Income Tax Appellate Tribunal - Chandigarh
M/S Tds Management Consultants P. Ltd., ... vs Dcit, Mohali on 4 August, 2021
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ "बी" , च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH "B", CHANDIGARH (VIRTUAL COURT) ी एन.के.सैनी, उपा य! एवं ी आर.एल. नेगी, या$यक सद&य BEFORE: SHRI. N.K.SAINI, VP & SHRI , R.L. NEGI, JM आयकर अपील सं./ ITA NO. 17/Chd/2017 नधा रण वष / Assessment Year : 2013-14 TDS Management Consultants P. बनाम The DCIT Ltd. Circle VI(1) SCF 81, Phase 6, Mohali Mohali थायी लेखा सं./PAN NO: AACCT5653K अपीलाथ /Appellant यथ /Respondent नधा रती क! ओर से/Assessee by : Shri Arvind Badoni, CA राज व क! ओर से/ Revenue by : Shri Ashok Kumar, Addl. CIT सन ु वाई क! तार&ख/Date of Hearing : 04/08/2021 उदघोषणा क! तार&ख/Date of Pronouncement : 04/08/2021 आदे श/Order PER N.K. SAINI, VICE PRESIDENT This is an appeal by the Assessee against the order dt. 24/10/2016 of Ld. CIT(A)-2, Chandigarh.
2. Following grounds have been raised in this appeal:
" On the facts and circumstances of the case and in law, the Ld. CIT(Appeals) in Appeal No. 199/2/15-16 has erred in allowing appeal partly and upholding the following addition:
1. The Ld. CIT(A) has erred in allowing addition of Rs. 3,95,721/- on account of Interest incurred during the year under section 14A, rule 8D(2)(ii) of the Income Tax Act, 1961.
2. It is prayed that the order of the CIT(A) be set aside."
3. The only grievance of the assessee in this appeal relates to the sustenance of disallowance of Rs. 3,95,721/- made by the A.O. by invoking the provisions of Section 14AA of the Income Tax Act, 1961 (hereinafter referred to as 'Act') read with Rule 8D(2)(ii) of the Income Tax Rules.
4. The facts of the case in brief are that the assessee filed its return of income on 29/09/2013 declaring an income of Rs. 3,31,42,040/- which was processed under section 2 143(1) of the Act, subsequently, the case was selected for scrutiny. During the course of assessment proceedings the A.O. noticed that the assessee had earned dividend income of Rs. 10,760/- which was not claimed as exempt income in the Income Tax Return. The A.O. however invoked the provisions of Section 14A of the Act read with rule 8D of the Income Tax Rules and made the disallowance of Rs. 4,13,462/- including the disallowance out of interest expenses of Rs. 395721/-.
5. Being aggrieved the assessee carried the matter to the Ld. CIT(A) who sustained the disallowance made by the A.O.
6. Now the assessee is in appeal.
7. The Ld. Counsel for the assessee at the very outset stated that no disallowance can be made more than the exempt income. It was stated that the exempt income in this case was of Rs. 10,760/- therefore the disallowance could have been made to that extent only. The reliance was placed on the following case laws:
• Joint Investments Pvt. Ltd. Vs. CIT [2015] 372 ITR 694 (Del) • Cheminvest Ltd. Vs. CIT(2015) 378 ITR 33 (Del) • CIT Vs. Winsome Textile Industries Ltd. [2009] 319 ITR 204 (P&H) • Order of the ITAT Chandigarh Bench in case of M/s Highway Industries Ltd. Vs. The ACIT in ITA No. 515/Chd/2015 dt. 16/06/2016.
8. In his rival submissions the Ld. DR strongly supported the impugned order passed by the Ld. CIT(A) and reiterated the observations made in the said order as well as in the assessment order dt. 30/11/2015 passed by the A.O.
9. We have considered the submissions of both the parties and perused the material available on the record. In the present case it is an admitted fact that the assessee earned the dividend income of Rs. 10,760/- which is exempted from tax under the Income Tax Act therefore the disallowance can be made to the extent of the said income only as per the ratio laid down by the Hon'ble Delhi High Court in the case of Cheminvest Ltd. Vs. CIT (supra) wherein it has been held that:3
" The expression "does not form part of the total income" in section 14A of the Income-tax Act, 1961, envisages that there should be an actual receipt of income, which is not includible in the total income, during the relevant previous year for the purpose of disallowing any expenditure incurred in relation to the income."
In the present case it is an admitted fact that the assessee had earned exempt income of Rs. 10,760/- only. Therefore the disallowance under section 14A of the Act read with Rule 8D is restricted to the said amount.
10. In the result, appeal of the Assessee is partly allowed.
(Order pronounced in the open Court on 04/08/2021 ) Sd/- Sd/-
आर.एल. नेगी एन.के.सैनी,
(R.L. NEGI ) ( N.K. SAINI)
या$यक सद&य/ Judicial Member उपा य! / VICE PRESIDENT
AG
Date: 04/08/2021
आदे श क! त,ल-प अ.े-षत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आय/ ु त/ CIT
4. आयकर आय/ ु त (अपील)/ The CIT(A)
5. -वभागीय त न4ध, आयकर अपील&य आ4धकरण, च7डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File