AVINASH RAMCHANDRA PHADNIS,PUNE vs. INCOME-TAX OFFICER, WARD - 11(2), PUNE

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ITA 2105/PUN/2017Status: DisposedITAT Pune13 November 2018AY 2014-154 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that disallowance under Section 14A is restricted to the extent of exempt income earned, citing precedents from the Delhi High Court.

What were the facts?

The assessee earned exempt dividend income of Rs.1,82,362/-. The Assessing Officer (AO) disallowed Rs.14,72,451/- under Section 14A read with Rule 8D, which was confirmed by the CIT(A).

What were the issues?

Whether the disallowance under Section 14A can exceed the amount of exempt income earned by the assessee.

Which sections of the Income-tax Act were involved?

Section 14A

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Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE

Before: SHRI R.S. SYAL

For Respondent: Shri Rajesh Gawli

आदेश / ORDER PER R.S.SYAL, VP :

This appeal by the assessee is arising out of the order passed by the CIT(A)-1, Pune, on 29-06-2017 in relation to the A.Y. 2014-15.

2.

The only issue raised in this appeal is against the confirmation of disallowance of Rs.14,72,451/- made by the AO u/s.14A of the Income Tax Act, 1961 (hereinafter also called as ‘the Act’).

2 ITA No.2105/PUN/2017 Avinash Ramchandra Phadnis

3.

Succinctly, the facts of the case are that the assessee

earned exempt dividend income, which figure has been given

at Rs.1,82,362/- in the grounds of appeal before the Tribunal.

No disallowance was offered u/s.14A of the Act read with

Rule 8D of the Income Tax Rules, 1962. The AO invoked the

provisions of Rule 8D and made disallowance amounting to

Rs.14,72,451/-. The Ld. CIT(A) sustained such disallowance.

4.

I have heard the ld. DR and perused the relevant material

on record. It is found that the assessee earned dividend income

of Rs.1,82,362/-, which was claimed as exempt. The Hon'ble

Delhi High Court in the case Cheminvest Ltd. vs. CIT (2015)

378 ITR 33 (Del) has held that if there is no exempt income,

there can be no question of making any disallowance u/s 14A

of the Act. Similar view has been taken by the Hon'ble Delhi

High Court in CIT vs. Holcim India P. Ltd. (2014) 90CCH

081-Del-HC. The net effect of these decisions is that the

disallowance u/s 14A gets restricted to the extent of exempt

income, even if the provisions of the section are attracted.

Similar view has been taken by the Delhi Bench of the

Tribunal in several cases including Indo Hongkong Industries

Pvt. Ltd. Vs. DCIT in ITA Nos. 2611 & 2612/Del/2015 vide its

3 ITA No.2105/PUN/2017 Avinash Ramchandra Phadnis

order dated September, 2018, to which I am a party. No contrary decision has been brought to my notice by the ld. DR. In view of the above precedents, which are squarely applicable to the facts of the instant case, I limit the disallowance to the extent of exempt income of Rs.1,82,362/-.

5.

In the result, the appeal is partly allowed.

Order pronounced in the Open Court on 13th November, 2018. Sd/- (R.S.SYAL) उपा�य�/ VICE PRESIDENT उपा�य� उपा�य� उपा�य�

पुणे Pune; �दनांक Dated : 13th November, 2018 सतीश आदेश क� क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order is forwarded to: अ�ेिषत आदेश आदेश आदेश 1. अपीलाथ� / The Appellant; 2. ��यथ� / The Respondent; 3. आयकर आयु�(अपील) / The CIT (Appeals)-1, Pune 4. आयकर आयु� / The Pr. CIT-1, Pune 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे “SMC” / DR ‘SMC’, ITAT, Pune; 6. गाड� फाईल / Guard file. आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER, आदेशानुसार

/ True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune

ITA No.2105/PUN/2017 Avinash Ramchandra Phadnis

Date 1. Draft dictated on 12-11-18 2. Draft placed before author 12-11-18 3. Draft proposed & placed before the - second member 4. Draft discussed/approved by Second - Member. 5. Approved Draft comes to the Sr.PS/PS 12-11-18 6. Kept for pronouncement on 13-11-18 7. File sent to the Bench Clerk 13-11-18 8. Date on which file goes to the AR 9. Date on which file goes to the Head Clerk. 10. Date of dispatch of Order.

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