Manish Subhash Deshmukh, Solapur V. Assistant Commissioner of Income-tax, Circle - 1, Solapur

ITA 1151/PUN/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9220 (ITAT-PUNE)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Appeal Filed On: 26-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANJEET SHAH
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE . , BEFORE SHRI D. KARUNAKARA RAO, AM . / ITA NO.1151/PUN/2019 / ASSESSMENT YEAR : 2016-17 MANISH SUBHASH DESHMUKH, 13A, SAHYADRI NAGAR, HOTGI ROAD, NEAR VIKAS NAGAR, SOLAPUR-413003. PAN : AHZPD7424P . /APPELLANT VS. ACIT, CIRCLE-1, SOLAPUR. . / RESPONDENT / APPELLANT BY : SHRI KRISHNA V. GUJARATHI, AR / RESPONDENT BY : SHRI RANJEET SHAH, DR / DATE OF HEARING : 26.09.2019 / DATE OF PRONOUNCEMENT: 01.10.2019 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-7, PUNE DATED 31.05.2019 FOR THE ASSESSMENT YEAR 2015-16. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER :- 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONOURABLE CIT(A) - 7, PUNE, ERRED IN CONFIRMING DISALLOWANCE OF RS. 64,73,783/- BY APPLYING THE PROVISIONS OF SECTION 14A OF THE INCOME TAX ACT, 1961 READ WITH RULE 8D OF THE INCOME TAX RULES, 1962 WITHOUT APPRECIATING THE FACTS OF THE CASE AND LEGAL POSITION IN PROPER PERSPECTIVE. THE APPELLANT HEREBY PRAYS THAT THE DISALLOWANCE OF RS. 64,73,783/- MAY PLEASE BE DELETED. 2) WITHOUT PREJUDICE TO GROUND OF APPEAL NO. 1, THE LEARNED ASSESSING OFFICER HAS ERRED IN CALCULATING DISALLOWANCE U/S 14A AS PER AMENDED RULE 8D WITHOUT APPRECIATING THE FACT THAT THE AMENDED RULE 8D OF THE INCOME TAX RULES, 1962 WAS NOT APPLICABLE FOR THE YEAR UNDER CONSIDERATION. THE APPELLANT HEREBY PRAYS THAT THE LEARNED AO BE DIRECTED TO RECOMPUTE DISALLOWANCE AS PER RULE 8D AS APPLICABLE FOR THE YEAR UNDER CONSIDERATION. ITA NO.1151/PUN/2019 - 2 - 3) THE APPELLANT HEREBY RESERVES THE RIGHT TO ADD, AMEND, ALTER OR RAISE ANY ADDITIONAL GROUND OR GROUNDS OF APPEAL OR DELETE OR WITHDRAW ANY OF THE GROUND OF APPEAL/S. 3. BEFORE ME, AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS IS A CASE WHERE THE DISALLOWANCE WAS MADE U/S 14A OF THE ACT READ WITH RULE 8D(2) OF THE RULES AND AN AMOUNT OF RS.64,73,783/- WAS DISALLOWED. IN THE PROCESS, THE LOWER AUTHORITIES IGNORED THE FACT THAT THE ASSESSEE, ALTHOUGH INVESTED IN THE SHARES, NEVER EARNED ANY EXEMPT INCOME DURING THE YEAR OUT OF THE SAID INVESTMENT. IN THIS REGARD, RELYING ON THE HONBLE DELHI HIGH COURTS JUDGEMENT IN THE CASE OF CHEM INVEST PVT. LTD. VS. CIT, 378 ITR 33, LD. COUNSEL SUBMITTED THAT THIS IS A CASE WHERE NO DISALLOWANCE(S) IS CALLED FOR. 4. ON HEARING BOTH THE SIDES AND AFTER PERUSING THE FACTS, I FIND UNDISPUTEDLY NO EXEMPT INCOME HAS BECOME PART OF THE TOTAL INCOME OF THE YEAR OF THE ASSESSEE. FURTHER, I FIND THE ABOVE SAID JUDGEMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CHEM INVEST PVT. LTD. (SUPRA) IS RELEVANT FOR THE FOLLOWING LEGAL PROPOSITION :- EXPRESSION DOES NOT FORM PART OF THE TOTAL INCOME IN SECTION 14A ENVISAGES THAT THERE SHOULD BE AN ACTUAL RECEIPT OF INCOME, WHICH WAS NOT INCLUDIBLE IN THE TOTAL INCOME, DURING THE RELEVANT PREVIOUS YEAR FOR THE PURPOSE OF DISALLOWING ANY EXPENDITURE INCURRED IN RELATION TO THE SAID INCOME. 5. CONSIDERING THE ABOVE SETTLED LEGAL NATURE OF THE ISSUE AT THE LEVEL OF HONBLE HIGH COURT, I AM OF THE OPINION, NO DISALLOWANCE IS CALLED FOR U/S 14A OF THE ACT R.W. RULE 8D(2) OF THE RULES ON THE FACTS OF THE PRESENT CASE. THUS, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. ITA NO.1151/PUN/2019 - 3 - 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 01 ST DAY OF OCTOBER, 2019. SD/- (D. KARUNAKARA RAO) / ACCOUNTANT MEMBER / PUNE; DATED : 01 ST OCTOBER, 2019. SUJEET / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-7, PUNE; 4. THE PR.CIT-6, PUNE; 5. , , - / DR SMC, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE