BARODA INDUSTRIES PRIVATE LIMITED,MUMBAI vs. ASSISTANT COMMISSIONER OF INCOME TAX, MUMBAI

PDF · subscribers
ITA 1880/MUM/2024Status: DisposedITAT Mumbai18 February 2025AY 2017-20183 pages
AI SummaryWithdrawn

What did the Tribunal hold?

The Tribunal noted that the assessee had filed an application under the Vivad-se-Vishwas Scheme 2024 (VSVS-2024) with the intention to settle the dispute. The assessee had submitted Form No. 1 and deposited the requisite amount of tax. Consequently, the Tribunal held that the appeal filed by the assessee was liable to be dismissed as withdrawn. No specific findings were made on the merits of the grounds of appeal concerning Section 14A and Rule 8D disallowance, as the appeal was withdrawn by the assessee. The operative direction was to dismiss the appeal as withdrawn.

What were the facts?

The assessee, Baroda Industries Pvt. Ltd., filed an appeal before the Income-Tax Appellate Tribunal (ITAT), Mumbai, challenging the order of the Commissioner of Income-tax (Appeals) [CIT(A)] dated 29.02.2024. This order pertained to Assessment Year (A.Y.) 2017-18 and was passed under Section 250 of the Income-tax Act, 1961. The primary dispute revolved around a disallowance under Section 14A of the Act, amounting to Rs. 64,18,706, made by the Assessing Officer (AO) and upheld by the CIT(A). The assessee had made a suo-moto disallowance of Rs. 15,50,000 on a reasonable basis. The appeal was listed for hearing on 14.02.2025 and pronounced on 18.02.2025.

What were the issues?

1. Whether the CIT(A) erred in not considering certain grounds of appeal raised by the assessee relating to the disallowance under Section 14A read with Rule 8D, made by the AO? 2. Whether the CIT(A) erred in holding that the assessee cannot challenge the non-recording of satisfaction by the AO before making disallowance as per Rule 8D, on the ground that the assessee had itself made a suo-moto disallowance? 3. Whether the CIT(A) and AO erred in failing to appreciate that the assessee had worked out and offered to tax a disallowance under Section 14A on a 'reasonable basis' and had disallowed various expenses on its own volition? 4. Whether the CIT(A) erred in failing to appreciate that disallowance under Section 14A can only be made in respect of expenditure with a direct and proximate nexus with earning of exempt income? Assessee's Contentions: The assessee argued that the AO resorted to Rule 8D mechanically without recording satisfaction. It contended that the CIT(A) erred in holding that the assessee could not challenge the non-recording of satisfaction as the assessee had made a suo-moto disallowance. The assessee further argued that it had offered a suo-moto disallowance of Rs. 15,50,000 on a reasonable basis, voluntarily disallowing various expenses. Finally, it argued that Section 14A disallowance is only applicable to expenditure with a direct and proximate nexus to exempt income. Revenue's Contentions: The judgment records no specific contentions for the revenue.

Which sections of the Income-tax Act were involved?

Section 14A,Section 250

AI-generated summary — verify with the full judgment below

Before: SHRI NARENDER KUMAR CHOUDHRY & SMT. RENU JAUHRI

For Appellant: Shri Vaibhav Jhunjhunwala
For Respondent: Ms. Monica Pande
Hearing: 14.02.2025Pronounced: 18.02.2025

Assessee by : Shri Vaibhav Jhunjhunwala Revenue by : Ms. Monica Pande Date of Hearing 14.02.2025 Date of Pronouncement 18.02.2025 आदेश / O R D E R PER RENU JAUHRI [A.M.] :- This appeal is filed by the assessee against the order of the Learned Commissioner of Income-tax (Appeals), Mumbai/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] dated 29.02.2024 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year [A.Y.] 2017-18.

2.

The assessee has raised the following grounds of appeal: “I. ADDITION/DISALLOWANCE UNDER SECTION 14A OF THE ACT OF RS.64,18,706/-:

A.Y. 2017-18 Baroda Industries Pvt. Ltd. 1.1 On the facts and in the circumstances of the case and in law, the learned Commissioner of Income tax (Appeals) [CIT (Appeals)] erred in not considering certain grounds of appeal raised by the Appellant relating to disallowance of Section 14A read with Rule 8D made by the learned Assessing Officer. 1.2 The learned CIT (Appeals) failed to appreciate that the learned Assessing Officer had resorted to Rule 8D in a mechanical manner without recording his "satisfaction" as to how the disallowance offered by the Appellant was not fair or reasonable. 1.3 On the facts and in the circumstances of the case and in law, the CIT(Appeals) erred holding that the appellant cannot challenge the non- recording of satisfaction before making disallowance as per Rule 8D on the ground that the appellant had itself made a suo-moto disallowance. 1.4 The learned CIT(Appeals) and the learned Assessing Officer failed to appreciate that the appellant had worked out and offered to tax a disallowance under Section 14A of the Act for a sum of Rs.15,50,000/- on "reasonable basis". The learned CIT(Appeals) and the learned Assessing Officer failed to appreciate that the appellant had disallowed various expenses on its own volition while working out the said disallowance on "reasonable basis". 1.5 On the facts and in circumstances of the case and in law, CIT(Appeals) failed to appreciate that disallowance under Section 14A can be made only in respect of such expenditure which has a direct and proximate nexus with earning of exempt income.”

3. At the outset, Ld. AR informed that with an intention to settle the dispute, the assessee has filed application under Vivad-Se-Vishwas Scheme 2024 (VSVS- 2024). It has filed form No. 1 and has also deposited the requisite amount of tax and therefore the appeal of the assessee is liable to be dismissed as withdrawn.

4. Accordingly, the same is dismissed as withdrawn. Order pronounced in the open court on 18.02.2025.

More judgments on Section 14A

All 15,875 judgments and leading authorities on Section 14A →

Recent GST High Court judgments

Search GST case law →