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Income Tax Appellate Tribunal, “SMC-B” BENCH : BANGALORE
Before: SHRI SUNIL KUMAR YADAV
Per Sunil Kumar Yadav, Judicial Member
This appeal is preferred by the revenue against the order of CIT(A), interalia, on the following grounds:
2. Though various grounds are raised in this appeal but the main issue involved in this appeal is with regard to disallowance of expenses by invoking the provisions of section 14A of the Income Tax Act. The facts in briefs borne out from the record is that the assessee has earned the exempted income from the investment in shares. But he has not Page 3 of 5 offered any disallowance of expenses in computation of its income.
The AO has taken note of these facts and he accordingly invoked rule 8D of the Income Tax Rules and computed the disallowance of expenses incurred in earning the exempted income.
Aggrieved, the assessee preferred an appeal before the CIT(A), but he did not find favour with him. Now the assessee is before us and during the course of hearing, he invited our attention to the copy of the balance sheet filed during the course of hearing of the appeal with the submission that the assessee itself has disallowed Rs.37,275/- on account of expenses in earning the exempted income. During the course of hearing the specific query was raised as to whether these details of expenses were furnished before the AO during the course of assessment proceedings. But no concrete evidence has been placed before us in this regard. Though the assessee has earned substantial amount of exempted income but it is not clear as to whether he has disallowed the expenses relating to the earning of exempted income.
The learned counsel for the assessee further contended that before making the disallowance by invoking the provisions of section Page 4 of 5 14A of the Act and computing disallowance as per Rule 8D, the AO has not recorded his satisfaction with regard to incorrectness of the computation of the income of the assessee. In this regard, we have carefully examined the assessment order and find that the AO has categorically recorded that the assessee has not considered any amount for disallowance under section 14A of the Act though he has earned an exempted income. Now the assessee has come up with a plea that he has offered disallowance of Rs.37,275/- while computing the total income but no evidence is placed in this regard. In the light of the fact, I am of the view that let the issue be examined afresh by the AO.
We accordingly set aside the order of the CIT(A) and restore the matter to the file of the AO with a direction to readjudicate the issue afresh in the light of the explanations and details to be furnished with regard to disallowance under section 14A of the Act. If AO is not convinced with the details furnished by the assessee, he may record a satisfaction with regard to incorrectness of the calculations furnished to the AO and thereafter proceed the fresh calculations for disallowance as per Rule 8D of the Rules. Other grounds raised in this appeal are consequential in nature and needs no independent adjudication.
Page 5 of 5 Accordingly, the matter is restored to the file of the AO to readjudicate the issue afresh after affording an opportunity of being heard to the assessee.
In the result, the appeal of the assessee is partly allowed for statistical purposes.
Pronounced in the open court on 19th May, 2017.