FICHEM,AHMEDABAD vs. THE DY.CIT, CIRCLE-2(1)(1) (PREVIUOSLY CIRCLE-6(1)), AHMEDABAD

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ITA 1176/AHD/2024Status: DisposedITAT Ahmedabad16 October 2024AY 2017-18Bench: DR. BRR KUMAR (Accountant Member), SHRI SIDDHARTHA NAUTIYAL (Judicial Member)3 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that a disallowance of Rs. 2,000/- would suffice from the expenditure incurred in earning the exempt income, considering the dividend income and LTCG earned.

What were the facts?

The assessee claimed expenses related to earning dividend income and long-term capital gains (LTCG). The Assessing Officer disallowed the entire expenditure claimed, in addition to an amount already disallowed by the assessee.

What were the issues?

The primary issue was the correctness of the disallowance of expenses under Section 14A of the Income Tax Act, 1961, in relation to exempt income.

Which sections of the Income-tax Act were involved?

Section 14A,Section 115U

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD

Before: DR. BRR KUMAR & SHRI SIDDHARTHA NAUTIYAL

For Appellant: Shri Parin Shah, A.R
For Respondent: Shri Waghe Prasad Rao, S.R.-DR
Hearing: 16.10.2024Pronounced: 16.10.2024

PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:

This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), ADDL/JCIT (A), Thiruvanantpuram, vide order dated 29.04.2024 passed for A.Y. 2017-18. 2. The Assessee has taken the following grounds of appeal:-

“1. On the facts and circumstances of the case and in law, the Ld. Commissioner of Income-tax (Appeal) [‘the CIT(A)’] erred in confirming the disallowance amounting to Rs. 11,72,273/- made under section 14A of the Act by the Ld. Assessing Officer without considering the submission filed.

2.

Your appellant craves leave to add, alter and/or to amend all or any of the grounds before the final hearing.”

3.

Heard the arguments of both the parties and perused material on record. M/s. Fichem vs. DCIT Asst.Year –2017-18 - 2–

4.

The Assessing Officer disallowed Rs. 11,72,273/- under Section 14A r.w.r. 8D of the Act. It is an undisputed fact that the assessee has received dividend income of Rs. 8,266/- and Long Term Capital Gain (in short “LTCG”) of Rs. 23,45,857/-. The LTCG includes capital gain of Rs. 11,82,580/- from private equity fund which is liable to tax as per the provisions of Section 115U of the Act.

5.

We find that the Assessing Officer disallowed the entire expenditure debited and claimed in Profit & Loss Account of Rs. 11,72,273/- in addition to the amount disallowed by the assessee to the tune of Rs. 3,68,675/-. The above facts reveal that the assessee had net dividend income of Rs. 8,266/- and net LTCG of Rs. 11,82,580/-. The LTCG of Rs. 11,63,267/- was earned on redemption of four Mutual Funds and keeping in view the exempt income added in the taxable income under Section 115U of the Act and the expenditure incurred by the assesseee. We held that disallowance of Rs. 2,000/- would suffice from the expenditure incurred in earning the exempt income in the interest of justice.

6.

In the result, the appeal of the assessee is partly allowed.

This Order is pronounced in the Open Court on 16/10/2024 (DR. BRR KUMAR) JUDICIAL MEMBER Ahmedabad; Dated 16/10/2024 TANMAY, Sr. PSITA No. 1176/Ahd/2024 M/s. Fichem vs. DCIT Asst.Year –2017-18 - 3–

आदेश की "ितिलिप अ"ेिषत/Copy of the Order forwarded to : 1. अपीलाथ" / The Appellant

2.

""थ" / The Respondent. 3. संबंिधत आयकर आयु" / Concerned CIT 4. आयकर आयु"(अपील) / The CIT(A)- 5. िवभागीय "ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड" फाईल / Guard file. आदेशानुसार/ BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt.

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