PR.COMMISSIONER OF INCOME TAX-4 vs. M/S HERO CORPORATE SERVICE LTD.

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ITA/768/2017HC DelhiDLHC01284658201730 January 2018Bench: HON'BLE MR. JUSTICE S. RAVINDRA BHAT,HON'BLE MR. JUSTICE A. K. CHAWLA1 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no interference was called for with the ITAT's order. The Court found that the facts of the case supported the concurrent view of the lower appellate authorities. The assessee had declared exempt income of ₹48,447/- and voluntarily offered a disallowance of ₹2,58,620/- under Section 14A. The Assessing Officer, however, made an 'astronomically high' disallowance of ₹3,57,82,473/-. The Court reasoned that in such circumstances, the concurrent view of the CIT(A) and the ITAT, based on settled principles from previous authorities, could not be faulted. The appeal was accordingly dismissed. The specific principle cited is that the AO's rejection of the assessee's explanation and offered disallowance, and the subsequent high disallowance, was not justified.

What were the facts?

The appeal concerns the assessment year(s) not specified in the judgment. The Pr. Commissioner of Income Tax-4 (Revenue) is challenging an order passed by the Income Tax Appellate Tribunal (ITAT). The ITAT had confirmed the decision of the Commissioner (Appeals) [CIT(A)]. The CIT(A) had set aside a disallowance made by the Assessing Officer (AO) under Section 14A. The AO had disallowed an amount of ₹3,57,82,473/-. The assessee, M/s Hero Corporate Service Ltd., had offered ₹2,58,620/- as disallowance against exempt income of ₹48,447/-. The AO rejected the assessee's explanation and the amount offered. The ITAT found no interference was called for due to concurrent findings of the lower appellate authorities.

What were the issues?

1. Whether the ITAT was justified in confirming the CIT(A)'s decision to set aside the disallowance made by the AO under Section 14A of the Income Tax Act, 1961, on the grounds that the AO could not have rejected the assessee's explanation and the amount offered to tax in the manner he did? Assessee's contentions: The judgment does not record any specific contentions made by the assessee before the High Court. However, the facts indicate the assessee had offered an amount as disallowance under Section 14A, which was accepted by the lower appellate authorities. Revenue's contentions: The Revenue, through the Pr. Commissioner of Income Tax-4, appealed the ITAT's order. The judgment implies the Revenue argued for the AO's disallowance to be upheld, as it challenges the ITAT's confirmation of the CIT(A)'s decision which set aside the AO's disallowance. The Revenue likely contended that the AO was justified in making a higher disallowance than what the assessee offered.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

$~1 * IN THE HIGH COURT OF DELHI AT NEW DELHI +

ITA 768/2017

PR.COMMISSIONER OF INCOME TAX-4 ..... Appellant

Through: Mr. Ruchir Bhatia, Advocate.

Versus

M/S HERO CORPORATE SERVICE LTD. ..... Respondent

Through: None.

CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE A. K. CHAWLA

O R D E R %

30.01.2018

The ITAT in this case confirmed the CIT (A)’s decision. The appellate Commissioner set aside the disallowance made under Section 14A holding that the explanation of the assessee and the amount offered to tax under Section 14A could not have been rejected by the Assessing Officer in the manner that he did. Besides the fact that the findings are concurrent, the Court is of the opinion that the facts of this case are such that no interference is called for. As against the exempt income of `48,447/-, the assessee had itself offered `2,58,620/- as disallowance. The Assessing Officer, however, disallowed the astronomically high figure of `3,57,82,473/-. In these circumstances, the concurrent view of the lower appellate authorities based upon the settled principle enunciated in previous authorities cannot be faulted. The appeal is accordingly dismissed.

S. RAVINDRA BHAT, J

A. K. CHAWLA, J JANUARY 30, 2018/vikas/

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