R. JEGATHAMBAL,VIRUDHUNAGAR vs. DCIT, MADURAI

This is an appeal filed by the assessee against the order of the learned Commissioner of Income Tax (Appeals)-19, Chennai in appeal No.I.T.A. No.159/18-19 dated 13.08.2019 for the Assessment Year 2011-12.

It was submitted by the learned Authorized Representative that the assessee is an individual who is also having income from partnership firms. It was a submission that in the course of assessment, it was noticed that the assessee was having exempt income and consequently the Assessing Officer had invoked the provisions of Section 14A r.w.Rule-8D and had disallowed an amount of Rs.11,90,082/- as expenditure in relation to income which does not form part of the total income. It was a submission that the dividend income earned by the assessee was only Rs.46,950/-. It was a submission that if at all, the disallowance u/s.14A r.w.Rule 8D must be restricted to the exempt income.

In reply, the learned Departmental Representative submitted that the assessee is deriving share of income from partnership firms. It was a submission that even the same has 3 -: to be considered for the purpose of computing the disallowance u/s.14A r.w.Rule-8D of the Income Tax Act, 1961. For this purpose, the learned Departmental Representative placed before me a copy of the order of the Co-ordinate Bench of this Tribunal, Mumbai Bench in the case of Dharmasingh M. Popat vs. Assistant Commissioner of Income Tax reported in [2010] 127 TTJ 61 (Mumbai), as also the decision of the Co-ordinate Bench of this Tribunal, Pune Bench in the case of Paras Bhomraj Oswal vs. Assistant Commissioner of Income Tax, Kohlapur reported in [2017] 88 taxmann.com 41 (Pune – Trib.).

I have considered the rival submissions and perused the materials available on record.

Admittedly, the disallowance u/s.14A, r.w.Rule-8D is in respect of the expenditure incurred in respect of such incomes which are not includable in the total income of the assessee. The share of income from the partnership firm as also the dividend income, admittedly, is not includable in the total income of the assessee, as the same is exempt u/s.10 of the 4 -: Income Tax Act, 1961. A perusal of the assessment order does not show as to how the Assessing Officer has determined the disallowance u/s.14A r.w.Rule-8D. This being so, in the interest of justice, the issue of the disallowance u/s.14A r.w.Rule-8D is restored to the file of the Assessing Officer for re-adjudication and for re-computing after granting the assessee adequate opportunity of being heard.

In the result, the appeal of the assessee in is partly allowed for statistical purpose.