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Income Tax Appellate Tribunal, “B” BENCH, PUNE
Before: SHRI D. KARUNAKARA RAO, AM & SHRI PARTHA SARATHI CHAUDHURY, JM
आदेश / ORDER
PER D. KARUNAKARA RAO, AM:
This appeal filed by the assessee is directed against the order of the Ld. CIT(A), Pune-1 dated 22.08.2017 for the assessment year 2014-15.
The assessee has raised following grounds in this appeal:
“1. The learned CIT(A) erred in confirming the disallowance of Rs.6,67,862/- u/s.14A r.w.r. 8D(2)(iii). Therefore, it is prayed to delete the same.
2. The learned CIT(A) erred in not restricting the disallowance u/s.14A to the extent of actual expenditure claimed by the appellant in the profit and loss account i.e. to Rs.3,72,923/-. Therefore, without prejudice to ground No.1 and in alternate, it is prayed to restrict the disallowance u/s.14A to Rs.3,72,923/-.
Appellant craves leave to add/amend/alter any ground of appeal before or at the time of hearing.”
3. Briefly stated relevant facts include that the assessee company is engaged in the business of civil construction, contracting and real estate development, filed its original return of income for A.Y. 2014-15 on 29.09.2014 declaring total income of Rs. Nil. The payment of tax was made u/s.115JB of the Income Tax Act, 1961 (hereinafter referred to as „the Act‟). Thereafter, the case was selected for scrutiny and assessment order u/s.143(3) of the Act was passed on 29.08.2016 at the total income of Rs. Nil. Finally, the Assessing Officer made disallowance of Rs.6,67,862/- u/s.14A of the Act.
4. During First Appellate Proceedings, the Ld. CIT(Appeal) confirmed the disallowance made by the Assessing Officer against which the assessee is in appeal before us.
5. At the very outset, the Ld. Counsel for the assessee through video conference submitted that this is a case where the assessee earned share or profit which is exempted u/s.14A r.w.r.8D(2)(iii) of the Income Tax Rules. The actual expenditure debited to the P & L account by the assessee was to the tune of Rs.3,72,923/-. Ignoring the total debits, the Assessing Officer, under Clause (iii) sub section (2) of Rule 8D of the Rules made disallowance to the tune of Rs.6,67,862/-. The Ld. Counsel for the assessee further submitted that there are series of decisions in favour of the assessee wherein it is stated that disallowance should not exceed to the actual expenditure debited to Profit & Loss account. The Ld. Counsel for the assessee prayed that the matter may be restored to the file of the Ld. CIT(Appeal) for verification of accounts maintained by the assessee. For disallowance, there is existing specific law on this specific issue that disallowance should not exceed the actual expenditure.
On the other hand, the Ld. DR for the Revenue has relied on the orders of the Authorities below.
We have heard the submissions on the said limited issue and perused the materials available on record. We have also perused the order of the Ld. CIT(Appeal) specifically Para 7. We find the Ld. CIT(Appeal) has not passed a speaking order on the issue and there was no reference regarding the above settled legal position of law while adjudicating the issue. Therefore, we are of the opinion that the matter needs re-adjudication in consonance with the settled legal position of the law on the issue. In view of the above, the matter is restored to the file of the Ld. CIT(Appeal) for re-adjudication considering the settled legal position of the law on the issue. The Ld. CIT(Appeal) shall grant reasonable opportunity of hearing to the assessee as per set principles of natural justice. The assessee is directed to submit necessary documents/decisions as per requirements.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced on 9th day of June, 2020.
Sd/- Sd/- PARTHA SARATHI CHAUDHURY D. KARUNAKARA RAO JUDICIAL MEMBER ACCOUNTANT MEMBER ऩुणे / Pune; ददनाांक / Dated : 09th June, 2020. SB आदेश की प्रनिलऱपप अग्रेपषि / Copy of the Order forwarded to : अऩीऱाथी / The Appellant. 1. प्रत्यथी / The Respondent. 2. 3. The CIT(Appeal), Pune-
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