ABUSHA INVESTMENT & MANAGEMENT SERVICES LLP,CHENNAI V. DCIT, NON CORP CIRCLE 7(1), CHENNAI

ITA 1856/CHNY/2024

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The case involves Abusha Investment & Management Services LLP, which appealed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi. The appeal was concerning the disallowance of Rs. 403.78 Lacs under Section 14A of the Income Tax Act, which was confirmed by the CIT(A). The primary contention was whether the assessee had earned any exempt income that would necessitate a disallowance under Section 14A. The assessee argued that there was no exempt income as the dividend received was taxed under Section 115BBDA, and the voluntary disallowance of Rs. 10 Lacs was made in the computation of income. The Tribunal, after reviewing the submissions and the tax payments made by the assessee, decided in favor of the assessee, removing the disallowance.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 29489 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 26-09-2024
• Assessment Year: 2018-2019
• Appeal Filed On: 04-07-2024
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R. ANITA LD.
• Assessee Lawyers: AJITH KUMAR CHORDIA LD
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

" आयकर अपीलीय अिधकरण “सी”\u000eा यपीठ चे\u0013ई म\u0016। IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, CHENNAI मा ननीय \u0019ी एबी टी.वक\u001f, \u000eा ियक सद\" एवं माननीय \u0019ी मनोज क ुमार अ'वाल ,ले खा सद\" क े सम)। BEFORE HON’BLE SHRI ABY T. VARKEY, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं./ ITA No.1856/Chny/2024 (िनधा*रणवष* / Assessment Year: 2018-19) Abusha Investment & Management Services LLP 27, MylaiRamhanathan Street, Thyagaraja Nagar,Chennai – 600 017. बनाम/ Vs. DCIT Non Corporate Circle -7(1), Chennai. \u0002थायीलेखासं./जीआइआरसं./TAN/GIR No.AAZFA-6631-N (अपीलाथ\u001c/Appellant) : (\u001f थ\u001c / Respondent) अपीलाथ\u001cकीओरसे/ Appellant by : Shri Ajith Kumar Chordia (CA) – Ld.AR \u001f थ\u001cकीओरसे/Respondent by : Ms. R. Anita (Addl.CIT) -Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 26-09-2024 घोषणाकीतारीख /Date of Pronouncement : 09-10-2024 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2018-19 arises out of the order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 09-05-2024 in the matter of an assessment framed by the Ld.AO u/s.143(3) r.w.s. 144B of the Act on 30-04-2021. The sole grievance of the assessee is confirmation of disallowance u/s 14A for Rs.403.78 Lacs. 2 2. The Ld. AR advanced arguments and submitted that there is no exempt income earned by the assessee and Ld. AO erred in noting the correct facts. The Ld. Sr. DR justified the addition and drew attention to the provisions of Sec. 115BBDA (2) providing that no expenditure shall be allowed in computing income by way of dividend. The written submissions have been filed in this regard. Having heard rival submissions and upon perusal of case records, our adjudication would be as under. 3. The assessee received dividend of Rs.80.15 Lacs and claimed amount of Rs.10 Lacs to be exempt. The Ld. AO proceeded to compute disallowance u/s 14A. The assessee submitted that dividend income became chargeable to tax in this year vide Sec. 115BBDA. The deduction of Rs.10 Lacs was claimed as per this Section only but the same has also been voluntarily disallowed in the computation of income. However, rejecting the same, Ld. AO applied Rule 8D and computed disallowance of Rs.413.78 Lacs u/r 8D(2)(ii) @ 1% of annual average of monthly averages of opening and closing value of the investment. After adjusting voluntary disallowance of Rs.10 Lacs, the amount of Rs.403.78 Lacs was added to the income of the assessee. The Ld. CIT(A) confirmed the same except verification of computations by Ld. AO. Aggrieved the assessee is in further appeal before us. 4. From assessee’s computation of income as placed on record, it could be seen that the assessee has offered dividend income of Rs.70.15 Lacs to tax as income from other sources. It could also be seen that the amount in excess of Rs.10 Lacs i.e., Rs.70.15 Lacs has been offered to tax @10% and due taxes has been paid on the same in terms of Sec.115BBDA. It is evident that the assessee has not claimed any 3 expenditure or losses against this income. The taxes have been paid as per computation mechanism as provided under the statute. Therefore, no case of disallowance u/s 14A could be made out against the assessee. Hence, we delete the impugned disallowance. 5. The appeal stand allowed in terms of our above order. Order pronounced on 9th October, 2024 Sd/- Sd/- (ABY T. VARKEY) (MANOJ KUMAR AGGARWAL) \u000eाियक सद\" /JUDICIAL MEMBER लेखा सद\" / ACCOUNTANT MEMBER चे4ई Chennai; िदनांक Dated :09-10-2024 DS आदेशकीHितिलिपअ'ेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u001c/Appellant 2. \u001f थ\u001c/Respondent 3. आयकरआयु=/CIT Coimbatore. 4. िवभागीय\u001fितिनिध/DR 5. गाडBफाईल/GF "