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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-8, Chennai, dated 28.11.2017 and pertains to assessment year 2013-14.
The only issue arises for consideration is disallowance made by the Assessing Officer under Section 14A of the Income-tax Act, 1961 (in short 'the Act').
Shri M. Sanjeev Aditya, the Ld. representative for the assessee, submitted that the assessee has no objection to disallow the expenditure incurred by the assessee in respect of the exempted income earned. In this case, certain investments have resulted in taxable income.
Therefore, according to the Ld. representative, the investments which resulted in taxable income have to be excluded from computation. In other words, according to the Ld. representative, those investments which resulted in income which is taxable under the provisions of Income-tax Act, cannot be taken into consideration for the purpose of disallowance under Rule 8D(2) of the Income-tax Rules, 1962.
We heard Shri R.V. Aroon Prasad, the Ld. Departmental Representative also. Rule 8D(2) Income-tax Rules, 1962 and Section 14A of the Act clearly say that the expenditure incurred by the assessee for earning the exempted income has to be disallowed. In this case, the assessee claims that certain investments resulted in taxable income.
This Tribunal is of the considered opinion that wherever the income is taxable under the provisions of Income-tax Act, cannot be taken into consideration for the purpose of disallowance under Section 14A of the Act read with Rule 8D(2) of Income-tax Rules, 1962. In other words, the income which is otherwise taxable under the provisions of Income-tax Act, would not fall within the purview of Section 14A of the Act. In view of the above, the Assessing Officer has to verify whether any part of income is taxable under the provisions of the Income-tax Act. Accordingly, orders of both the authorities below are set aside and the entire issue is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter afresh and bring on record the income earned by the assessee which is taxable and non-taxable and thereafter decide the issue afresh in accordance with law, after giving a reasonable opportunity to the assessee.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the court on 25th October, 2018 at Chennai.