TARINI STEEL COMAPNY LTD,PUNE vs. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE - 8, PUNE

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ITA 723/PUN/2019Status: DisposedITAT Pune27 July 2022AY 2013-144 pages
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What did the Tribunal hold?

The Tribunal held that Section 14A disallowance is only applicable in relation to exempt income. For AY 2013-14, since there was no exempt income, the disallowance was deleted. For AY 2014-15, the disallowance was restricted to the amount of exempt income earned.

What were the facts?

The assessee had appealed against disallowances made under Section 14A read with Rule 8D for assessment years 2013-14 and 2014-15. For AY 2013-14, the assessee claimed no exempt income, while for AY 2014-15, the exempt income was Rs. 18,382.19.

What were the issues?

The primary issue was the applicability and quantum of disallowance under Section 14A read with Rule 8D when the assessee had minimal or no exempt income.

Which sections of the Income-tax Act were involved?

Section 14A

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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE

Before: SHRI S.S. GODARA & DR. DIPAK P. RIPOTE

For Appellant: Shri M.G. Jasnani
For Respondent: Shri M.G. Jasnani

Shri Sarvesh Khandelwal Assessee by Revenue by Shri M.G. Jasnani Date of hearing 14-07-2022 Date of pronouncement 27-07-2022 आदेश / ORDER PER S.S. GODARA, JM : These assessee‟s twin appeals for assessment years 2013-14 and 2014-15 arise against the CIT(A)-6, Pune‟s common order dated 26.02.2019 passed in case Nos.PN/CIT(A)-6/ACIT Cir- 10/376/15-16 & PN/CIT(A)-6/ACIT Cir-10/10199/17-18 respectively, in proceedings under Section 143(3) of the Income Tax Act, 1961, in short „the Act‟.

Heard both the parties. Case files perused. 2. Coming to the assessee‟s identical sole substantive grievance that both the learned lower authorities have erred in law and on facts in making section 14A read with rule 8D disallowance of Rs.2,13,600/- and Rs.22,62,658/-; assessment year-wise, respectively, it emerges at the outset with the able assistance coming from both the sides that this taxpayer had not derived any exempt income in former assessment year and the relevant figure in latter assessment year reads a sum of Rs.18,382.19 only. That being the case, we quote PCIT vs. Kohinoor Projects Pvt. Ltd. (2020) 425 ITR 700 (Bom) that section 14A read with rule 8D only comes into play “in relation” to an assessee‟s exempt income derived in the relevant previous year than having any independent exigibility. We thus accept the assessee‟s instant former appeal No.723/PUN/2019 for this precise reason alone.

3.

The factual position is admittedly a little different in assessment year 2014-15‟s appeal wherein the assessee has derived exempt income amounting to Rs.18,382.19 only. We quote Joint Investments (P) Ltd. vs. CIT 372 ITR 694 (Del) that such section 14A read with rule 8D disallowance ought not to exceed the assessee‟s exempt income itself to restrict the same from Rs.22,62,658/- to Rs.18,382.19 in very terms. The Revenue‟s vehement contentions supporting the impugned disallowance are partly accepted in very terms. So is the outcome of this latter main appeal No.724/PUN/2019. Ordered accordingly.

4.

To sum up, the assessee‟s former appeal No.723/PUN/2019 is allowed and latter appeal No.724/PUN/2019 is partly allowed in above terms. A copy of this common order be placed in the respective case files.

Order pronounced in the Open Court on 27th July, 2022.

Sd/- Sd/- (DIPAK P. RIPOTE) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे Pune; ददिधांक Dated : 27th July, 2022 GCVSR आदेश की प्रतिलिपि अग्रेपिि/Copy of the Order is forwarded to: अपीऱधर्थी / The Appellant; 1. प्रत्यर्थी / The Respondent; 2. 3. The CIT(A)-6, Pune 4. The Pr.CIT-5, Pune 5. विभागीय प्रविविवि, आयकर अपीलीय अविकरण, पुणे “B” / DR „B‟, ITAT, Pune 6. गार्ड फाईल / Guard file आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अविकरण ,पुणे / ITAT, Pune

Date 1. Draft dictated on 14-07-2022 Sr.PS 2. Draft placed before author 26-07-2022 Sr.PS 3. Draft proposed & placed before the JM second member 4. Draft discussed/approved by Second JM Member. 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order.

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