HINDUSTHAN FEEDS MANUFACTURING COMPANY,SATARA vs. ASSISTANT COMMISSIONER OF INCOME-TAX, SATARA CIRCLE, SATARA

This assessee’s appeal for A.Y. 2014-15 is directed against the CIT(A)-4, Pune’s order dated 25/04/2017 passed in case No. PN/CIT(A)-4/264/2016- 17/291 involving proceeding u/s. 143(3) of the Income Tax Act, 1961 ; in short "the Act”. Heard both the parties. Case file perused.

The assessee’s sole substantive ground raised in instant appeal challenges correctness of both the lower authorities’ action making sec. 14A r. w. Rule 8D (2) (i to iii) direct, proportionate interest administrative expenses disallowance(s) of Rs.46,80,655/-, Rs.19,95,692/- and Rs.1,11,516/-;

We have given our thoughtful consideration to rival pleadings and perused the case file. We first of all note this tribunal’s co-ordinate bench order dated 12.9.2019 in Revenue’s appeal for assessment year 2012-13 has already decided the issue in assessee’s favour that interest paid on partner’s capital account is not to be considered for the purpose of sec. 14A disallowance. This is coupled with the fact that the learned lower authorities have not computed the impugned disallowance of administrative expenditure after taking into consideration only the investments yielding exempt income or the actual amount; as the case may be as per ACIT V/s Vineet Investment Pvt. Ltd. (2017) 165 ITD 27 (Del.)(SB). Faced with this situation, we direct the learned Assessing Officer to frame his afresh computation as per law with a rider that in case impugned disallowance exceeds the one already in issue Rs.10,04,932/-, the same shall be restricted to the extent of exempt income only in light of Joint Investments Ltd V/s ACIT (2015) 374 ITR 94. Ordered accordingly.

This assessee’s appeal is partly allowed in above terms. Order pronounced in the Open Court on this 10th day of June, 2022.