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Income Tax Appellate Tribunal, “F BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI N.K. PRADHAN
This is an appeal by the assessee against the order dated 20thMarch 2019, passed by the learned Commissioner of Income Tax (Appeals)–34, Mumbai, pertaining to the assessment year 2014–15.
The dispute in the present appeal is confined to disallowance of ` 5,40,320, under section 14A r/w rule 8D.
When the appeal was called for hearing, no one was present on behalf of the assessee to represent the case. There is no application
2 Vipul Anantrai Thosani seeking adjournment either. Considering the nature of dispute, we proceed to dispose off the appeal ex–parte qua the assessee after hearing the learned Departmental Representative and on the basis of material available on record.
Brief facts are, the assessee is an individual. For the assessment year under dispute, the assessee filed its return of income on 20th September 2020, declaring total income of ` 51,01,520. During the assessment proceedings, the Assessing Officer on verifying the material on record noticed that during the year under consideration, the assessee has received exempt income by way of dividend amounting to `71,307. Whereas, he has not disallowed any expenditure attributable to such income. He, therefore, called upon the assessee to explain why disallowance of expenditure for earning exempt income should not be made in accordance with the provisions of section 14A r/w rule 8D. As stated by the Assessing Officer, in response to the query raised, the assessee furnished statement showing working of disallowance under section 14A r/w rule 8D at ` 5,40,320. Taking note of such working, the Assessing Officer disallowed an amount of ` 5,40,320, under section 14A of the Act. The assessee challenged such disallowance before learned Commissioner (Appeals) without any success.
3 Vipul Anantrai Thosani 5. We have heard the learned Departmental Representative and perused the material on record. It is evident, the assessee had not disallowed any expenditure attributable to the exempt income. Only in response to the show cause notice issued by the Assessing Officer, the assessee furnished a working of disallowance under rule 8D. However, as per the grounds raised before us, the specific case of the assessee is, the disallowance under section 14A r/w rule 8D has to be restricted to the exempt income earned during the year. We find the aforesaid contention of the assessee acceptable. Now, it is fairly well settled in a catena of judicial precedents that the disallowance under section 14A r/w rule 8D cannot exceed the quantum of exempt income earned during the year. Following the settled legal principle, we direct the Assessing Officer to restrict the disallowance under section 14A r/w rule 8D to an amount of ` 71,307. Accordingly, ground raised by the assessee is partly allowed.
In the result, appeal is partly allowed. Order pronounced through notice board under rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963, on 25.09.2020