ACIT CORPORATE CIRCLE 2, MADURAI vs. TVS SRICHAKRA LIMITED, MADURAI

This appeal filed by the Revenue is directed against the order of the ld. Commissioner of Income Tax (Appeals) 1, Madurai dated 28.03.2018 relevant to the assessment year 2013-14. The Revenue has challenged the order of the ld. CIT(A) in restricting the disallowance under section 14A of the Act r.w. Rule 8D to the extent of exempt income earned by the assessee.

Brief facts of the case are that the assessee filed return of income for the assessment year 2013-14 on 30.11.2013 declaring a loss of ₹.2,81,76,297/-. The return filed by the assessee was selected for scrutiny. After considering the details furnished by the assessee against statutory notices, the Assessing Officer completed assessment under section 143(3) of the Act determining the assessed total income at ₹. 12,01,03,241/- after making various disallowance/addition. On appeal, after considering the submissions of the assessee and facts of the case, the ld. CIT(A) partly allowed the appeal of the assessee.

Aggrieved, the Revenue is in appeal before the Tribunal against the restriction of the disallowance under section 14A of the Act to the extent the assessee earned the exempt income.

We have heard both the parties, peruse the materials available on record and gone through the orders of authorities below. In this case, the assessee has received dividend income of ₹.25,00,000/- during the year and claimed it as exempt, whereas, the Assessing Officer made disallowance of ₹.1,48,48,091/- under section 14A r.w. Rule 8D. By following the decision in the case of Redington (India) Ltd. v. Addl. CIT in TCA No. 520 of 2016 dated 23.12.2016, the ld. CIT(A) restricted the disallowance under section 14A of the Act to the extent of exempted income earned by the assessee. We also find that in the case of Joint Investments Pvt. Ltd. v. CIT 372 ITR 694 (Delhi), the Hon’ble Delhi High Court has held that the disallowance under section 14A r.w. Rule 8D should be restricted to the extent of exempt income earned. In view of the above, we find no reason to interfere with the order passed by the ld. CIT(A). Accordingly, the ground raised by the Revenue stands dismissed.

In the result, the appeal filed by the Revenue is dismissed. Order pronounced on the 25th July, 2019 at Chennai.