KAPAREVA DEVELOPMENT PVT. LTD.,NEW DELHI vs. DCIT CENTRAL CIRCLE 17, NEW DELHI
आयकर अपीलीय अिधकरण
िदʟी पीठ “एस एम सी”, िदʟी
ŵी िवकास अव̾थी, Ɋाियक सद˟
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH “SMC”, DELHI
BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER
आअसं.2065/िदʟी/2024 (िन.व. 2013-14)
Kapareva Devlopment P. Ltd.,
305, Kusal Bazar, 32-33, Nehru Place,
New Delhi 110019
PAN: AABCK-7339-N
...... अपीलाथᱮ/Appellant
बनाम Vs.
Deputy Commissioner of Income Tax,
Central Circle-17, ARC, Jhandewalan,
New Delhi 110005
..... ᮧितवादी/Respondent
अपीलाथŎ Ȫारा/ Appellant by : Shri Sandeep Chadha, Chartered Accountant
ŮितवादीȪारा/Respondent by : Shri Sanjay Kumar, Sr. DR
सुनवाई कᳱ ितिथ/ Date of hearing
:
13/01/2025
घोषणा कᳱ ितिथ/ Date of pronouncement :
:
13/01/2025
आदेश/ORDER
PER VIKAS AWASTHY, JM:
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-29, New Delhi (hereinafter referred to as 'the CIT(A)') dated
14.03.2024, for assessment year 2013-14. 2. The solitary addition made by the Assessing Officer (AO) in impugned assessment year is with regard to disallowance u/s.14A of the Income Tax Act,
1961(hereinafter referred to as ‘the Act’). The assesee has made suo moto disallowance of Rs.2,45,353/-. The AO not satisfied with the suo moto disallowance
2
by the assessee invoked the provisions of Rule 8D and made disallowance of Rs.13,21,676/-. The short contention of the assessee is that own interest free funds of the assessee are much more than the investments made.
3. During the period relevant to assessment year under appeal, the assessee has received dividend income of Rs.7,09,321/-. A perusal of Audited Balance Sheet as on 31.03.2013 filed in the paper book shows that own funds of the assessee comprising of Share Capital, Reserve & Surplus are to the tune of Rs.7,03,10,513/- as against investments of Rs.5,08,43,026/-. It is no more res integra that where the assessee is having mixed bag of own interest free funds and interest bearing funds, it is presumed that the investments are made by the assessee from own non- interest bearing funds. Hence, no disallowance under Rule 8D(2)(ii) is warranted. As regards disallowance under Rule 8D(2)(iii), the assessee has made suo moto disallowance of 0.5% of average investments. It is also a settled position that for the purpose of computing disallowance under Rule 8D(2)(iii) only dividend yielding investments are to be considered, whereas, the AO has taken average of total opening and closing investments.
4. A perusal of provisions of section 14A(2) of the Act would show that the Assessing Officer shall determine the amount of expenditure incurred in relation to earning of the exempt income in accordance with Rule 8D, if, the Assessing Officer having regard to the accounts of assessee is not satisfied with correctness of the claim of the assessee in respect of expenditure incurred in relation to earning of exempt income. Thus, the Assessing Officer has to first record his dissatisfaction qua suo moto disallowance made by the Assessing Officer. A perusal of assessment order at the outset shows that while recording his dissatisfaction, the AO is under 3
impression that the assessee has not made any disallowance u/s. 14A of the Act.
This is evident from the observations of the AO, "There can be no eventuality that no expenses could be said to have been made by the assessee in making investments". The presumption by the AO that no disallowance is made by the assessee itself makes the dis-satisfaction defective. Thus, considering facts of the case and the settled legal position, additional disallowance made by the AO u/s.
14A of the Act is directed to be deleted.
5. In the result, impugned order is set aside and appeal of the assessee is allowed.
Order pronounced in the open court on Monday the 13th day January, 2024. (VIKAS AWASTHY)
᭠याियक सद᭭य/JUDICIAL MEMBER
िदʟी/Delhi, ᳰदनांक/Dated 13.01.2025
NV/-
ᮧितिलिप अᮕेिषतCopy of the Order forwarded to :
1. अपीलाथᱮ/The Appellant ,
2. ᮧितवादी/ The Respondent.
3. The PCIT
4. िवभागीय ᮧितिनिध, आय.अपी.अिध., िदʟी /DR, ITAT, िदʟी
5. गाडᭅ फाइल/Guard file.
BY ORDER,
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(Dy./Asstt.