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Income Tax Appellate Tribunal, VIRTUAL COURT
Before: SHRI C.N. PRASAD, HONBLE & ITA.NO. 4645/MUM/2019 (A.Y: 2014-15) Shri Sanjay J. Sethi
O R D E R PER C.N. PRASAD (JM)
This appeal is filed by the assessee against the order of the Ld. Commissioner of Income-tax (Appeals)-10, Mumbai [hereinafter for short "Ld. CIT(A)] dated 10.05.2019 for the A.Y. 2014-15 in confirming the action of the Assessing Officer in disallowing ₹.4,34,417/- u/s. 14A of the Act.
2 ITA.NO. 4645/MUM/2019 (A.Y: 2014-15) Manekchand Panachand Trading Investment Company Pvt. Ltd., 2. Briefly stated the facts are, the Assessing Officer while completing the assessment computed the disallowance u/s. 14A r.w. Rule 8D of I.T. Rules and made disallowance of interest under Rule 8D(2)(ii) and expenses being 0.5% of average investments under Rule 8D(2)(iii) of I.T. Rules. Ld.CIT(A) sustained the action of the Assessing Officer. Against this order assessee is in appeal before us in confirming the disallowance made u/s. 14A of the Act.
Ld. Counsel for the assessee submits that during the Assessment Year under consideration assessee received exempt income of ₹.59,573/- and the Assessing Officer has made disallowance of ₹.4,34,417/- u/s. 14A r.w. Rule 8D of I.T. Rules. Learned Counsel for the assessee submitted that the disallowance u/s. 14A r.w. Rule 8D cannot exceed exempt income and therefore direction be given to Assessing Officer accordingly. Ld. Counsel for the assessee relied on the decision of the Hon'ble Supreme Court in the case of PCIT v. State Bank of Patiala (99 taxmann.com 286) wherein it was held that disallowance u/s. 14A of the Act cannot exceed exempt income.
Ld.DR vehemently supported the orders of the Authorities below.
3 ITA.NO. 4645/MUM/2019 (A.Y: 2014-15) Manekchand Panachand Trading Investment Company Pvt. Ltd., 5. Heard both sides, perused the orders of the authorities below. In view of the decision of the Hon'ble Supreme Court in the case of PCIT v. State Bank of Patiala (supra), I hold that the disallowance u/s. 14A shall not exceed the exempt income, accordingly the Assessing Officer is directed to restrict the disallowance u/s. 14A to the exempt income received by the assessee during the year under appeal.
In the result, appeal of the assessee is partly allowed.
Order pronounced in the virtual court on 19.01.2021.