BALBIR SINGH MAKKAR,NEW DELHI vs. ACIT, NEW DELHI
What did the Tribunal hold?
The Tribunal held that the disallowance under Section 14A cannot exceed the exempt income earned. Therefore, the disallowance should be restricted to the actual dividend income.
What were the facts?
The assessee earned dividend income of Rs. 20,735/- which was claimed as exempt. The Assessing Officer invoked Section 14A and Rule 8D to disallow Rs. 1,43,261/-.
What were the issues?
Whether the disallowance under Section 14A can exceed the exempt income earned by the assessee.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI ‘A’ BENCH,
Before: SHRI BHAVNESH SAINI, & SHRI N.K. BILLAIYA
PER N.K. BILLAIYA, ACCOUNTANT MEMBER,
This appeal by the assessee is preferred against the order of the Commissioner of Income Tax [Appeals] - 20 New Delhi dated 19.12.2016 pertaining to Assessment Year 2012-13.
The solitary grievance of the assessee is that the CIT(A) erred in law and on facts in sustaining the impugned addition of Rs. 1,43,261/- on account of disallowance as per section 14A of the Income tax Act, 1961 [hereinafter referred to as 'The Act' for short] r.w.r 8 D of the I.T. Rules, 1962.
Briefly stated, the facts of the case are that the assessee earned dividend income of Rs. 20,735/- and claimed the same to be exempt. Invoking the provisions of section 14A of the Act r.w.r 8D of the Rules, the Assessing Officer computed the disallowance at Rs. 1,43,261/-.
The assessee carried the matter before the ld. CIT(A) but without any success.
Before us, the ld. counsel for the assessee vehemently stated that on the facts of the case, section 14A of the Act r.w.r 8D of the Rules is not applicable.
Per contra, the ld. DR strongly supported the findings of the Assessing Officer.
We have carefully considered the orders of the authorities below.
There is no dispute that the dividend income earned by the assessee is at Rs. 20,735/-. In our considered opinion, the upper limit for disallowance should not exceed the exempt income of the year as held by the Hon'ble High Court of Delhi in the case of PCIT Vs. Mcdonald’s India Pvt Ltd of 2018 decided on 22.10.2018. Respectfully following the decision of the Hon'ble High Court [supra], we direct the Assessing Officer to restrict the disallowance to Rs. 20,735/-
In the result, the appeal filed by the assessee in is partly allowed.
The order is pronounced in the open court on 06.01.2020.
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- M/S American Express Bank Ltd., Mumbai vs The Jt DIT (It)1(1), MumbaiITA 9414/MUM/2004[2000-2001]Status: Disposed8 Oct 2026AY 2000-2001
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