SMT. HEMA RAVICHANDAR,BANGALORE vs. ASST.C.I.T., BANGALORE

PDF · subscribers
ITA 401/BANG/2016Status: DisposedITAT Bangalore13 October 2017AY 2011-123 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

For AY 2011-12, the Tribunal held that since the assessee had already debited substantial investment expenses to the capital account, further disallowance under Section 14A was not justified. For AY 2008-09, as no such debits were made to the capital account, the disallowance was upheld.

What were the facts?

The assessee appealed against disallowances made under Section 14A read with Rule 8D for AY 2008-09 and 2011-12. For AY 2011-12, the assessee had debited certain investment-related expenses to the capital account, arguing this amounted to a disallowance. No such debit was made in AY 2008-09.

What were the issues?

Whether disallowance under Section 14A is justified when the assessee has already capitalized investment-related expenses. The applicability of Section 14A for AY 2008-09 where no expenses were capitalized.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH : BANGALORE

Before: SHRI SUNIL KUMAR YADAV & SHRI ARUN KUMAR GARODIA

For Respondent: Shri Sumer Singh Meena, Addl. CIT (DR)
Hearing: 12.10.2017Pronounced: 13.10.2017

Date of hearing : 12.10.2017 Date of Pronouncement : 13.10.2017 O R D E R Per Shri A.K. Garodia, Accountant Member Both these appeals are filed by the assessee and these are directed against two Separate orders of learned CIT (A) – 7, Bengaluru dated 27.01.2016 for Assessment Year 2008 – 09 and dated 31.12.2015 for A. Y. 2011 – 12. Both these appeals were heard together and are being disposed of by this common order for the sake of convenience.

2.

In both these appeals, although several grounds are raised but the only grievance is about disallowance u/s 14A r.w.r. 8D Rs. 13,66,167/- in A. Y. 2008 – 09 and Rs. 46,83,958/- in A. Y. 2011 – 12.

3.

Learned AR of the assessee submitted that the copy of Capital account of the assessee for the year ended on 31.03.2011 is available on page 45 of the Paper Book for A. Y. 2011 – 12 and as per the same, Rs. 54,36,625/- has been debited to Capital Account for Investment Advisory fees and Rs. 436,857/- to 401/Bang/2016 Page 2 of 3 has been debited to Capital Account for DP Charges and therefore, to this extent, the assessee has not claimed deduction for expenses incurred in respect of investment activity which is akin to disallowance u/s 14A and therefore, any further disallowance u/s 14A is not justified. The bench raised a query about such debit in capital account in A. Y. 2008 – 09 and in reply, she submitted that the copy of capital account for that year is available on page 59 of the Paper Book for A. Y. 2008 – 09 but there is no such debit in that year. Learned DR of the revenue supported the order of CIT (A) in both years.

4.

We have considered the rival submissions. We find that in A. Y. 2011 – 12, the assessee herself has made disallowance in respect of expenses incurred in respect of investment activity by debiting expenses to Capital Account of Rs. 54,36,625/- for Investment Advisory fees and Rs. 436,857/- for DP Charges total Rs. 58,73,482/- which is more than 0.5% of average investment worked out by the A. O. at Rs. 46,83,958/- and disallowed u/s 14A. Hence, in our considered opinion, making any further disallowance in this year u/s 14A is not justified. Hence, we delete the same.

5.

But in A. Y. 2008 – 09, no such amount is debited to Capital Account and hence, it is inferred that the same is debited to P & L Account in that year and therefore, we find no infirmity in the order of CIT (A) in A. Y. 2008 – 09.

6.

In the result, appeal filed by the assessee for A. Y. 2008 – 09 is dismissed and that for A. Y. 2011 – 12 is allowed.

Order pronounced in the open court on the date mentioned on the caption page.

More judgments on Section 14A

All 15,875 judgments and leading authorities on Section 14A →

Recent GST High Court judgments

Search GST case law →