JATINDER SINGH ANAND,NEW DELHI vs. ITO, NEW DELHI

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ITA 5018/DEL/2016Status: DisposedITAT Delhi10 January 2017AY 2012-134 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the AO had made a calculation mistake in determining the disallowance under Section 14A by using the total investment figure instead of the average investment. Therefore, the matter was restored to the AO for re-adjudication.

What were the facts?

The assessee's return was selected for scrutiny, and the Assessing Officer (AO) made additions under Section 14A read with Rule 8D and also charged interest under Sections 234B and 234C. The CIT(A) sustained these additions.

What were the issues?

The primary issue was the correctness of the disallowance made under Section 14A due to a calculation error by the AO. The secondary issue involved the levy of interest under Sections 234B and 234C.

Which sections of the Income-tax Act were involved?

Section 14A,Section 234B,Section 234C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DELHI

Before: Sh. N. K. Saini

Hearing: 05.01.2017Pronounced: 10.01.2017

ORDER This is an appeal by the assessee against the order dated 20.07.2016 of ld. CIT(A)-XV, New Delhi.

2.

Following grounds have been raised in this appeal: “1. The Ld. A.O. was wrong, unjustified and has erred in law and in facts by levying an addition of Rs. 460,904/- u/s 14A read with Rule 8D of the Income Tax Act, 1961 to the returned income on account of disallowance of interest expense relatable to exempt income from investment.

1.

2. The Ld. A.O. was wrong, unjustified and has erred in law and in facts by levying an addition of Rs. 30,923/- u/s 14A read with Rule 8D of the Income Tax Act, 1961 to the returned income on account of chargeability of disallowance u/s 14A.

2 Jatinder Singh Anand 3. Further, the Ld. A.O. was wrong, unjustified and has erred in law and on facts by passing an order imposing additional interest u/s 234B and 234C of the Income Tax Act, 1961.

4.

Further, the Ld. A.O. was wrong, unjustified and has erred in law and on facts in holding that the appellant has deliberately & knowingly filed inaccurate particular of his income and concealed his actual income to the extent of Rs. 460.904/-.

5. Further, the Ld. A.O. was wrong, unjustified and has erred in law and on facts in computing the disallowance under Rule 8D(2)(ii), by considering the value of total assets net of current liabilities.

6. The Ld. A.O. was wrong, unjustified and has erred in law and in facts by not considering that the intention behind making the investment by the assessee is not for the purpose of earning exempt income but for strategic reasons and business expediency.

7. The appellant craves leave for making any addition, alteration, deletion or modification in the grounds of appeal

before the disposal of the appeal.”

3. From the above grounds, it is gathered that the grievance of the assessee relates to the sustenance of addition made by the AO u/s 14A of the Income Tax Act, 1961 (hereinafter referred to as the Act) r.w. Rule 8D of the Income Tax Rules, 1962 and the charging of interest u/s 234B and 234C of the Act.

3 Jatinder Singh Anand 4. Facts of the case in brief are that the assessee filed the return of income on 29.09.2012 declaring an income of Rs.11,94,630/- which was processed u/s 143(1) of the Act. Later on, the case was selected for scrutiny. The AO made the addition of Rs.4,60,904/- and Rs.30,923/- u/s 14A of the Act r.w. Rule 8D of the Income Tax Rules, 1962. He also added Rs.4,207/- being the difference in the figures of Form No. 26AS.

5.

Being aggrieved the assessee carried the matter to the ld. CIT(A) who sustained the additions made by the AO.

6.

Now the assessee is in appeal. The ld. Counsel for the assessee did not dispute the addition u/s 14A of the Act but stated that there was mistake in the calculations of the figure worked out by the AO for the addition u/s 14A of the Act and the main mistake is in the figures of average investment which had wrongly been taken by the AO at Rs.61,84,692/- instead of Rs.30,92,346/-. He requested to restore the matter to the AO for verification and working out the correct figure. Nobody was present on behalf of the department.

7.

I have considered the submissions of the ld. Counsel for the assessee and perused the material available on the record. It appears that inadvertently the AO had taken total figure of investment instead of average investment while working out the disallowance u/s 14A of the Act. In that view of the matter, this issue is set aside back to the file of 4 Jatinder Singh Anand the AO for re-adjudication in accordance with law after providing due and reasonable opportunity of being heard to the assessee.

8.

In the result, the appeal of the assessee is allowed for statistical purposes. (Order Pronounced in the Court on 10/01/2017)

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