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Facts
The assessee, Cliantha Research Limited, filed an appeal against an order upholding the disallowance of Rs.47,82,000 under Section 14A of the IT Act. The assessee argued that they were not granted a fair opportunity to be heard and presented evidence, and pointed to previous favorable orders for similar facts.
Held
The Tribunal found that the assessee had claimed exempt income of Rs. 2,92,693 and made a suo-moto disallowance of Rs. 1,30,000. The Tribunal held that since the assessee had rightly disallowed a sufficient amount for earning exempt income, no further disallowance was called for.
Key Issues
Whether the disallowance under Section 14A was justified when the assessee had already made a suo-moto disallowance and previous similar orders favored the assessee?
Sections Cited
14A, 8D
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Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD
Before: DR. B.R.R. KUMAR, VICE-Ms. SUCHITRA KAMBLE
PER DR. B.R.R. KUMAR, VICE-PRESIDENT:-
This appeal is filed by the Assessee against the appellate order dated 30.12.2024 passed by the Commissioner of Income Tax (Exemption), Ahmedabad, relating to the Assessment Year 2017-18.
The assessee has raised the following grounds of appeals:
1 That the learned CIT-Appeals erred in law and on facts in upholding the disallowance of Rs.47,82,000 under section 14A of the IT Act, as made by the Assessing Officer, invoking the provisions of Rule 8-D of the IT Rules.
Cliantha Research Limited Vs.A CIT Asst. Year : 2017-18 - 2– 2 That the learned CIT-Appeals grievously erred in dismissing the appeal of the appellant without even granting a fair opportunity of being heard to the appellant. Under para 4.7 of the appellate order, the learned CIT-A has alleged without any basis or justification that, "the appellant has not been able to provide any conclusive evidence or a comprehensive submission in support of its contentions. Rather, it has been delaying the appellate procedure by requesting for adjournment repeatedly." It is matter of record that in response to the notices served to the appellant, the appellant had requested that, "it may be permitted to avail of its right to make its presentation alongwith relevant supporting submissions via video conferencing at the time of formal hearing of the appeal." This fair and equitous request on part of the appellant cannot be treated as requesting for repeated adjournments.
In its appeal before the Hon'ble ITAT, the appellant wishes to rely on the following material facts, which are also duly verifiable from the records of the Assessing Officer and which should clearly go to support the prayer of the appellant that the addition u/s 14A, as made by the learned AO, needs to be deleted. a. Appellate Order dated 15/02/2024 passed by the NFAC for AY 2018-19 deleting the disallowance of Rs 94,33,500 u/s. 14A r.w Rule 8-D on squarely identical facts and against which no Appeal has been preferred by the department. b. Assessment Order dated 07/03/2022 passed by National Faceless Assessment Centre without making any addition u/s. 14A r.w. Rule 8-D It is pertinent to note that under the Show Cause Notice (SCN) issued prior to passing of the Assessment Order, it was proposed to make a disallowance of Rs 82,00,292/- on squarely identical facts. However, the reply of the appellant in response to the SCN was duly accepted on merits and the proposal for the addition was dropped in toto. c. It is also a matter of record that the appellant has been suo-motu offering disallowance in its ITR as logically required under the provisions of Sec. 14A. 4 The appellant requests that leave be granted to add, alter or amend any ground before the final hearing of the appeal.
Cliantha Research Limited Vs.A CIT Asst. Year : 2017-18 - 3– 3. On going through the record, we find that total exempt income claimed by the assessee was Rs. 2,92,693/- and also made a suo-moto disallowance of Rs. 1,30,000/-. The Assessment Year in question is 2017-18, and since the assessee has rightly disallowed sufficient amount on account of earning exempt income, we hold that no further disallowance is called for.
In the result, the appeal of the assessee is allowed.
The order is pronounced in the open Court on 07.05.2025