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Facts
The Department appealed the order of the Learned Commissioner of Income Tax (Appeals) for Assessment Year 2016-17. The CIT(A) had deleted an addition of Rs. 1,60,91,918/- made by the Assessing Officer under section 14A of the Income Tax Act, 1961, which was the Revenue's sole grievance.
Held
The Income Tax Appellate Tribunal upheld the CIT(A)'s decision to delete the addition made under section 14A. The Tribunal, citing Supreme Court and Delhi High Court precedents, affirmed that disallowance under section 14A must be restricted to the extent of exempt income earned by the assessee, finding no infirmity in the CIT(A)'s order.
Key Issues
Whether the CIT(A) was justified in deleting the disallowance of Rs. 1,60,91,918/- made under section 14A of the Income Tax Act, 1961, by restricting it to the extent of exempt income earned.
Sections Cited
14A of the I. T. Act, 1961
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘G’: NEW DELHI
Before: BEFORE SHRI SHAMIM YAHYA & SHRI YOGESH KUMAR U.S.
This appeal is filed by the Department against the order of Learned Commissioner of Income Tax (Appeals)/ National Faceless Appeal Centre (NFAC) for short], dated 10/01/2024 for the Assessment Year 2016-17.
The grounds of Appeal are as under: -
“1. Whether in facts and circumstances of the case, Ld CIT(A) was right in allowing appeal of the assessee.
2. Whether in facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 1,60,91,918/- made u/s 14A of the I. T. Act, 1961.”
The only grievance of the Revenue in the present Appeal against the order of the Ld. CIT(A) is the deletion of the addition of Rs. 1,60,91,918/- made by the A.O. u/s 14A of Income Tax Act, 1961 (‘Act’ for short).
We have heard both the parties and perused the material available on record.
The Assessing Officer made disallowance of Rs. 1,60,91,918/- u/s 14A of the Act. The Ld. CIT(A) deleted the said addition based on the settled position of law in the following Judgment rendered by the Hon'ble Supreme Court in the case of State Bank of Patiala (2018) 99 com and the Judgment of Hon'ble High Court of Delhi in the case of CIT Vs. Joint Investment Pvt. Ltd. (2015) 372 ITR 69, wherein it is held that the disallowance to be restricted to the extent of exempt income earned by the Assessee. Thus, we find no error or infirmity in the order of the Ld. CIT(A) in deleting the disallowance u/s 14A of the Act. Accordingly we find no merit in the Grounds of appeal of the Revenue.
7.In the result, the Appeal of the Revenue is dismissed.