TRUSTLINE HOLDINGS PVT. LTD.,,CHENNAI vs. DCIT, CC-3(1),, CHENNAI

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ITA 1180/CHNY/2024Status: DisposedITAT Chennai19 September 2024AY 2017-18Bench: HON’BLE SHRI MAHAVIR SINGH (Vice President), SHRI MANOJ KUMAR AGGARWAL (Accountant Member)1 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal accepted the assessee's plea that only investments actually yielding exempt income should be considered for computation. They directed the AO to re-compute the disallowance accordingly.

What were the facts?

The assessee earned exempt dividend income and long-term capital gains but did not offer any disallowance under section 14A. The AO computed disallowance under rule 8D(2)(ii) at 1% of the average value of investments yielding exempt income, which was confirmed by the CIT(A).

What were the issues?

Whether disallowance under section 14A r.w. rule 8D(2)(ii) should be computed considering only investments that actually yielded exempt income.

Which sections of the Income-tax Act were involved?

Section 14A,Section 143(3),Section 8D(2)(ii)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “C” BENCH, CHENNAI

Before: HON’BLE SHRI MAHAVIR SINGH, VP & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM

(िनधा)रण वष) / Assessment Year: 2017-18) M/s. Trustline Holdings Pvt. Ltd. DCIT बनाम/ 39/19, II Floor, Aspen Court, Corporate Circle-3(1), VI Main Road, R.A. Puram, Chennai. Vs. Chennai-600 028. �थायीलेखासं./जीआइआरसं./PAN/GIR No. AACCT-0398-M (अपीलाथ�/Appellant) : (� थ� / Respondent) अपीलाथ�कीओरसे/ Appellant by : Shri N. Arjun Raj (Advocate)-Ld. AR � थ�कीओरसे/Respondent by : Ms. R. Anita (Addl.CIT) -Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 19-09-2024 घोषणाकीतारीख /Date of Pronouncement : 19-09-2024 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member)

1.

Aforesaid appeal by assessee for Assessment Year (AY) 2017-18 arises out of the order passed by Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] on 30-03-2024 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s 143(3) of the Act on 15-12-2019. The sole issue that fall for our consideration is disallowance u/s.14A r.w. rule 8D(2)(ii) for Rs.12.25 Lacs. Having heard rival submissions, the same is adjudicated as under.

2.

Upon perusal of assessment order, it could be seen that the assessee earned exempt dividend income of Rs.17.97 Lacs and also earned exempt Long Term Capital Gains. The assessee did not offer any disallowance u/s 14A on the ground that no expenditure was incurred towards earning of exempt income. Since the assessee had closing investment of Rs.12.25 Crores, Ld. AO proceeded to compute disallowance u/r 8D(2). The direct expenses disallowance u/r 8D(2)(i) was computed as Rs.5.69 Lacs. However, the same has already been deleted by Ld. CIT(A) and the same is not the subject matter of appeal before us. The only dispute is with respect to indirect expenses disallowance u/r 8D(2)(ii) for Rs.12.25 Lacs which has been computed by Ld. AO @1% of annual average of monthly averages of value of investments yielding exempt income. The Ld. CIT(A) has confirmed the same. The only plea raised by Ld. AR is that for the purpose of computations, only those investments are to be considered which have actually yielded any exempt income during the year. The computations, in that respect, have been placed in the paper-book.

3.

Applying the ratio of Delhi Tribunal Special Bench decision in the case of M/s. Vireet Investments Private Limited (165 ITD 27), we accept the plea of Ld. AR and direct Ld. AO to re-compute the impugned disallowance by considering only those investments which have actually yielded any exempt income during the year. No other ground has been urged in the appeal.

4.

The appeal stand allowed for statistical purposes.

Order pronounced on 19th September, 2024.

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