DCIT 1(3)(1), MUMBAI vs. PAYONE ENTERPRISES (P) LTD., MUMBAI

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ITA 3682/MUM/2018Status: DisposedITAT Mumbai02 August 2019AY 2014-153 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision to restrict the disallowance under Section 14A to the extent of the dividend income earned, following High Court and Supreme Court precedents.

What were the facts?

The assessee earned dividend income and made a suo moto disallowance of administrative expenses under Section 14A. The AO computed a much higher disallowance, which was then restricted by the CIT(A).

What were the issues?

Whether the disallowance under Section 14A should be restricted to the amount of exempt income.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “C”, BENCH

Before: SHRI M.BALAGANESH, AM & SHRI AMARJIT SINGH, JM

For Appellant: Shri Deepak Jain
For Respondent: Shri Abi Rama Kartikeyan, Shri Deepak Jain
Hearing: 30/07/2019Pronounced: 02/08/2019

आदेश / O R D E R PER M. BALAGANESH (A.M): This appeal in A.Y.2014-15 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-2, Mumbai in appeal No.CIT(A)-2/IT/187/2016-17 dated 05/01/2018 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 23/11/2016 by the ld. Dy. Commissioner of Income Tax, Circle-1(2)(2), Mumbai (hereinafter referred to as ld. AO).

1.

M/s. Payone Enterprises P. Ltd 2. The only issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in restricting the disallowance made u/s.14A of the Act read with rule 8D(2)(iii) of the rules to the extent of dividend income.

3.

We have heard rival submissions. We find that assessee had earned dividend income of Rs.81,372/- and claimed the same as exempt in the return of income. Assessee made suomoto disallowance of administrative expenses u/s.14A of the Act read with rule 8D(2)(iii) of the rules in the sum of Rs.49,542/-. The ld. AO proceeded to compute the disallowance under third limb of rule 8D(2) and arrived at the disallowance figure of Rs.1,21,84,586/- after reducing the amount disallowed already by the assessee in the sum of Rs.49,452/-. The ld. CIT(A) by placing reliance on the decision of the Hon’ble Delhi High Court in the case of Joint Investments reported in 372 ITR 694 restricted the disallowance made u/s.14A of the Act to the extent of dividend income. The ld. CIT(A) directed the ld. AO to disallow only the remaining sum of Rs.31,920/- (Rs.81,372 – Rs.49,452/-) u/s.14A of the Act. We find no infirmity in the said order of the ld. CIT(A) as the same has been rendered by following the decision of the Hon’ble Delhi High Court and this issue is also now settled by the Hon’ble Supreme Court in the case of Maxopp Investments reported in 402 ITR 640. Accordingly, the ground raised

by the revenue is dismissed.

4. In the result, appeal of the revenue is dismissed.

Order pronounced in the open court on this 02/08/2019 Sd/- Sd/- (AMARJIT SINGH) (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated 02/08/2019 KARUNA, sr.ps M/s. Payone Enterprises P. Ltd Copy of the Order forwarded to : The Appellant 1. The Respondent. 2. The CIT(A), Mumbai. 3. CIT 4. DR, ITAT, Mumbai 5. 6. Guard file. //True Copy//

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