Income Tax Appellate Tribunal - Delhi
M/S. Paliwal Gdr Homestyles (P) Ltd., ... vs Dcit, New Delhi on 9 April, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES: 'F', NEW DELHI
BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER
AND SMT. BEENA A PILLAI, JUDICIAL MEMBER
ITA No. 1501/Del/2015
A.Y. 2011-12
Paliwal GDR DCIT
Homestyles (P) Ltd. vs. Circle 14(1)
38, Functional Indl. New Delhi
Estate
Patparganj
Delhi 110 092
PAN: AACCP3904F
(Appellant) (Respondent)
Appellant by None
Respondent by Sh. Atiq Ahmed, Sr.D.R.
Date of Hearing 14.03.2018
Date of Pronouncement .04.2018
ORDER
PER BEENA A PILLAI, JUDICIAL MEMBER
The present appeal has been filed by assessee against the order dated 22/12/2014 passed by Ld.CIT(A)-7, Delhi for assessment year 2011-12 on the following grounds of appeal:
"1. That the Ld.CIT(A)-7, New Delhi has erred both in law and on facts in sustaining disallowance of Rs.3,39,772/- representing expenditure disallowable by invoking section 14A read with rule 8D of the Income Tax Act, 1961 (the Act).
ITA 1501/Del/2015 A.Y:2011-12 Paliwal GDR Homestyles (P) Ltd., Delhi vs. DCIT
2. That the Ld.CIT(A) has also failed to appreciate that even on the principle of consistency the disallowance made is untenable.
It is therefore prayed that disallowance made and sustained by ld.CIT(A) may kindly be deleted and appeal of appellant company be allowed."
2. Brief facts of the case are as under:
Assessee is a company and filed its return of income on 07/09/11 for the year under consideration declaring total income of Rs.3,02,03,069/-. The case was selected for scrutiny and assessment was completed under section 143(3) of the Income Tax Act, 1961 (the Act) by making various additions in the hands of the assessee which are as under:
Income returned by assessee Rs.3,02,03,069/- Addition:
U/s 37 & 38(2) of the Act Rs. 1,57,315/-
U/s 14A of the Act Rs. 3,39,772/- --------------------- Total income Rs. 3,07,00,156/-
2.1. Aggrieved by the additions made by Ld.AO assessee preferred appeal before Ld.CIT (A) who dismissed the appeal and confirmed the additions made by Ld.AO.
3. Aggrieved by the order passed by Ld. CIT (A) assessee is in appeal before us now.
3.1. The only issue agitated by assessee, is in respect of disallowance of Rs.3,39,772/- being expenditure disallowed under section 14 A read with Rule 8D (2) of Rules.
2ITA 1501/Del/2015 A.Y:2011-12 Paliwal GDR Homestyles (P) Ltd., Delhi vs. DCIT 3.2. Ld.AR submitted that during the year under consideration assessee earned tax free dividend income of Rs.16,14,200/- against investment of Rs.8,08,25,812/-. He submitted that Assessing Officer while computing disallowance has taken into consideration only the 3rd limb of Rule 8D being amount equal to ½% of the average value of investment. He submitted that there are various decisions of Hon'ble Delhi High Court wherein a lenient view has been taken in respect of investments that need to be considered for the purposes of 3rd limb of Rule 8D (2) of Rules. He submitted that investments considered for computing ½% of average value should be only those investments, which have yielded tax free income to assessee for the year under consideration.
3.3. Ld. DR though supported order passed by Ld. CIT (A) did not oppose the submissions advanced by Ld.AR.
4. We have perused the submissions advanced by both the sides in the light of the records placed before us. 4.1. Coming to the grounds raised regarding applicability of sec.14 A r. w. Rule 8D, we are of the considered opinion that Hon'ble Supreme Court recently in the case of Maxopp Investments vs. CIT reported in (2018) 91 Taxmann.com 514 has held, considering the intention of provisions under section 14 A of the Act, the expenditure related to tax free income earned by assessee during the year under consideration calls for disallowance. However, 3rd limb of Rule 8D (2), reads as under:
"(iii) an amount equal to one half of the value of investment from which, does not form part of total income, as appearing in the balance sheet of the assessee on the first day and last day of P.Y."3
ITA 1501/Del/2015 A.Y:2011-12 Paliwal GDR Homestyles (P) Ltd., Delhi vs. DCIT Accordingly we direct Ld.AO to consider only those investments, from which assessee earned exempt income that do not form part of total income. Assessee is directed to provide necessary details for computation of the same to Ld.AO. 4.2. Accordingly grounds raised by assessee stand partly allowed.
5. In the result appeal filed by assessee stands partly allowed. Order pronounced in the Open Court on 09th April, 2018.
Sd/- Sd/-
(N.S.SAINI) (BEENA A PILLAI)
Accountant Member Judicial Member
Dated: 09th April, 2018.
· mv
Copy of the Order forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
6. Guard File
By Order
Asst. Registrar
ITAT, Delhi Benches, New Delhi
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