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Income Tax Appellate Tribunal, “E” Bench, Mumbai
O R D E R Per Shamim Yahya (AM) :- This appeal by the assessee is directed against order of learned CIT(A) dated 17.5.2018 and pertains to assessment year 2013-14.
The issue raised is that learned CIT(A) erred in sustaining the disallowance of Rs.12,55,853/- under section 14A. It is further contended that learning CIT(A) erred in sustaining the adjustment under section 115 JB of the disallowance under section 14A.
Brief facts of the case are that assessing officer noted that assessee has not made any disallowance under section 14A. On enquiry in this regard assessee responded that assessee has not earned any exempt income. However the assessing officer did not accept this contention. He made a disallowance of Rs. 12,55,853/- under rule 8D(iii).
Before the learned CIT(appeals) assessee also gave an alternative without prejudice working for disallowance of an amount of Rs. 1,00,747/- in this 2 Tata Motors Limited (Successor to TML Drivelines Ltd.)
regard. The learned CIT(A) noted that assessee has earned exempt income and has not made any disallowance under section 14A. He rejected the assessee's reliance upon assessee's own case for earlier years on the ground that rule 8D was not held, to be mandatory in those years. The learned CIT(A) also rejected the assessee’s working of disallowance of Rs. 1,00,747/- on the ground that the same was ad hoc and had not been submitted earlier before the assessing officer.
Against this order assessee is in appeal before us. We have heard the parties and perused the records. We find that there is contradictory finding in the orders of the authorities below. While the assessing officer is rejecting the assessee's contention that it has not earned any exempt income by holding that nevertheless disallowance under section 14A is required. The learned CIT(A) on the other hand is finding that assessee has earned exempt income. In the records before us this fact is not clear. As held by honourable jurisdictional High Court in the case of CIT v. Delite Enterprises (2012) 047 (I) ITCL 0282, wherein honourable jurisdictional High Court has agreed with the view of the honourable Delhi High Court in the case of Cheminvest Ltd (ITA 749/2014) that the disallowance under section 14A should be limited to the exempt income earned.
Furthermore we note that the learned CIT(A) has rightly rejected the contention of the assessee that no disallowance under section 14A is required. As regards the alternative working of disallowance of Rs. 1,00,747/- given by the assessee, we find that learned CIT(appeals) has rejected the same without cogent findings. He has also not asked for remand report from the assessing officer. In our considered opinion if the assessee has earned exempt income then the assessee’s working of the disallowance of Rs. 1,00,747/- should be examined by the assessing officer. Accordingly, we remit the issue to the file of assessing officer. If the assessee has not earned any exempt income, no disallowance under section 14A is required as per the decision of honourable
3 Tata Motors Limited (Successor to TML Drivelines Ltd.) jurisdictional High Court referred above. If the assessee has earned exempt income the assessee’s submission of the working of disallowance of Rs. 1,00,747/- shall be examined by the assessing officer, and thereafter the assessing officer shall take a decision as per law.
As regards the adjustment under section 115JB with regard to the disallowance under section 14A, we note that the same is not warranted as per the decision of the Special Bench of the Tribunal in the case of Vireet Investments Pvt. Ltd. (ITA No. 502/Del/20132 and CO. 68/Del/2014 dt. 16.6.2017). We direct accordingly.
In the result, the appeal by the assessee stands partly allowed.
Order has been pronounced under Rule 34(4) of the ITAT Rules on 14.7.2020.