ROVO MARKETING PVT. LTD.,NEW DELHI vs. ITO, NEW DELHI

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ITA 6038/DEL/2014Status: DisposedITAT Delhi12 December 2017AY 2011-125 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that, following the jurisdictional High Court's decision, disallowance under Section 14A cannot exceed the exempt income earned. Therefore, the addition was restricted to the exempt income amount.

What were the facts?

The assessee challenged the addition of Rs. 12,79,844/- made by the Assessing Officer under Section 14A of the Income Tax Act, 1961, read with Rule 8D. The assessee argued that the disallowance should be restricted to the exempt income earned, which was Rs. 1,51,698/-.

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

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Income Tax Appellate Tribunal, DELHI BENCH: ‘F’ NEW DELHI

Before: SHRI G. D. AGRAWAL & SHRI CHANDRA MOHAN GARG

Hearing: 11.12.2017Pronounced: 12.12.2017

PER CHANDRA MOHAN GARG, JUDICIAL MEMBER

1.

This appeal has been filed by the assessee against the order of the Ld.CIT(A)-XVIII, New Delhi dated 22/8/2014 for Assessment Year 2011- 12.

2.

In this appeal, the assessee has raised a single issue wherein the assessee is challenging the confirmation of addition by the Ld.CIT(A) of Rs.12,79,844/- made by the A.O u/s 14A of the Income Tax Act, 1961 (for short the Act) read with Rules 8D of the Income Tax Rules, 1962 (For short the Rules).

3.

The Ld. AR submitted that in view of the decision of Hon'ble High Court of Delhi in the case of Joint Investment Vs. CIT 372 ITR 694 (Delhi) disallowance cannot be made more than exempt income earned and claimed as exempt by the assessee which was only 1,51,698/- in the present case. Hence, the disallowance may kindly be restricted to the said amount.

4.

The Ld. Departmental Representative strongly supported the action of the A.O as well as the First Appellate Order and submitted that the authorities below were correct and justified in making addition.

However, on being asked by the Bench, the Ld. Departmental Representative fairly submitted as per ratio of the decision of Hon’ble Jurisdictional High Court of Delhi in the case of Joint Investment (supra) the addition more than exempt income cannot be made.

5.

On careful consideration and rival submissions in the present case admittedly and undisputedly the assessee has earned exempt income of Rs.1,51,698/-. Hence, as per ratio of the decision of Jurisdictional High Court of Delhi in the case of Joint Investment (Supra), no disallowance u/s 14A of the Act read with Rule 8D of the Rules can be made more than the exemption amount Hence, respectfully following the decision of Hon’ble Jurisdictional High Court, we direct the A.O to restrict disallowance to Rs.1,51,698/- and to delete the remaining part of addition. Accordingly, the sole ground of the assessee is partly allowed in the manner as indicated above.

7.

In the result, the appeal is partly allowed.

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