MAHABHADRA CONSTRUCTIONS LTD,GAUTAM BUDH NAGAR vs. DCIT, CIRCLE-13(2), DELHI

This assessee’s appeal for Assessment Year 2014-15, arises against the CIT(A)/NFAC, Delhi’s DIN & order No. ITBA/NFAC/S/250/2023–24/10552668445(1) dated 21.08.2023, in proceedings u/s 143(3) of the Income Tax Act, 1961 (in short “the Act”).

Heard both the parties at length. Case file perused.

It transpires during the course of hearing that the assessee/appellant herein is aggrieved against both the learned lower authorities’ action invoking section 14A r.w. Rule 8D disallowance amounting to Rs.2,21,36,173; in assessment

We next notice with the able assistance coming from both the parties that there is no dispute about the assessee having derived exempt income in the relevant previous year amounting to Rs.1,15,20,605/- in the nature of dividends. And that it had further suo motu disallowed a sum of Rs.50,87,743/- in the computation which has been enhanced to Rs.2,21,36,173/- as administrative expenditure thereunder, in the Assessing Officer’s assessment as upheld in the lower appellate discussion.

That being the case, the Revenue could hardly dispute that case law PCIT Vs. Caraf Builders and Construction Pvt. Ltd. (2019) 414 ITR 122 (Del.) and ACIT Vs. Vireet Investment Pvt. Ltd., and CO No. 68/Del/2014 dated 16.06.2017 (Special Bench) have already settled the issue that only dividend yielding investments ought to be considered whilst computing such a disallowance u/s 14A r.w. Rule 8D of the Income Tax Rules, 1962. Both the learned lower authorities have admittedly not considered this clinching proposition in their respective findings. We thus accept the assessee’s instant sole substantive ground in principle and direct the learned