AON CONSULTING PRIVATE LIMITED,GURGAON V. DCIT CIRCLE-1(1), DELHI

ITA 1461/DEL/2022

AI Insights

The case involves AON Consulting Private Limited appealing against the order of the Assessing Officer (AO) dated 22nd April 2022, concerning the Assessment Year 2018-19. The primary issues in the appeal included the disallowance made under section 14A read with Rule 8D, adjustments not made by the AO, credit of TDS, and the initiation of proceedings under section 270A of the Income Tax Act. The Tribunal found that the AO had incorrectly applied Rule 8D in calculating disallowances related to dividend income and had not properly examined the assessee's accounts. The Tribunal also noted that the AO had relied on figures from an intimation order under section 143(1) without considering the assessee's submissions regarding other adjustments. The Tribunal remanded the issues of TDS credit and other adjustments back to the AO for re-examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 711545 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2018-2019
• Other Referred Cases: H.T. Media Ltd. vs PCIT, Joint Investments (P.) Ltd. vs CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S.K. JADHAV
• Assessee Lawyers: S.K. AGGARWAL
• Keywords: TDS; Rule 8D
• Section: 14A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘H’: NEW DELHI BEFORE SHRI PRAKASH CHAND YADAV, JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.1461/Del/2022 (ASSESSMENT YEAR 2018-19) M/s AON Consulting Private Limited, 710, Ansal Chamber-II, 6, Bikaji Cama Place, New Delhi-110066 PAN-AAHCA0739J Vs. DCIT, Circle-1(1), Delhi. (Appellant) (Respondent) Assessee by Shri S.K. Aggarwal, CA Department by Shri S. K. Jadhav, CIT-DR Date of Hearing 22/07/2025 Date of Pronouncement 25/07/2025 O R D E R PER PRAKASH CHAND YADAV, JM: The present appeal of the assessee is arising out from the order of Ld. Assessing Officer dated 22nd April, 2022 having DIN No. ITBA/AST/S/143(3)/2022-23/1042842904(1) and relates to Assessment Year 2018-19. 2. The assessee has raised four grounds with respect to disallowance made by the AO by invoking the provisions of 14A r.w. rule 8D and has raised four grounds with respect to the certain adjustment which has not been made by the AO while framing the assessment. The assessee has raised other two grounds which are relates to the credit of TDS as well as initiation of proceedings u/s 270A of the IT Act. So far as initiation of proceedings u/s 270A of the Income Tax Act concerning this ground is premature and, hence, dismiss accordingly. Printed from counselvise.com 2 ITA No.1461 /Del/2022 Aon Consulting Private Limited vs. DCIT 3. Similarly, ground No.1 is general in nature and, hence, does not require any specific adjudication. 4. So far as grounds relates to disallowance of 14A r.w. Rule 8D is concern, it is the contention of the Ld. Counsel for the assessee that similar issue has been decided by the Co-ordinate Bench in assessee’s own case for Assessment Year 2020-21 in ITA No.4415/Del/2024. 5. Ld. DR relied upon the orders of the lower authorities below and pointed out certain observations made by the Ld. DRP. Ld. DR vehemently contended that the Assessing Officer has duly recorded the satisfaction before invoking the provisions of 14A and, hence, the impugned order is justifiable. 6. We have heard the rival submissions and perused the material available on record. Certain facts which are relevant for deciding the issue of satisfaction are that in this case, the assessee has earned dividend income to the tune of Rs.1,30,476,759/- and disallowed an amount of Rs.3,020,006/-. The Ld. AO while applying the provisions of Rule 8D(2)(ii) has taken the figure of dividend income at Rs 137,55,00,000/- and computed the disallowance of rule 8D(2)(ii) @ 1% of this figure. We observed that figure of Rs. 137,55,00,000/- as taken by the AO is not related to the facts of assessee’s case. The fact of the matter is that the total dividend earned by the assessee is Rs.1,30,476,759/- and not Rs 137,55,00,000/-, which means the AO has committed a mistake while deciding the issue. This shows that the Assessing Officer has failed to examine the correctness of the assessee’s account and hence, it is a case where the AO has failed to point out any defect with respect to the suo-motto disallowance made by the assessee. It is settled positon of law that recording of satisfaction before invoking the provisions of section 14A is sine qua non. Further, Co-ordinate Bench of the Tribunal while dealing with the similar issue has observe as under: “11. We have heard the rival submission and perused the material available on record. With respect to the issue of section 14A, we observe that in this case, Ld. DR has failed to refute the argument of the assessee that no borrowed funds have been utilized by the Printed from counselvise.com 3 ITA No.1461 /Del/2022 Aon Consulting Private Limited vs. DCIT assessee for making investment in mutual fund. It is also an admitted position of the fact that the assessee has made suo-moto disallowance an amount of Rs.11,46,007/-. The Id. Assessing Officer while recording satisfaction, failed to point out any defect with respect of the disallowance made by the assessee, further the Assessing Officer has failed to point out as to why the accounts of the assessee are not correct. We also observe that the Assessing Officer has wrongly recorded the amount of Rs.30,20,006/ at the time of recording of satisfaction. It is settled position of law that recording of satisfaction is sine qua non before invoking the provisions of section 14A as held by the Hon'ble Delhi High Court in the case of H.T. Media Ltd. vs PCIT (supra) and Joint Investments (P.) Ltd. vs CIT (supra). In the case of H.T. Media Ltd., the Hon'ble High Court in para-35 has categorically held that \"the Assessing Officer had to first record, on examining the accounts, that he was not satisfied with the correctness of the assessee's claim of Rs.3 lakhs being the administrative expenses. This was mandatorily necessitated by Section 14A(2) of the Act and read with Rule 8D(2) of the Rules\". Hon'ble High Court further held that these type of observations made by the Assessing Officer are not done in the present case and hence the satisfaction recorded by the Assessing Officer is of no use. In the present case also, the Assessing Officer has failed to point out the incorrectness of the account of the assessee. Further, the assessee has not diverted any borrowed fund vis-a-vis investments in mutual fund, there is another aspect of the matter that is the assessee has invested in mutual funds, on which STT as applicable has also been deducted by the payee. Considering all these aspects, we are of the firm opinion that the Assessing Officer has wrongly invoked the provisions of section 14A. Hence, we delete the addition made by the Assessing Officer on this ground.” Following the verdict of the Co-ordinate Bench, we allow this ground of the assessee. 7. So far as other grounds are concerning i.e. adjustments which have not been made by the Assessing Officer as per the details provided by the assessee. It is the contention of the assessee that the AO has relied upon the figures which are coming out from the intimation order issued u/s 143(1) and has ignored the submissions of the assessee. Ld DR could not controvert this factual position. Therefore, in the interest of justice, we remand these issues to the file of AO for examining afresh in accordance with law. 8. So far as the ground related to the credit of TDS is concern, we direct the AO to verify the facts and figure once again and decide the issue in accordance with law. Printed from counselvise.com 4 ITA No.1461 /Del/2022 Aon Consulting Private Limited vs. DCIT 9. In the result, the appeal of the assessee is allowed as indicated above. Order pronounced in the open court on 25/07/2025. Sd/- Sd/- (MANISH AGARWAL) (PRAKASH CHAND YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 25/07/2025 PK/Sr. Ps Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI Printed from counselvise.com "