Narinder Bajaj, New Delhi V. DCIT, circle-16(2), New Delhi

CO 121/DEL/2019

AI Insights

The case involves Narinder Bajaj, the appellant, contesting the disallowance made under section 14A of the Income Tax Act by the AO, which amounted to Rs.8,66,497. The disallowance was related to expenses and interest attributed to earning exempt income. The Tribunal found that the direct expenditure related to exempt income was only Rs.30,788, and interest not directly attributable was nil. The Tribunal directed the AO to restrict the disallowance to Rs.4,29,958, based on the investments that actually yielded exempt income during the relevant year. The Tribunal's decision was influenced by the dismissal of the Revenue's appeal due to low tax effect, which rendered some of the Cross Objections infructuous.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 131793 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 16 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 08-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 05-12-2022
• Assessment Year: 2015-2016
• Appeal Filed On: 22-09-2019
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Tax effect; Earning of tax free income; Tax effect
• Section: 14A

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL DELHIBENCH ‘E’, NEW DELHI Before Dr. B. R. R. Kumar, Accountant Member Sh. Yogesh Kumar US, Judicial Member CO No. 130/Del/2018 (in ITA No. 3729/Del/2018 : Asstt. Year : 2014-15 Narinder Bajaj, E-12/4, 1 st Floor, Vasant Vihar, New Delhi-110057 Vs JCIT(OSD), Circle-16(2), New Delhi-110002 (APPELLANT) (RESPONDENT) PAN No. AEAPB0307H CO No. 121/Del/2019 (in ITA No. 3009/Del/2019 : Asstt. Year : 2015-16 Narinder Bajaj, E-12/4, 1 st Floor, Vasant Vihar, New Delhi-110057 Vs DCIT, Circle-16(2), New Delhi-110002 (APPELLANT) (RESPONDENT) PAN No. AEAPB0307H Assessee by : Sh. Ajay Baheti, CA Revenue by : Sh. Amit Shukla, Sr. DR Date of Hearing: 06.12.2022 Date of Pronouncement: 09.02.2023 ORDER Per Dr. B. R. R. Kumar, Accountant Member: The present Cross Objections have been filed by the assessee against the order of ld. CIT(A)-36, New Delhi dated 27.02.2018 and the order of ld. CIT(A)-6, New Delhi dated 31.01.2019. CO No. 130/Del/2018 CO No. 121/Del/2019 Narinder Bajaj 2 2. The ld. CIT(A) directed the AO to grant set off of inter head losses and brought forward losses, hence owing to dismissal of the appeal of the Revenue in ITA No. 3729/Del/2018 for A.Y.2014-15 vide order dated 23.08.2019 on the grounds of low tax effect, the Cross Objection No. 1 stands allowed by the Revenue for all purposes. 3. Cross Objection No. 2 pertaining to STCG becomes infructuous after dismissal of departmental appeal owing to low tax effect. 4. Cross Objection No. 4, 5, 6 treated as in fructuous. 5. Cross Objection No. 7 is general. CO No. 121/Del/2019 in ITA No. 2009/Del/2019 CO No. 130/Del/2018 in ITA NO. 3729/Del/2018 Disallowance u/s 14A: 6. The AO made disallowance of Rs.8,66,497/- u/s 14A. From the record, we find that expenditure directly relating to the exempt income was Rs.30,788/-, interest not directly attributable to was Nil, 0.5% of average investments which actually yielded exempt income during the relevant year was Rs.3,99,171/-. Hence, we hold that the disallowance be restricted to Rs.4,29,958/- based on the investments yielded exempt income. CO No. 130/Del/2018 CO No. 121/Del/2019 Narinder Bajaj 3 7. The AO is directed to re-compute the disallowance u/s 14A by taking into consideration, the average investments which yielded dividend income for the A.Y. 2015-16. 8. In the result, the COs of the assessee are allowed. Order Pronounced in the Open Court on 09/02/2023. Sd/- Sd/- (Yogesh Kumar US) (Dr. B. R. R. Kumar) Judicial Member Accountant Member Dated: 09/02/2023 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR