M/S. AHILIABAI SARDESSAI,PANAJI vs. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 1(1), PANAJI

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ITA 74/PAN/2020Status: DisposedITAT Panaji20 September 2023AY 2016-17Bench: SHRI R.S. SYAL (Vice President), SHRI S.S. VISWANETHRA RAVI (Judicial Member)4 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the AO's methodology for disallowance under Rule 8D(2)(iii) needed reconsideration. The issue was remanded to the AO to consider only those investments that yielded exempt income.

What were the facts?

The assessee earned exempt income and the Assessing Officer (AO) made a disallowance under Section 14A read with Rule 8D. The Commissioner of Income Tax (Appeals) deleted parts of the disallowance but confirmed a portion under Rule 8D(2)(iii).

What were the issues?

Whether the disallowance under Rule 8D(2)(iii) was correctly calculated by the AO, considering only investments yielding exempt income.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PANAJI

Before: SHRI R.S. SYAL & SHRI S.S. VISWANETHRA RAVI

For Appellant: Shri N.J. Prabhudesai
For Respondent: Smt. Ashwini Hosmani

आदेश / ORDER

PER S.S. VISWANETHRA RAVI, JM :

1.

These two appeals filed by the assessee against the separate order dated 24-02-2020 and 29-01-2020 passed by the Commissioner of Income Tax (Appeals)-1, Panaji [‘CIT(A)’] for assessment years 2013-14 and 2016- 17.

2.

Since, the issues raised in both the appeals are similar basing on the same identical facts. Therefore, with the consent of both the parties, we proceed to hear both the appeals together and to pass a consolidated order for the sake of convenience.

3.

First, we shall take up appeal in for A.Y. 2013-14.

4.

We find that this appeal was filed with a delay of 59 days. After hearing both the parties, we condone the said delay.

5.

The assessee raised four grounds of appeal amongst which the only issue emanates for our consideration is as to whether the CIT(A) justified in restricting the addition made by the AO under Rule 8D(2)iii) of the Rules.

6. On perusal of the assessment order, we note that the assessee earned exempt income of Rs.1,23,40,571/- and the AO asked the assessee to work out the disallowance u/s. 14A r.w. Rule 8D of the Rules. It was explained that no expenditure was incurred on the investments and the AO rejected the same. The AO disallowed total disallowance under Rule 8D(2) to an extent of Rs.22,82,208/-. The CIT(A) deleted the disallowance made by the AO under Rule 8D(2)(i) & (ii) and confirmed the disallowance under Rule 8D(2)(iii) of the Rules.

7. Before us, the ld. AR placed on record the order of this Tribunal in assessee’s own case for A.Y. 2014-15. On perusal of the same, we find the same is not applicable to the facts on hand, wherein, the present case AO rejected the contention of the assessee incurring no expenditure in earning exempt income. It is settled principle that the disallowance of expenditure should be relating to those investments which yielded exempt income. As noted above, the AO agitated methodology under Rule 8D(2)(iii) taking into consideration average investments and therefore, we deem it proper to remand the issue to the file of AO for its fresh consideration for making disallowance of expenditure taking into consideration those investments which yielded exempt income. 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.

8.

In the result, the appeal of assessee is allowed for statistical purpose.

9.

We find that this appeal was filed with a delay of 85 days. After hearing both the parties, we condone the said delay.

10.

We find that the facts in except the variance in amount. Since, the facts in ITA No. 74/PAN/2020 are similar to ITA No. 73/PAN/2020, the findings given by us while deciding the appeal of assessee in ITA No. 73/PAN/2020 would mutatis mutandis apply to ITA No. 74/PAN/2020, as well. Accordingly, the appeal of assessee is allowed for statistical purpose.

11.

To sum up, both the appeals of assessee are allowed for statistical purpose.

Order pronounced in the open court on 20th September, 2023.

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