ACIT 6(2)(2), MUMBAI vs. ESSAR PROPERTIES PRIVATE LIMITED, MUMBAI

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ITA 5265/MUM/2017Status: DisposedITAT Mumbai04 February 2019AY 2012-132 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 held that the disallowance under Section 14A read with Rule 8D cannot exceed the amount of exempt income earned by the assessee. This decision was based on a prior ruling in the assessee's own case.

What were the facts?

The Revenue appealed the CIT(A)'s order which deleted a disallowance made under Section 14A read with Rule 8D. The CIT(A) had followed a previous ITAT order for the assessee's own case.

What were the issues?

Whether the disallowance under Section 14A read with Rule 8D can exceed the amount of exempt income earned by the assessee.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “E” BENCH, MUMBAI

For Appellant: Shri R. Manjunatha Swamy, Shri Anuj Kisnadwala
Pronounced: 04.02.2019

O R D E R Per Shamim Yahya, A. M.:

This appeal by the Revenue is directed against the order of the learned Commissioner of Income Tax (Appeals)-12, Mumbai (‘ld.CIT(A) for short) dated 12.05.2017 and pertains to the assessment year (A.Y.) 2012-13.

2.

The grounds of appeal read as under:

1. On the facts and circumstances of the case and in law the ld. Commissioner of Income Tax (Appeals) erred in deleting the disallowance made u/s.14A r.w.r. 8D if Rs.32,08,70,603/- ignoring the CBDT circular No.5/2014 dated 11.02.2014 that disallowance u/s. 14A has to be made irrespective of the fact whether any exempt income has been earned during the year by the assessee or not.

3.

We have heard both the counsel and perused the records. We find that in this case, the ld. CIT(A) has granted relief to the assessee by following the ITAT order in the assessee’s own case for the proposition that the amount of disallowance u/s.14A cannot exceed the amount of exempt income.

4.

Against the above order, the Revenue is in appeal before us.

5.

We have heard both the counsel and perused the records. We find that the issue is covered by the decision of ITAT in assessee’s own case earlier for A.Y. 2009-10 vide order dated 19.07.2016. In the said order, the ITAT has held as under: 4. We have heard both the counsel and perused the orders of the Revenue Authorities as well as judgment of the Hon'ble Delhi High Court in the case of Joint Investments Pvt. Ltd. (supra) and the cited decisions of the Tribunal (supra). On perusal of the cited decisions, we find the same are relevant for the proposition that the exempt income surely cannot swallow the entire amount and the disallowance u/s. 14A read with Rule 8D cannot exceed the exempt income [para 2.2 of the Tribunal’s order in the case of Daga Global Chemicals P. Ltd. (supra) is relevant in this regard]. Considering the settled legal position of the issue, we are of the opinion that the disallowance under the said provisions of 14A read with Rule 8D should be restricted to the exempt income. We direct the A.O. accordingly. Thus, the ground raised

by the assessee is allowed.

6. We further note that as mentioned above, the issue is covered in favour of the assessee. Respectfully following the precedent, we uphold the order of the ld. CIT(A).

7.

In the result, this appeal by the Revenue stands dismissed. Order pronounced in the open court on 04.02.2019 Sd/- Sd/- (Ram Lal Negi) (Shamim Yahya) Judicial Member Accountant Member Mumbai; Dated : 04.02.2019 Roshani, Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT - concerned 5. DR, ITAT, Mumbai 6. Guard File BY ORDER,

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