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Income Tax Appellate Tribunal, AHMEDABAD ‘D’ BENCH, AHMEDABAD
Per Pramod Kumar, AM:
These five appeals pertain to the same assessee, involve a common issue and were heard together. As a matter of convenience, therefore, all the five appeals are being disposed of by way of this common order.
Grievances of the assessee is that the learned CIT(A) has erred in upholding the disallowance under section 14A “being entire expenditure incurred by the appellant instead of restricting it to the extent of non-corporate expenses”.
ITA Nos.276, 277, 278, 279 & 2418/Ahd/2014 A.Ys.: 2004-05, 2006-07, 2009-10, 2010-11 & 2011-12 Page 2 of 3 3. The short contention of the assessee is that to the extent the corporate expenses incurred for maintenance and existence of corporate entity are concerned, the same cannot be subjected to disallowance under section 14A because irrespective of whether or not the assessee earns any tax exempt income, these expenses will have to be incurred anyway. These expenses, therefore, cannot be said to have been incurred by the assessee “in relation of a tax exempt income”. This plea has been rejected by the authorities below. Learned counsel then invites our attention to the order dated 20th January 2016, holding that “proportionate disallowance” as relatable to tax exempt income is in order. We are urged to follow the same.
Learned Departmental Representative relies upon the stand of the authorities below.
We are unable to see any merits in the plea of the assessee. When an assessee company is formed as an investment company and it primarily exists only for earring tax exempt income, it cannot be said that the expenses incurred for existence of corporate entity cannot be said to have been incurred “in relation to” earning of an income which is exempt from tax. That exactly is the situation before us. Under these circumstances, therefore, the relief prayed or cannot be granted.
The judicial precedent cited before us does not help the assessee on the issue in appeal before us.
ITA Nos.276, 277, 278, 279 & 2418/Ahd/2014 A.Ys.: 2004-05, 2006-07, 2009-10, 2010-11 & 2011-12 Page 3 of 3 7. In the result, appeals are dismissed. Pronounced in the open court today on the 17th day of August, 2017.
Sd/- Sd/- Mahavir Prasad Pramod Kumar (Judicial Member) (Accountant Member) Ahmedabad, the 17th day of August, 2017 PBN/* Copies to: (1) The appellant (2) The respondent (3) Commissioner (4) CIT(A) (5) Departmental Representative (6) Guard File By order TRUE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad