ITO, NEW DELHI vs. M/S. MODERATE LEASING & CAPITAL SERVICES LTD., NEW DELHI

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ITA 4706/DEL/2014Status: DisposedITAT Delhi31 May 2017AY 2009-102 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that while disallowance under Section 14A read with Rule 8D is applicable, it cannot exceed the amount of exempt income earned. Following the jurisdictional High Court's decision, the disallowance was confirmed at Rs. 264/-.

What were the facts?

The assessee company reported exempt dividend income of Rs. 1700/-. The Assessing Officer disallowed Rs. 99047514/- under Section 14A read with Rule 8D. The CIT(A) restricted this disallowance to Rs. 264/-.

What were the issues?

Whether the disallowance under Section 14A read with Rule 8D can exceed the exempt income earned by the assessee, and the correctness of the CIT(A)'s computation of disallowance.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, DELHI BENCH “E”: NEW DELHI

Before: SHRI I.C.SUDHIR & SHRI PRASHANT MAHARISHI

For Respondent: DR Assessee by:
Hearing: 30/05/2017Pronounced: 31/05/2017

O R D E R PER PRASHANT MAHARISHI, A. M. 1. This appeal is preferred by revenue against the order of the ld CIT(A)-V, New Delhi dated 06.06.2014 by which the disallowance of Rs. 99047514/- made by the ld Assessing Officer u/s 14A of the Income Tax Act vide order u/s 143(3) of the Act dated 05.12.2011 for AY 2009-10 was deleted. 2. The revenue has preferred following grounds of appeal:- “1. Whether on the facts and circumstances of the case and in law, the ld CIT(A) erred in deleting the additions of Rs. 99047514/- made by the AO on account of disallowance u/s 14A read with Rule 8D. 1.1 Whether on the facts and circumstances of the case and in law, the ld CIT(A) has ignored that the disallowance was made according to the section 14A read with Rule 8D of the Income Tax Rule?

2. Whether on the facts and circumstances of the case and in law, the ld CIT(A) has ignored that the facts of Asstt. Year 2011-12 are not similar to the asstt. Year 2009-10?”

3. The brief facts of the case is that the assessee company filed its return of income on 29.09.2009 for Rs. 3176580/-. During the year the assessee has received a sum of Rs. 1700/- as dividend and claimed the same as exempt. The ld Assessing Officer after show cause made disallowance u/s 14A of the Act amounting to Rs. 99047514/- applying provisions of Rule 8D. the assessee contested the same before the first appellate authority who recomputed the disallowance u/s 14A of the Act applying Rule 8D of the Income Tax Rules after remand report of the assessee at

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