M/S P N WRITER & CO PVT LTD,MUMBAI vs. DY COMMISSIONER OF INCOME TAX CIRCLE 7(1),MUMBAI, MUMBAI

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ITA 1046/MUM/2022Status: DisposedITAT Mumbai10 August 2022AY 2009-104 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that disallowance under Section 14A cannot exceed the exempt income earned in that year. Following established High Court and Supreme Court precedents, the Tribunal directed the AO to restrict the disallowance to the amount of exempt income.

What were the facts?

The assessee challenged the disallowance made under Section 14A, arguing that the disallowance amount significantly exceeded the dividend income earned. The Assessing Officer (AO) and CIT(A) had confirmed a disallowance of Rs. 9,36,209/- against dividend income of Rs. 85,439/-.

What were the issues?

Whether the disallowance under Section 14A can exceed the exempt income earned by the assessee.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(4)Show list

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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI

Before: SHRI AMIT SHUKLA, JM & SHRI PRASHANT MAHARISHI, AM

For Appellant: Shri Priyesh Gansotta, Shri Shambhu Yadav, DR सुनवधईकीतधरीख/
For Respondent: Shri Shambhu Yadav

O R D E R

Per Amit Shukla, Judicial Member:

1.

The aforesaid appeal has been filed by the assessee against the impugned order dated 22.03.2022, passed by National Faceless M/s P. N. Writer & Co. Pvt. Ltd. Appeal Centre (NFAC), Delhi for the quantum of assessment passed u/s 143(3) for AY 2009-10.

2.

In various grounds, assessee has challenged the disallowance made u/s 14A on the ground that dividend income was only Rs. 85,439/- whereas the disallowance made by the AO and confirmed by Ld. CIT(A) is Rs. 9,36,209/-.

3.

Now it is well settled that disallowance u/s 14A cannot exceed the exempt income which proposition upheld by Hon'ble Delhi Court in Pr. CIT v. Mc Donalds India (P.) Ltd. ITA 725/2018 decided on 22nd October, 2018 cannot exceed the exempt income of that year. This decision of the Hon'ble High Court follows the ratio and judgment of the Hon'ble Supreme Court in the case of Maxopp Investments Ltd. v. CIT [2018] 402 ITR 640/254 Taxman 325/91 taxmann.com 154 and the earlier judgments of the Delhi High Court in Cheminvest v. CIT [2015] 378 ITR 33/234 Taxman 761/61 taxmann.com 118 and CIT v. Holcim (P.) Ltd. [2015] 57 taxmann.com 28 (Delhi).

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