RAJNISH GARG,LUDHIANA vs. DCIT, C-VI, LUDHIANA

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ITA 1399/CHANDI/2018Status: DisposedITAT Chandigarh25 February 2019AY 2012-133 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the Assessing Officer did not record satisfaction regarding the assessee's suo motu disallowance and that the assessee did not use interest-bearing funds for investments. Therefore, no further disallowance beyond what the assessee offered is warranted.

What were the facts?

The assessee made investments in shares and mutual funds, earning dividend income. The assessee suo motu disallowed a portion of expenditure under Section 14A, but the Assessing Officer and CIT(A) made a higher disallowance.

What were the issues?

Whether the disallowance of expenditure under Section 14A was correctly computed by the lower authorities, considering the assessee's suo motu disallowance and investment pattern.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

आदेश/Order

The present appeal has been preferred by the assessee against the order dated 28.08.2018 of the Commissioner of Income Tax(Appeals)-3, Ludhiana [hereinafter referred to as ‘CIT(A)’].

2.

No one has come present on behalf of the assessee despite notice. Since a small issue of disallowance of expenditure incurred in relation to the earning of exempt income under the provisions of section 14A of the Income-tax Act, 1961 (in short 'the Act') is involved, hence, we proceed to decide the issue after hearing the Ld. DR.

3.

The Ld. DR has invited our attention to the impugned order of the Assessing officer to submit that the assessee during the year had made investment in shares and mutual funds amounting to Rs. 3,24,79,868/-,

ITA No. 1399-Chd-2018- Sh. Rajnish Garg, Ludhiana 2

whereupon, the assessee earned dividend income of Rs. 2,34,919/-. That

though the assessee suo motu disallowed a sum of Rs. 1,01,546/- under

the provisions of section 14A of the Act, however, the assessee could not

justify it by giving the details of the same to the Assessing officer. The

Assessing officer, therefore, calculated the disallowance u/s 14A of the

Act read with Rule 8D (2)(iii) of the Income Tax Rules at 2,28,070/-. The

attention of the Tribunal was invited to the impugned order of the CIT(A)

that the Ld. CIT(A) has also held that the Assessing officer has computed

the disallowance as per the provisions of law. However, a perusal of the

order of the CIT(A) further reveals that the assessee has also furnished the

details regarding suo motu calculation of disallowance at Rs. 1,01,546/-.

A perusal of the order of the Assessing officer as well as of the CIT(A)

reveals that no fault has been pointed out in the working of the suo motu

disallowance made by the assessee.

4.

Considering the amount of dividend income of Rs. 2.34 lacs and suo

motu disallowance made by the assessee of the expenditure for earning of

the aforesaid income at 1,01,546/- and also considering the fact that the

Assessing officer has not recorded any satisfaction regarding the working

of the suo motu disallowance made by the Assessing officer and also

further considering the fact that the assessee had not used any interest

bearing funds to make the investment, in my view, no further disallowance

is called for in this case except that has been suo motu offered by the

assessee. I, therefore, delete the addition made by the lower authorities to

the extent of disallowance offered by the assessee himself.

ITA No. 1399-Chd-2018- Sh. Rajnish Garg, Ludhiana 3

In the result, the appeal of the assessee is, therefore, treated as allowed. Order dictated and pronounced in the Open Court immediately on completion of hearing. Sd/-

(संजय गग� / SANJAY GARG) �या�यक सद�य/ Judicial Member Dated : 27.02.2019 “आर.के.” आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File

आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar

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