M/S. RAJDEEP AUTOMATION PVT.LTD,PUNE vs. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE - 5, PUNE

PER ANIL CHATURVEDI, AM :

These two appeals filed by the assessee are emanating out of the 1. separate orders of Commissioner of Income Tax (Appeals), 4 - Pune dated 12.06.2017 for A.Y.s 2012-13 and 2013-14. 2. Before us, at the outset, both the parties submitted that though the appeals filed by the assessee are for two different assessment years but the facts and issues involved in both the appeals are identical except for the assessment year and the amounts involved and therefore the submissions made by them while arguing one appeal would be equally applicable to the other appeal also and thus both the appeals can be heard together. In order. We, however, proceed with the facts in ITA No.2374/PUN/2017 for A.Y. 2012-13. 3. The relevant facts as culled out from the material on record are as under :-

Assessee is a company stated to be engaged in the business of trading and manufacturing of electronic and electric goods. Assessee filed

its return of income for A.Y. 2012-13 on 30.09.2012 declaring total income

of Rs.2,67,68,722/-. Thereafter, the case was taken up for scrutiny and assessment was framed u/s 143(3) of the Act vide order dated 19.02.2015

and the total income was determined at Rs.2,73,17,990/-. Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A), who vide

order dated 12.06.2017 (in appeal No.PN/CIT(A)-4/61/2015-16) dismissed

the appeal of assessee. Aggrieved by the order of Ld.CIT(A), assessee is now before us and has raised the following grounds :

“1. The learned Deputy Commissioner of Income Tax, Circle-5, Pune has erred in making aggregate disallowance of interest under section 14A of the Act of Rs. 5,45,265/- when the entire investment yielding exempt income has been made out of own funds and the Commissioner of Income Tax (Appeals)-4, Pune has erred in confirming the same.

2013-14 & the same was upheld by Ld.CIT(A). Aggrieved by the order of Ld.CIT(A) similar grounds have been raised by the assessee in ITA

No.2375/PUN/2017 for A.Y. 2013-14. 5. All the grounds being inter-connected are considered together.

attributable to the exempt income was not disallowed by the assessee while

computing the total income of the assessee. AO therefore on the basis of the methodology prescribed under Rule 8D of I.T. Rules worked out the disallowance u/s 14A of the Act at Rs. 5,49,265/- for A.Y. 2012-13 and Rs.6,49,557/- for A.Y. 2013-14. Aggrieved by the orders of AO, assessee

carried the matter before Ld.CIT(A), who vide orders dated 12.06.2017 for A.Y. 2012-13 and 2013-14 dismissed the appeals of assessee.

Aggrieved by the orders of Ld.CIT(A), assessee is now in appeal

before us.

is covered by the decisions of various High Courts, we reject the request for adjournment and decide to take up the hearing.

lower authorities, no disallowance u/s 14A r.w. Rule 8D is called for in the present cases. She therefore submitted that the addition be deleted. Ld.

D.R. on the other hand supported the orders of lower authorities.

is with respect to disallowance u/s 14A r.w. Rule 8D of the Act. It is an undisputed fact that assessee had earned exempt income of Rs.62,111/-

in A.Y. 2012-13 and Rs.1,66,283/- in A.Y. 2013-14 (as noted by Ld.CIT(A)

in Page 4 and 9 of his orders for A.Ys. 2012-13 and 2013-14, respectively).

However, the disallowance u/s 14A r.w. Rule 8D of I.T. Rules has been worked out at Rs.5,49,265/- for A.Y. 2012-13 and Rs.6,49,557/- for A.Y.

2013-14. It is thus seen that the disallowance u/s 14A worked out by AO

is much more than the exempt income earned by the assessee. We find

that the Hon’ble Punjab and Haryana High Court in the case of PCIT Vs.

State Bank of Patiala (2018) 99 Taxmann.com 285 has held that the amount of disallowance u/s 14A of the Act has to be restricted to the amount of exempt income only and not at a higher figure. We find that against the aforesaid order of Punjab and Haryana High Court, Revenue

filed S.L.P. before the Hon’ble Apex Court and the S.L.P. was dismissed by the Hon’ble Apex Court (2018) 99 Taxmann.com 286 (SC). We further find

that Hon’ble Delhi High Court in the case of PCIT Vs Caraf Builders &

Construction (P) Ltd., (2019) 101 Taxmann.com 167 (Del) after considering

the decisions of Hon’ble Apex Court in the case of Maxopp Investment Ltd. other decisions has held that disallowance u/s 14A cannot exceed exempt

income of the relevant year. In the present case, since assessee has earned exempt income of 62,111/- in A.Y. 2012-13 and Rs.1,66,283/- in A.Y. 2013-14, we relying on the aforesaid decisions, direct the disallowance u/s 14A r.w. Rule 8D be restricted only to the exempt income earned by assessee. We thus direct accordingly. Thus, the grounds of the assessee are partly allowed in both the appeals.

Order pronounced on 21st day of February, 2020. (GEORGE MATHAN) (ANIL CHATURVEDI) "या"यक सद"य / JUDICIAL MEMBER लेखा सद"य / ACCOUNTANT MEMBER

पुणे Pune; "दनांक Dated : 21st February, 2020. Yamini

आदेश क" ""त"ल"प अ"े"षत/Copy of the Order forwarded to : 1. अपीलाथ" / The Appellant

आदेशानुसार/ BY ORDER

//// व"र"ठ "नजी स"चव / Sr. Private Secretary आयकर अपील"य अ"धकरण ,पुणे / ITAT, Pune.