PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) - 1 vs. M/S MOON STAR SECURITIES TRADING & FINANCE CO. PVT. LTD.,
What did the High Court hold?
The High Court held that the Assessing Officer failed to provide reasons for rejecting the assessee's offered disallowance amounts and arbitrarily applied Rule 8D. Therefore, the ITAT's decision was upheld.
What were the facts?
The Revenue appealed against an ITAT decision concerning disallowance under Section 14A of the Income Tax Act. The disallowances were made during search assessment proceedings under Section 153A.
What were the issues?
Whether the Assessing Officer's rejection of the assessee's disallowance without providing reasons and the subsequent application of Rule 8D was justified.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cases cited in this judgment(1)Show listHide list
Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.
- CIT v. Taikisha Engineering India Ltd.252 citing370 ITR 338 · 2015 · HC · Read judgment
$~31 * IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ITA 363/2018 & CM APPL. 11644/2018
PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) – 1
..... Appellant Through: Mr. Sanjay Kumar with Mr. Rahul Chaudhary, Standing Counsels for Revenue.
versus
M/S MOON STAR SECURITIES TRADING & FINANCE CO. PVT. LTD.
..... Respondent
Through: None.
CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE A. K. CHAWLA
O R D E R %
23.03.2018
The question of law urged is identical to what was urged by the Revenue in ITA 81/2018 and ITA 83/2018 (Principal Commissioner of Income Tax (Central)-1 v. M/s Moonstar Securities Trading and Finance Co. Pvt. Ltd.) with respect to disallowance under Section 14A of the Income Tax Act, 1961 (hereafter referred to as “the Act”). The additions were made in the course of search assessment under Section 153A of the Act. Those appeals were rejected on the ground that no substantial question of law arose when the Court on 24.01.2018 held as follows:
“In these two appeals, identical questions are sought to be urged with respect to the disallowance made under Section 14A. The assessee had claimed
ITA 363/2018
Page 1 of 2
receipt of tax exempt income by way of dividends for the relevant years. It was subjected to search and was issued with notices under Section 153A. Disallowances were made in the course of the search assessment proceedings. The relief granted by the impugned order was based upon the decision of this Court in CIT-VI v. Taikisha Engineering India Ltd., 370 ITR 338 (Del) where it was held that unless the Assessing Officer rejected the explanation or the rationale which induced the assessee to offer particular amount as expenditure with some reasoning, the mere rejection per se cannot be accepted. In this case for both years, the assessee had offered amounts as disallowance claiming them to be expenditure for tax exempt income. The Assessing Officer merely proceeded to reject such amount as expenditure and straightaway applied Rule 8D without adducing any reasons. Consequently, the principle enunciated in Taikisha Engineering (supra) clearly applied. As a result, it is held that the ITAT did not fall into error in holding as it did; no substantial question of law arises. The appeals are accordingly dismissed.”
For the same reasons, this appeal too is unmerited; no substantial question of law arises. The appeal is dismissed.
S. RAVINDRA BHAT, J
A. K. CHAWLA, J MARCH 23, 2018/kks
ITA 363/2018
Page 2 of 2
More judgments on Section 14A
- Blacksoil Capital Private Limited (As… vs DCIT, Circle-1(1), HyderabadITA 2217/HYD/2026[2017-18]Status: Disposed9 Oct 2026AY 2017-18
- Hiral Construction, Mumbai vs ITO Ward 42(1)(2), MumbaiITA 8431/MUM/2025[2017-18]Status: Disposed8 Oct 2026AY 2017-18
- The Dy DIT (It) 1(2), Mumbai vs M/S Citi Bank N.A, MumbaiITA 4981/MUM/2007[2002-2003]Status: Disposed8 Oct 2026AY 2002-2003
- M/S. Citi Bank N.A., Mumbai vs The Addl DIT (It) RG-1, MumbaiITA 4970/MUM/2007[2002-2003]Status: Disposed8 Oct 2026AY 2002-2003
- M/S American Express Bank Ltd., Mumbai vs The Jt DIT (It)1(1), MumbaiITA 9414/MUM/2004[2000-2001]Status: Disposed8 Oct 2026AY 2000-2001
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