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Income Tax Appellate Tribunal, DELHI BENCH ‘F’, NEW DELHI
Before: Sh. Amit ShuklaDr. B. R. R. Kumar
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the assessee against the order of the ld. CIT(A)-XXVI, New Delhi, dated 13.10.2017.
Following grounds have been raised by the assessee:
1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) is bad both in the eyes of law and on facts.
2. On the facts and circumstances of the case the ld. CIT (A) has erred both on facts and in law in confirming the addition of Rs.7,37,989/- on account of expenses incurred for earning exempt income u/s 14A of the Act.
2 Planetcast Media Services Ltd. 3. That the addition has been confirmed rejecting the contention of the assessee that no such expenses in relation to earning exempt income has been incurred by the assessee.
4. That the disallowance has been confirmed rejecting the contention of the assessee that in the absence of any satisfaction with regard to the contention of the assessee being not correct having being recorded by the Assessing Officer the disallowance is not sustainable.”
The assessee is in the business of providing telecommunication services like VSAT & Broadband services and made cumulative investment in 8.1% IRFC tax free bonds and other investments. The total investments made by the assessee at the beginning of the year was Rs.13.89 Cr. and at the end of the year was Rs.15.62 Cr. The AO has disallowed Rs.16.82 lacs on account of Section 14A after computing the average value of investment and taking into consideration the average value of the total assets. Out of the disallowance of Rs.16.82 lacs, the ld. CIT (A) has given relief of Rs.9.44 lacs holding that no disallowance is warranted on account of interest as the assessee has got sufficient own funds for the said investment.
Before us, during the arguments, the ld. AR brought to our notice that the assessee has earned Rs.24.66 lacs as exempt income from the cumulative investment in tax free bonds of IRFC of Rs.3.04 Cr. and relied upon the order of the Special Bench of ITAT in the case of Vireet Investments in wherein it was held that the disallowance under Rule 8D(iii) be computed taking into consideration the only the investments yielding exempt income. Hence, it was argued that 3 Planetcast Media Services Ltd. the 0.5% of the average investment on Rs.3.04 Cr. be computed as right disallowance.
The ld. DR argued that the contention of the assessee cannot be accepted and the entire investment should be considered for computing 0.5% of the average investments.
Having gone through the facts of the case, we also find that in the case of the assessee for the assessment year 2014- 15 the disallowance has been restricted to the investments yielding exempt income placing reliance on judgment in the case of Vireet Investments (supra). In the absence of any material change to the facts of the case and in the preposition of the law, we hereby direct that the disallowance be computed @0.5% on the investment of Rs.3.04 Cr.
In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 10/11/2020.