HIMESH R. SHAH,JAMNAGAR. vs. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-3, JAMNAGAR.

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ITA 298/RJT/2018Status: DisposedITAT Rajkot19 October 2022AY 2014-158 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee had reasonably demonstrated that investments earning exempt income were made from personal funds. This fact was also noted by the CIT(A) in a preceding year for identical investments. Therefore, the disallowance of expenses under Section 14A was not justified.

What were the facts?

The assessee claimed disallowance of expenditure under Section 14A read with Rule 8D for earning exempt income. The assessee argued that investments earning exempt income were made from personal funds, not business funds, and therefore, interest expenses claimed in business were unrelated. The Assessing Officer (AO) and CIT(A) disallowed the expenditure, stating the assessee failed to substantiate the source of funds and utilization of borrowed funds.

What were the issues?

Whether expenditure incurred for earning exempt income is disallowable when investments are made from personal funds and not business funds.

Which sections of the Income-tax Act were involved?

Section 14A

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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT

Before: SMT.ANNAPURNA GUPTA & SHRI T.R.SENTHIL KUMAR

For Appellant: Shri D.S. Varia, AR
For Respondent: Shri Shramdeep Sinha, Ld.CIT(DR)
Hearing: 11/10/2022Pronounced: 19/10/2022

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त ( अपील ) / The CIT(A)- 5. �वभागीय ��त�न�ध , आयकर अपील�य अ�धकरण , राजोकट/DR,ITAT, Ahmedabad, 6. गाड� फाईल /Guard file. आदेशानुसार/ BY ORDER,

सहायक पंजीकार (Asstt. Registrar) आयकर अपील�य अ�धकरण, ITAT, Ahmedabad

1.

Date of dictation : 11-10-2022 2. Date on which the typed draft is placed before : the Dictating Member. 3. Date on which the approved draft comes to the : Sr.P.S./P.S 4. Date on which the fair order is placed before the : Dictating Member for pronouncement. 5. Date on which fair order placed before Other : Member 6. Date on which the fair order comes back to the : Sr.P.S./P.S. 7. Date on which the file goes to the Bench Clerk. : 19.10.2022 8. Date on which the file goes to the Head Clerk. : 9. The date on which the file goes to the Assistant : Registrar for signature on the order. 10. Date of Despatch of the Order :

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