M/S. AHILIABAI SARDESSAI,PANAJI vs. INCOME TAX OFFICER, WARD 2(4), PANAJI

This is an appeal filed by the assessee directed against the order of the National Faceless Appeal Centre, Delhi [‘NFAC’] dated 26.03.2021 for the assessment year 2014-15.

Briefly, the facts of the case are that the appellant is a partnership firm engaged in the business of mining. The Return of Income for the assessment year 2014-15 was filed on 30.09.2014 declaring a loss of Rs.4,92,14,101/- and the same was revised at loss 2 of Rs.6,47,68,218/-. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward-2(4), Panaji-Goa (‘the Assessing Officer’) vide order dated 29.12.2016 passed u/s 143(3) of the Income Tax Act, 1961 (‘the Act’) at a total loss of Rs.5,83,57,432/-. While doing so, the Assessing Officer made addition of Rs.15,65,088/- u/s14A and Rs.48,45,698/- u/s 41(1) of the Act. 3. Being aggrieved by the above additions, an appeal was filed before the NFAC, who vide impugned order, confirmed the disallowance u/s 14A r.w. Rule 8D(2)(iii) of the Income Tax Rules, 1962 (‘the Rules’) and deleted the addition u/s 14A r.w. Rule 8D(2)(ii). The ld. CIT(A) also deleted the addition on account of sundry creditors of Rs.48,45,698/-. 4. Being aggrieved by the disallowance u/s 14A r.w. Rule 8(D)(2)(iii), the appellant is in appeal before us in the present appeal. 5. Before us, it is contended that the appellant had not incurred any expenditure to earn the exempt income and, therefore, the question of disallowance u/s 14A r.w. Rule 8(D)(2)(iii) does not 3 ITA No.08/PAN/2021 arise. He also placed reliance on the decision of the Co-ordinate Bench of the Tribunal in assessee’s own case for the assessment year 2015-16 vide ITA No.450/PAN/2018 dated 30.08.2022, wherein, the Co-ordinate Bench of the Tribunal deleted the addition. 6. On the other hand, ld. Sr. DR placing reliance on the orders of the lower authorities submits that the addition should be sustained. 7. We heard the rival submissions and perused the material on record. The issue in the present appeal relates to the quantum of disallowance u/s 14A r.w. Rule 8D(2)(iii). The appellant took a consistent view that no expenditure was incurred to earn the exempt income. The lower authorities rejected the contention of the appellant by noting that the quantum of higher magnitude involvement cannot be made without a proper analysis of market conditions, which requires the expertise and, therefore, rejected the contention of the appellant that no expenditure was incurred and computed the quantum of amount of disallowance in accordance with the provisions of Rule 8D(2)(iii) of the Rules. From perusal of the findings of the lower authorities, it would be clear that the rejection of the contention of the appellant that no expenditure was