M/S. VAIBHAV CREDIT & PORTFOLIO PVT. LTD,MUMBAI vs. DCIT CENT. CIRCLE 3(1), MUMBAI

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ITA 2085/MUM/2021Status: DisposedITAT Mumbai31 October 2022AY 2018-194 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the assessee's claim to consider only investments yielding exempt income for disallowance calculation is justified. The AO is directed to recalculate the disallowance based on this principle.

What were the facts?

The assessee earned exempt dividend income but made a minimal disallowance for expenses related to investments. The Assessing Officer (AO) made a substantial disallowance under Section 14A read with Rule 8D, which was confirmed by the CIT(A).

What were the issues?

Whether the disallowance under Section 14A should be restricted to investments that actually yielded exempt income during the year.

Which sections of the Income-tax Act were involved?

Section 14A

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Income Tax Appellate Tribunal, ‘SMC’ BENCH, MUMBAI

For Respondent: Shri. Ujjawal Chavan SR AR
Hearing: 20.09.2022Pronounced: 31.10.2022
1.

This appeal is filed by the assessee against the appellate order passed by the Commissioner of income tax (appeal) – 51, Mumbai dated 5/11/2021 for assessment year 2018 – 19 wherein the assessment order dated 27/12/2019 passed by the Dabur to Commissioner of income tax, central circle – 3 (1), Mumbai (the AO) u/s 143 (3) of the income tax act 1961 (the act) wherein disallowance u/s 14 A of the income tax act was made of Rs. 289,025 is confirmed.

2.

Following grounds are raised:-

2. On the facts and in the circumstances of the case and in law the learned Assessing Officer erred in initiating penalty u/s. 270A(1) of the IT Act 1961 and the reason assigned for doing so are wrong and contrary to the provision of Income Tax Act and rules made there under.

3. On the facts and circumstances of the case and in law, learned Assessing Officer erred in charging interest u/s. 234B and 234C of the IT Act and the reason assigned for doing so are wrong and contrary to the provision of Income Tax and rules made there under”.

3.

Brief facts of the case shows that assessee is subjected to search u/s 132 of the act on 21/8/2017. The assessee filed return of income on 9/10/2018 declaring total income of ₹ 116,610/–. Notice u/s 143 (2) of the act was issued. It was found that assessee has made investment in shares to the tune of ₹ 19.38 crores as on 31/3/2017 and ₹ 17.50 crores as on 31/3/2018 whereas the dividend income earned by the assessee is ₹ 390,113/–. Assessee

4.

In appeal before the learned CIT – A appeal of the assessee failed.

5.

Before us despite notice, none appeared on behalf of the assessee on last 4 occasions, therefore, we do not have any other alternative but to dispose of this appeal on the facts and merits of the case as per information available on record.

6.

The learned departmental representative vehemently supported the orders of the lower authorities.

7.

We have carefully considered the contentions of the learned departmental representative as well as perused the orders of the lower authorities. We find that in the present case the assessee has earned exempt income of ₹ 390,113/–. The assessee disallowed a sum of ₹ 4574 /– which included Demate charges of ₹ 4098/–. The claim of the assessee before the learned CIT – A is that only those

8.

In the result appeal of the assessee is allowed for statistical purposes.

Order pronounced in the open court on 31.10.2022.

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