BADRA ESTATES AND INDUSTRIES LIMITED,BANGALORE vs. ACIT, CIRCLE-1(1)(2), BANGALORE

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ITA 2573/BANG/2024Status: DisposedITAT Bangalore11 August 2025AY 2017-18Bench: SHRI NARENDER KUMAR CHODHRY (Judicial Member), SHRI WASEEM AHMED (Accountant Member)5 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The tribunal held that for the purpose of Section 14A and Rule 8D, only investments that actually yielded exempt income should be considered for disallowance, not the entire investment. Regarding Section 115JE, the tribunal directed the JAO to pass a consequential order.

What were the facts?

The Assessee appealed against an order passed by the National Faceless Assessment Center (NFAC) for the assessment year 2017-18. The appeal primarily concerned a disallowance under Section 14A read with Rule 8D, and a direction for considering Section 115JE.

What were the issues?

Whether disallowance under Section 14A should be based on total investment or only on investments yielding exempt income? Whether the AO has complied with the directions regarding Section 115JE?

Which sections of the Income-tax Act were involved?

Section 14A,Section 8D,Section 115JE,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH, BANGALORE

Before: SHRI NARENDER KUMAR CHODHRY & SHRI WASEEM AHMED

For Appellant: Shri Ravishankar S.V, Ld. Advocate
Hearing: 11.08.2025Pronounced: 11.08.2025

This appeal has been preferred by the Assessee against the order dated 19/06/2024 impugned herein passed by the National Faceless Assessment Center (NFAC), Delhi/Ld. Commissioner of Income Tax (A) {in short ‘Ld. Commissioner’} u/s 250 of the Income-tax Act 1961 (in short ‘Act’) for the assessment year 2017-18.

ITANo.2573/Bang/2024 Page 2 of 3

2.

The ld.AR of the Assessee in the context of first issue/ disallowance amounting to Rs.1,23,233/-made u/s 14A r.w. rule 8D, has submitted that the AO has failed to appreciate the provisions of sec. 14A of the Act. Even otherwise the ld. Commissioner also upheld such disallowance by sidelining the relevant provisions of law and therefore the decision of the Ld. Commissioner on this aspect is unsustainable.

3.

On the contrary, the ld. DR vehemently supported the orders of the authorities below on the disallowance u/s 14A of the Act.

4.

Having heard the parties and perused the material available on record, we observe from the record that the Assessee has made the total investment of Rs.93,25,121/- in 4 companies during the AY under consideration and has received the dividend to the tune of Rs.7,18,000/- in total [6,74,920+21540+21,540] and thereby if any disallowance has to be made, then only this amount to be considered but not the entire investment, as held by the Delhi High Court in the case of ACB India Ltd vs ACIT [TS-176- HC-2015(DEL)-O] by holding as under:

“That for the purpose of Rule-8D, only those investments shall be considered which have actually yielded exempt income during the relevant previous year. 5. Thus, respectfully following the dictum of Hon’ble High Court in the case (supra), we direct the JAO to consider the investments, which have actually yielded income during the AY under consideration but not the entire investment. Thus, this ground raised by the Assessee is allowed.

ITANo.2573/Bang/2024 Page 3 of 3 6. Coming to the section with regard to consideration of 115JE of the Act by the AO, we observe that the CIT(A) has already directed the AO to consider the same and compute the deemed income but nothing happened so far. Thus, for substantial justice, as the parties have also prayed for the same, we direct the JAO to pass the consequential order in pursuance to the impugned order within 3 months from today, while giving an opportunity for hearing to the Assessee.

7.

In the result, the appeal is partly allowed in the aforesaid terms.

Order pronounced in the court on 11thdayof August, 2025

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