comes to Sr.PS the Sr.PS/PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *

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