Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, PANAJI
Before: SHRI R.S. SYAL & SHRI S.S. VISWANETHRA RAVI
आदेश / ORDER
PER S.S. VISWANETHRA RAVI, JM :
This appeal by the assessee against the order dated 29-07-2022 passed by the National Faceless Appeal Centre, Delhi (“NFAC”) for assessment year 2018-19.
The assessee raised four grounds of appeal amongst which the only issue is to be decided is as to whether the CIT(A), NFAC, Delhi justified in confirming the addition made by the AO u/s. 14A r.w.s. 8D(ii) of the Rules.
3. At the outset, we note that the assessee earned dividend income of Rs.74,52,725/- which was claimed as exempt income. According to the AO, the assessee itself disallowed an amount of Rs.53,562/- for the purpose of expenditure incurred towards earning of the said dividend income. The AO, however, proceeded to adopt the methodology contemplated under Rule 8D(2) of the Rules. Since, the assessee not followed the methodology as contemplated under Rule 8D(2) of the Rules, the AO made disallowance at 1% on whole investment under Rule 8D(2)(iii) of the Rules taking into account the total average investment of Rs.18,04,08,859/-. On perusal of the assessment order, we note that the assessee calculated average investment at Rs.1,07,12,445/- which have yielded the dividend income of Rs.74,52,725/-, but however, the AO did not satisfy with the said submissions as made by the assessee to consider those investments which yielded exempt income for the purpose of computing disallowance of expenditure. The assessee reiterated the same submissions before the CIT(A), but however, CIT(A) confirmed the order of AO. Before us, the ld. AR drew our attention to the order of Special Bench of ITAT, Delhi in the case of Vireet Investment (P.) Ltd. reported in 82 taxmann.com 415 (Delhi-Trib.) (SB) at page 51 of the paper book. The ld. AR requested to remand the issue to the file of AO for its fresh consideration with a direction to take into account those investments which were yielded exempt income for the purpose of disallowance of expenditure. It is settled principle that those investments which yielded income shall be considered for the purpose of computing expenditure in relation to exempt income. The ld. DR did not dispute the finding of Special Bench of Delhi Tribunal. Thus, taking into consideration the facts and circumstances of the case, we deem it proper to remand the issue to the file of AO to make disallowance considering those investments which yielded exempt income for its fresh consideration. The assessee is liberty to file evidences, if any, in support of its claim. Thus, the grounds raised by the assessee are allowed for statistical purpose.
In the result, the appeal of assessee is allowed for statistical purpose.
Order pronounced in the open court on 21st September, 2023.