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Income Tax Appellate Tribunal, JAIPUR BENCHES,”B” JAIPUR
Before: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA. No. 191/JP/2018
आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Jh fot; iky jko] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA. No. 191/JP/2018 fu/kZkj.k o"kZ@Assessment Years : 2013-14 cuke M/s Trimurty Colonizers & Builders Pvt. The ITO, Vs. Ltd., Ward-6(4), 601, Geeta Enclave, Vinoba Marg, Jaipur. C-Scheme, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAACT 6613 K vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Rohan Sogani (C.A.) jktLo dh vksj ls@ Revenue by : Smt. Roonipal (JCIT) lquokbZ dh rkjh[k@ Date of Hearing : 05/12/2019 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 06/12/2019 vkns'k@ ORDER PER: VIKRAM SINGH YADAV, A.M.
This is an appeal filed by the assessee against the order of ld. CIT(A)-II, Jaipur dated 14.11.2017 for the Assessment Year 2013-14 wherein the sole ground raised by the assessee related to sustenance of disallowance of Rs. 1,49,445/- U/s 14A r/w Rule 8D(2)(iii).
During the course of hearing, the ld AR submitted that the assessee had made investment in the previous financial years in M/s Trimurty Landcon India (P) Ltd., SBBJ and a partnership firm. All the investments were made out of interest free funds available with the 2 M/s Trimurty Colonizers & Builders Pvt. Ltd. vs. ITO assessee. There is no expenditure which has been incurred by the assessee in earning the exempt income. It was further submitted that it is a settled legal proposition of law that the disallowance made by the Assessing Officer cannot exceed the exempt income and in the instant case, the total exempt income which has been earned by the assessee is only 7,109/- against which Rs. 5,67,268 was disallowed by the Assessing Officer and which has been restricted to Rs 149,445 by the ld CIT(A). In support, reliance was also placed on the Coordinate Bench decision in case of ACIT vs. M/s Mahindra World City (Jaipur) Ltd. (in dated 04.02.2019) wherein it was held as under:-
“12. The disallowance on account of common/indirect administrative expenditure being 0.5% of the average investment as per Rule 8D(2)(iii) of the Rules. Since the dividend income during the year is only Rs. 1,81,392/-, therefore, in view of the binding precedents on this issue, the disallowance made U/s 14A read with Rule 8D(2)(iii) of the Rules, cannot be more than the exempt income. The Hon’ble Delhi High Court in the case of Cheminvest Ltd. v. Commissioner of Income-tax-IV 378 ITR 33 has held that if there is no exempt income earned by the assessee during the year, no disallowance can be made on account of administrative expenditure, therefore, we find that the disallowance restricted by the ld. CIT(A) to the extent of exempt income is proper and justified.”
Per contra, the ld. DR has relied on the finding of the lower authorities. It was submitted that the assessee must have incurred 3 M/s Trimurty Colonizers & Builders Pvt. Ltd. vs. ITO certain expenditure to take care of its investment and therefore, it cannot be accepted that no expenditure has been incurred by the assessee. It was accordingly submitted that the ld. CIT(A) has rightly sustained the disallowance under Rule 8D(2)(iii) of the IT Rules.
We have heard the rival contentions and pursued the material available on record. Undisputedly, the investments have been made in the previous financial, there is no fresh investment which has been made during the year and income which has been claimed as exempt is Rs 7,109. Following the binding precedents on the issue as also held by the Coordinate Bench in case of ACIT vs. M/s Mahindra World City (Jaipur) Ltd. (supra), the disallowance made U/s 14A read with Rule 8D(2)(iii) of the Rules cannot be more than the exempt income. Therefore, the disallowance made by the Assessing Officer is hereby restricted to the extent of exempt income and the balance disallowance is hereby by directed to be deleted.
In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open Court on 06/12/2019.