ATHARVA CONSORTIUM AND REALTY PRIVATE LIMITED,PUNE vs. INCOME-TAX OFFICER, WARD - 1(1), PUNE

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ITA 2416/PUN/2017Status: DisposedITAT Pune18 June 2021AY 2013-144 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that for computing disallowance under Rule 8D, only the average value of investments yielding exempt income should be considered. The issue was remitted back to the Assessing Officer for recalculation.

What were the facts?

The assessee company, engaged in real estate, filed its return of income. The Assessing Officer made an addition of Rs. 1,98,733/- under Section 14A for indirect expenses incurred in earning exempt income.

What were the issues?

Whether investments not yielding exempt income should be excluded when calculating the average value of investments for disallowance under Section 14A.

Which sections of the Income-tax Act were involved?

Section 14A

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Income Tax Appellate Tribunal, “A” BENCH, PUNE

Before: SHRI INTURI RAMA RAO, AM & SHRI S. S. VISWANETHRA RAVI, JM

For Appellant: Shri Suhas Bora
Hearing: 15.06.2021Pronounced: 18.06.2021

ORDER

PER INTURI RAMA RAO, AM:

1.

This is an appeal filed by the assessee directed against the order of ld. Commissioner of Income Tax (Appeals)- 1, Pune (‘CIT(A)’ for short) dated 02.08.2017 for the assessment year 2013-14.

2.

The appellant raised the following grounds of appeal :-

1. The learned CIT (Appeals) erred in confirming the addition made by the AO of Rs. 1,98,733/- on account of disallowances u/s 14A on the ground that the appellant is not maintaining separate fund flow statement regarding investment yielding exempt income and investment in general business activity without appreciating the submissions given by the appellant. The AO failed to apply his mind on the main contention that no expenditure is required for earning exempt income.

2. The ld CIT(A) while confirming the addition made by the AO relied on the decision of Hon’ble Ahmedabad Tribunal in the case of Vishnu Anant Mahajan (2012) 22 taxman.com 88(Ahd) wherein it is held that as share of income from firm is not included in the total income provisions of section 14A are applicable and any expenditure incurred for earning share of income from firm shall be disallowed.

3.

The ld CIT(A) while confirming the disallowance made by the AO failed to consider the fact that the disallowance under section 14A can only be made if the AO records a finding that he is satisfied that claim made by the assessee is not correct. 4. The appellant may kindly be permitted to add to or alter any of grounds of appeal

, if deemed necessary.”

3. Briefly, the facts of the case are as under :- The appellant is a company incorporated under the provisions of the Companies Act, 1956. It is engaged in the business of promoters and builders and dealing in lands. The return of income for the assessment year 2013-14 was filed on 18.10.2013 declaring total income of Rs.98,70,354/-. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward-1(1), Pune (‘the Assessing Officer’) vide order dated 18.02.2016 passed u/s 143(3) of the Income Tax Act, 1961 (‘the Act’) at a total income of Rs.1,00,69,080/-. While doing so, the Assessing Officer made addition of Rs.1,98,733/- under the provisions of section 14A of the Act by holding that the assessee had incurred indirect expenses in earning the exempt income and rejected the contention of the appellant that no expenditure was incurred towards exempt income.

4. Being aggrieved by the above assessment order, an appeal was preferred before the ld. CIT(A), who vide his impugned order confirmed the action of the Assessing Officer.

5. Being aggrieved, the appellant is before us in the present appeal.

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