OM PRAKASH KHAITAN,NEW DELHI vs. ACIT, CIRCLE-61(1), NEW DELHI

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ITA 3714/DEL/2019Status: DisposedITAT Delhi28 April 2023AY 2015-163 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the facts of the current assessment year were identical to those in AY 2011-12 and 2013-14, where the issue was decided in favor of the assessee by the Delhi High Court. Therefore, the addition made by the AO was deleted.

What were the facts?

The Assessing Officer (AO) made a disallowance of Rs. 25,59,533/- under Section 14A read with Rule 8D for AY 2015-16, as the assessee earned exempt income. The assessee argued that no expenditure was incurred for investments and that certain expenses were suo motu added back.

What were the issues?

Whether disallowance under Section 14A read with Rule 8D is warranted when the assessee claims no expenditure was incurred for earning exempt income, and if the facts are distinguishable from previous favorable High Court rulings.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “E” NEW DELHI

Before: SHRI N.K. BILLAIYA & SHRI ANUBHAV SHARMA

Hearing: 27.04.2023

आदेश /O R D E R PER N.K. BILLAIYA, A.M.

1.

This appeal by the Assessee is preferred against the order of the Ld.CIT(Appeals)-38, New Delhi dated 26.03.2019 pertaining to AY 2015-16.

2.

The solitary grievance of the assessee is that the CIT(A) erred in confirming addition made u/s 14A of the Act read with Rule 8D amounting to Rs.25,59,533/-.

3.

Briefly stated the facts are that during the course of the scrutiny assessment proceedings the AO noticed that the assessee has earned 1

I.T.A.No.3714/Del/2019 exempt income. Assessee was asked to show-cause why disallowance should not be made u/s 14A read with Rule 8D. In its reply, the assessee submitted that it has not incurred any direct or indirect expenditure in connection with investments made in securities and mutual funds from where it iha earned exempt income. It was explained that assessee has paid portfolio management charges amounting to Rs.66,338/- and STT at Rs.23,412/-. It was pointed out that Rs.89,750/- has been suo moto added back by the assessee while computing its return of income.

Therefore, no further disallowance is to be made. This submission of the assessee was dismissed by the AO who proceeded to compute the disallowance u/s 14A read with Rule 8D at Rs.25,59,533/-. Assessee carried the matter before CIT(A) but without any success.

4.

Before us the Counsel for the assessee vehemently stated that the facts are similar to the facts of AY 2011-12 and 2013-14, where the issue has been decided in favour of the assessee and against the Revenue by the Hon’ble Jurisdictional High Court of Delhi.

5.

Per contra, the DR strongly supporting the assessment order stated that the facts are clearly distinguishable and read the operative part of the assessment order.

6.

We have given a thoughtful consideration to the orders of the authorities below. At the very outset, we have to state that the facts of the year under consideration are no different than the facts considered in I.T.A.No.3714/Del/2019 AY 2011-12 and 2013-14, wherein by a separate order of even date in and 4702/Del/2018. We have decided this issue in favour of the Assessee and against the Revenue by following the decision of the Hon’ble Jurisdictional High Court of Delhi. For our detailed discussion therein, we direct the AO to delete the addition of Rs.25,59,533/-.

7.

In the result, appeal of the assessee is accordingly allowed.

Order pronounced in the open court on 28/04/2023

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