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Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: SHRI RAJPAL YADAV, JM & SHRI AMARJIT SINGH, AM
आदेश/O R D E R
PER AMARJIT SINGH, ACCOUNTANT MEMBER:
In this case return of income declaring income of Rs. 2,11,72,330/- was filed on 29.09.2012. Subsequently the case was selected under scrutiny assessment by issuing notice u/s. 143(2) of the Act on 09.08.2013.
During the course of assessment proceedings the A.O. has noticed that assessee has claimed exemption u/s. 10(34) of the Act
ITA.No.3306/Ahd/2015 Assessment year 2012-13 - 2 –
to the amount of Rs. 1,10,435/-. The A.O. observed that assessee has not made any disallowance of expenditure incurred directly or indirectly attributable to earning exempt income. Therefore he computed an expenditure of Rs. 3,16,942/-. According to section 14A r.w.s. Rule 8D of the Income-tax Rule and added to the total income of the assessee.
Assessee preferred appeal before the Ld. CIT(A). Ld. CIT(A) who has dismissed the appeal of the assessee i.e. by stating that A.O. has correctly disallowed the expenses according to the provision of section 14A of the Act.
During the course of appellate proceedings before us. Ld. counsel has furnished paper book containing written submission given before Ld. CIT(A), acknowledgement of IT return, tax audit balance sheet etc. She contended that assessee has earned meager dividend income of Rs. 2620/- and disallowance under section 14A cannot exceed amount of exempt income.
On the other hand Ld. D.R. relied on the order of Ld. CIT(A). The Ld. counsel has also contended that assessee has made investment out of tax free fund and on which no expenditure has been incurred on exempt income.
On perusal of material placed on record, we observe that assessee has earned exempt income in the form of dividend of Rs. 26,260/- from various investment in shares. We further notice that Hon’ble Delhi High Court in the case of Joint Investment Pvt. Ltd. vs. CIT (2015) 372 ITR 694 (Delhi) held that the window for
ITA.No.3306/Ahd/2015 Assessment year 2012-13 - 3 – disallowance is indicted in section 14A and is only to the extent of disallowing expenditure incurred by the assessee in relation to tax exempt income. We have also noticed that the Hon’ble Delhi High Court in the case of CIT vs. Halim India Pvt. Ltd. (2014) 272 CTR 282 (Delhi) has held that there can be no disallowance under section 14A in absence of exempt income. After considering the above facts and judicial findings we restrict the disallowance to the extent of actual exempt income of Rs. 26,240/-. Therefore, the appeal of the assessee is partly allowed.
In the result, the appeal of the assessee is partly allowed.
Order pronounced in the Court on 02/ 02/2018 at Ahmedabad. Sd/- Sd/- (RAJPAL YADAV) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated, 02 / 02/2018 Mukul आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)- 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद /DR,ITAT, Ahmedabad. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, सहायक पंजीकार (Asstt.Registrar) आयकर अपील�य अ�धकरण ITAT, Ahmedabad