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Facts
The assessee and Revenue filed cross appeals for Assessment Year 2016-17 against the CIT(A)'s order. The assessee challenged a disallowance under Section 14A read with Rule 8D and the non-allowance of Education Cess. The Revenue's appeal pertained to a tax effect below the minimum prescribed by a CBDT circular.
Held
The Revenue's cross appeal was dismissed due to a tax effect below the prescribed limit of Rs. 60,00,000/-. For the assessee's appeal, the ground regarding the allowability of Education Cess was not pressed and hence rejected. The tribunal allowed the ground challenging the disallowance under Section 14A read with Rule 8D, holding that such a disallowance is not sustainable without satisfaction from the Assessing Officer under Section 14A(2).
Key Issues
Whether disallowance under Section 14A read with Rule 8D is sustainable without the Assessing Officer's satisfaction under Section 14A(2); whether Education Cess is an allowable deduction; and the maintainability of Revenue's appeal due to low tax effect.
Sections Cited
Section 143(3), Section 14A, Rule 8D, Section 14A(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘E’, NEW DELHI
Before: Sh. Satbeer Singh Godara & Sh. M. Balaganesh
Asstt. Year : 2016-17 Montage Enterprises Pvt. Ltd., Vs ACIT, 205, 2nd Floor, V-4, Mayur Plaza-2, Central Circle-27, Local Shopping Centre, Mayur Vihar, New Delhi-110055 Phase-I, New Delhi-110091 (APPELLANT) (RESPONDENT) PAN No. AACCM8173H : Asstt. Year : 2016-17 DCIT, Vs Montage Enterprises Pvt. Ltd., Central Circle-27, C-53, Shashi Garden, Near New Delhi-110055 Pocket-V, Gurudwara, Mayur Vihar, Phase-I, New Delhi-110091 (APPELLANT) (RESPONDENT) PAN No. AACCM8173H Assessee by : Sh. M. P. Rastogi, Adv. Revenue by : Sh. Akhilesh Kumar Yadav, Sr. DR Date of Hearing: 05.12.2024 Date of Pronouncement: 13.12.2024 ORDER Per Satbeer Singh Godara, Judicial Member: These assessee and Revenue cross appeal for Assessment Year 2016-17, arise against the CIT(A)-29, New Delhi’s order dated 22.10.2020 in case No. 162/2019-20, in proceedings u/s 143(3) of the Income Tax Act, 1961 (in short “The Act”).
Heard both the parties at length. Case file perused.
We note at the outset that the Revenue cross appeal herein infact involves tax effect of Montage Enterprises Pvt. Ltd. Rs.53,25,779/- i.e. less than the minimum prescribed amount of Rs.60,00,000/- as per the CBDT latest circular no. 2/2024 dated 07.09.2024 admittedly made applicable with retrospective effect. We thus reject the Revenue’s instant appeal as involving lower than the above prescribed tax effect of Rs.60,00,000/- subject to all just exceptions.
“1. On the facts and in the circumstances of the case, the lower authority has erred in confirming disallowance to the extent of Rs.38,58,216/- u/s 14A read with Rules 8D. It is contended that Section 14A is not applicable in the case of the appellant.
2. That on the facts and circumstances of the case, the ld. CIT(Appeals) was not justified and grossly erred in not allowing deduction of Education Cess on Income Tax in computing total income under the normal provisions of the Act for the Assessment Years 2015-15 and 2016- 17.”
Learned counsel at the outset does not press for the assessee latter substantive ground raising the issue of education cess as an allowable business deduction. Rejected accordingly.
This leaves us with the assessee’s former issue of correctness of both the lower authorities action making section 14A r.w. Rules 8D disallowance of Rs.38,58,216/- relating to it’s exempt income. We note during the course of hearing that this is a recurring issue between the parties since A.Y. 2008-09 which formed subject matter of adjudication in this tribunal’s various orders. More particularly, the latest of them is dated 20.06.2024 in assessee’s appeal for A.Y. 2014-15 holding therein that such a disallowance is not sustainable in absence of any section 14A(2) satisfaction Montage Enterprises Pvt. Ltd. having drawn by the Assessing Officer qua its books of account. That being the undisputed case from the Revenue side as well, we adopt judicial consistency to accept the assessee’s instant foremost substantive ground in very terms. This assessee’s appeal is partly allowed therefore. Necessary computation shall follow as per law.
6.1 No other ground or arguments has been pressed before us.
To sum up, this assessee’s appeal is dismissed in above terms. A copy of this common order be placed in the respective case files.
Order Pronounced in the Open Court on 13/12/2024.