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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
आदेश / O R D E R महावीर ससुंह, न्याययक सदस्य/ PER MAHAVIR SINGH, JM:
This appeal of assessee is arising out of the order of the Commissioner of Income Tax (Appeals)]-10, Mumbai, [in short CIT(A)], in Mumbai/10683/2015-16 dated 30.04.2019. The Assessment was framed by the Dy. Commissioner of Income Tax, Circle 5(2)(1) Mumbai (in short DCIT/ITO/ AO) for the A.Y. 2012-13 vide order
27.03.2015, under section 143(3) of the Income-tax Act, 1961 (hereinafter ‘the Act’).
The only issue in this appeal of assessee is against the order of CIT(A) confirming the disallowance of expenses relatable to exempt income by invoking the provisions of section 14A of the Act read with Rule 8D of the IT Rules 1962 (hereinafter the Rules) amounting to Rs. 4,02,020/-. For this assessee has raised the following grounds-
“1. The ld. CIT(A) has erred in law and in facts in confirming the disallowance under section 14A of the Act amounting to ₹ 4,02,020/- 2. The Ld. CIT(A) ought to have appreciated that the disallowance under section 14A could not have exceeded the amount of exempt income Under section 10(34) of the Act.”
We have heard the rival contentions and gone through the facts and circumstances of the case. At the outset, the learned Counsel for the assessee stated that the assessee company has received exempt income on account of dividend at Rs. 1,56,752/- and claimed the same as exempt under section 10(34) of the Act. He stated that to this extent, the disallowance should be restricted and not as computed by AO at Rs. 4,02,020/-. When this fact was confronted to the learned Sr. DR, he fairly agree with that this issue is covered by the decision of Hon’ble Bombay High Court in the case of Pr. CIT vs. Ballarpur Industries Limited in Income Tax Appeal No. 51 of 2016, wherein this issue has been considered following the judgment of Hon’ble Delhi High Court in the case of Chem invest Limited vs. CIT (2015) 378 ITR 33 (Delhi) held as under: -
Counsel for the Department and on a perusal of the impugned orders, it appears that both the Authorities have recorded a clear finding of fact that there was no exempt income earned by the assessee. While holding so, the Authorities relied on the judgment of the Delhi High Court in Income Tax Appeal No. 749/2014, which holds that the expression “does not form part of the total income” in Section 14A of the Income Tax Act, 1961 envisages that there should be an actual receipt of the income, which is not includible in the total income, during the relevant previous year for the purpose of disallowing any expenditure incurred in relation to the said income. The Income Tax Appellate Tribunal held that the provisions of Section 14A of the Income Tax Act, 1961 would not apply to the facts of this case as no exempt income was received or receivable during the relevant previous year. It is not the case of the Assessing Officer that any actual income was received by the assessee and the same was includible in the total income. In the facts of the case, the Authorities held that since the investments made by the assessee in the sister concerns were not the actual income received by the assessee, they could not have been included in the total income.”