PRINCIPAL COMMISSIONER OF INCOME TAX-4 vs. INDIAN SUGAR EXIM CORPORATION LTD

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ITA/852/2016HC DelhiDLHC01285022201618 January 2017Bench: HON'BLE MR. JUSTICE S. RAVINDRA BHAT,HON'BLE MR. JUSTICE NAJMI WAZIRI2 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal held that disallowance under Section 14A read with Rule 8D cannot exceed the exempt income. Following the Delhi High Court's decision, the disallowance was restricted to the amount voluntarily offered by the assessee.

What were the facts?

The Assessing Officer disallowed a significant amount under Section 14A read with Rule 8D. The CIT(A) reduced this disallowance, but the assessee had already offered a smaller disallowance. The ITAT restricted the disallowance to the amount offered by the assessee.

What were the issues?

Whether disallowance under Section 14A read with Rule 8D can exceed the tax-exempt income. The applicability of the Delhi High Court's ruling in Joint Investment Pvt. Ltd. v. CIT.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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$~12&13 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 851/2016, CM APPL.44317/2016

ITA 852/2016, CM APPL.44318/2016

PRINCIPAL COMMISSIONER OF INCOME TAX-4 ..... Appellant Through: Mr. Zoheb Hossain, Sr. Standing Counsel with Mr. Deepak Anand, Jr. Standing Counsel.

versus

INDIAN SUGAR EXIM CORPORATION LTD ..... Respondent

Through: Ms. Monika Ghai, Advocate.

CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE NAJMI WAZIRI

O R D E R %

18.01.2017

The question of law sought to be urged in these cases is in respect of the disallowance as against tax exempt income of `1,65,492/- for AY 2010-11. The Assessing Officer based upon his analysis of Rule 8D of the Income Tax Rules disallowed the sum of `2,45,34,198/-. This, however, was reduced by the CIT (A) to `16,24,198/- in addition to the original disallowance offered by the assessee which was `2,69,428/-, thus adding up to `18,93,626/-. The ITAT set aside the order of the CIT (A) by adopting the following reasoning: - “9. We have carefully heard the rival contention. We first

ITA 851 & 852/2016

Page 1 of 2

address the argument of the assessee that whether disallowance u/s 14A can exceed exempt income or not. Hon’ble Delhi High Court in the case of Joint Investment Pvt. Ltd. Vs. CIT in ITA No.117/2015 dated 25.02.2015 has held that disallowance u/s 14A rwr Rule 8D cannot exceed the entire tax exempt income. Therefore respectfully following the decision of Hon’ble Delhi High Court the disallowance is required to be restricted to Rs.1,65,492/- only. However, as the assessee on its own has made disallowance of Rs.2,69,428/- in the return of income, we restrict the disallowance as made by the assessee own its own. In view of this ground No.1 of the appeal is allowed reversing the order of the learned Commissioner of Income-tax (Appeals) and disallowance of Rs.16,24,198/- is directed to be deleted.”

This Court is of the opinion that having regard to the ruling in Joint Investment Pvt. Ltd. v. CIT (2015) 372 ITR 694 (Delhi) followed by the ITAT, no question of law arises; the appeals are accordingly dismissed, along with pending applications.

S. RAVINDRA BHAT, J

NAJMI WAZIRI, J JANUARY 18, 2017 /vikas/

ITA 851 & 852/2016

Page 2 of 2

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