SHRI K. THIAGARAJAN,MADURAI vs. ACIT, NCC - 3, MADURAI

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ITA 2073/CHNY/2019Status: DisposedITAT Chennai13 February 2020AY 2009-104 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that no notional expenditure can be disallowed under Section 14A in the absence of actual expenditure. For AY 2012-13, the disallowance was restricted to the actual expenditure claimed.

What were the facts?

The assessee's assessment was reopened, and an addition was made under Section 14A for disallowance of expenditure. The assessee contended that no expenditure was claimed as a deduction, and therefore, no disallowance should be made.

What were the issues?

Whether disallowance under Section 14A is permissible when no expenditure is claimed as a deduction, and whether the disallowance can exceed actual expenditure.

Which sections of the Income-tax Act were involved?

Section 14A,Section 143(3),Section 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘D’ BENCH, CHENNAI

Before: SHRI INTURI RAMA RAO & SHRI DUVVURU RL REDDY

For Respondent: Ms. R. Anitha, JCIT
Hearing: 06.02.2020Pronounced: 13.02.2020

सुनवाई क� तार�ख/Date of hearing : 06.02.2020 घोषणा क� तार�ख /Date of Pronouncement : 13.02.2020 आदेश /O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER:

These appeals filed by the Assessee are directed against the respective orders of the Commissioner of Income Tax (Appeals)- 1,Madurai, (in short ‘CIT(A)’) dated 03.06.2019 for the Assessment Years 2009-10 & 2012-13.

2 & 2074/Chny/2019 2. The brief facts of the case are as under: The appellant is an individual. Return of income for the assessment year 2009-10 was filed on 28.07.2009 disclosing income of Rs.3,64,185/-. Against the said return of income, the assessment was completed vide order dated 22.09.2011 passed U/s.143(3) of the Income Tax Act, 1961 (in short ‘the Act’) accepting the returned income. Subsequently, the assessment was reopened by issuing notice U/s.148 of the Act dated 07.03.2016. In response to it, the appellant filed the return of income on 10.03.2016 disclosing the same income as original return and the assessment was completed by an order dated 30.12.2016 passed U/s.143(3) r.w.s. 147 of the Act, at a total income of Rs.797,787/-, after making an addition of Rs.4,33,602/- U/s.14A of the Act, rejecting the contention of the appellant that no expenditure was claimed as deduction to earn exempt income. Being aggrieved by the above addition, an appeal was preferred before the CIT(A), who vide impugned order confirmed the action of the AO. Being aggrieved, the assessee is in appeal before us in the present appeal.

3.

The Ld.Counsel vehemently submitted that no expenditure was claimed as deduction and therefore the question of disallowance 3 & 2074/Chny/2019 U/s.14A of the Act , does not arise, as no notional expenditure can be disallowed. He also filed the financial statement in support of his contentions. On the other hand, the Ld.DR had not opposed the above submissions.

4.

We heard the rival submissions and perused the material on record. The only issue relates to the disallowance U/s.14A of the Act. Admittedly, the appellant had not made any claim for deduction of any expenditure under business head. Therefore it is settled position of law that no notional expenditure can be disallowed U/s.14A of the Act, in the absence of any actual expenditure incurred. The proviso to Rule 8D clearly provides that the amount of disallowance computed under the provisions of Rule 8D cannot exceed the actual expenditure incurred. In the light of these facts and legal position, we allow the appeal filed by the assessee.

5.

For the assessment year 2012-13, the amount of expenditure claimed is only Rs.8000/-. Hence, the amount of disallowance is restricted to Rs.8000/-.

Order pronounced in the court on 13th February, 2020 at Chennai.

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