Poonawalla Shares And Securities Pvt.Ltd, Pune V. Deputy Commissioner of Income-tax, Circle - 4, Pune

ITA 1380/PUN/2018

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 9148 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 28-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER ITA No. 1380/PUN/2018 नधा रण वष / Assessment Year : 2015-16 Poonawalla Shares & Securities Pvt. Ltd., Sarosh Bhavan, 16-B/1, Dr. Ambedkar Road, Pune – 411 001, Maharashtra PAN : AAACP6087H Vs. DCIT, Central Circle-4, Pune Appellant Respondent आदेश / ORDER PER R.S. SYAL, VP : This appeal by the assessee arises out of the order dated 07-06-2018 passed by the CIT(A)-3, Pune in relation to the assessment year 2015-16. 2. The only issue raised in this appeal is against the disallowance u/s.14A of the Income-tax Act, 1961 (hereinafter also called ‘the Act’). 3. Briefly stated, the facts of the case are that the assessee earned exempt dividend income from Indian companies to the tune Assessee by Shri R.S. Abhyankar Revenue by Shri Arvind Desai Date of hearing 07-07-2022 Date of pronouncement 08-07-2022 ITA No.1380/PUN/2018 Poonawalla Shares & Securities Pvt. Ltd., 2 of Rs.1,76,60,417/-. Certain amount was shown as attributable to the exempt income and hence disallowable u/s 14A of the Act. The Assessing Officer (AO) revised the disallowance u/s.14A, as per the mandate of Rule 8D(2)(iii), at ½% of average value of investments and made further addition of Rs.7,79,645/-. The ld. CIT(A) affirmed the addition, against which the assessee has approached the Tribunal. 4. We have heard the rival submissions and gone through the relevant material on record. The only issue pressed is about restricting the addition under Rule 8D(2)(iii) of the Income-tax Rules, 1962 by considering only such investments which yielded tax free dividend income. Other grounds challenging the improper satisfaction by the AO before making the disallowance etc. were not pressed. Such other grounds, ergo, stand dismissed. 5. Now coming to the issue pressed before the Tribunal, it is seen that the Hon'ble Delhi High Court in ACB India Ltd. vs. CIT (2015) 374 ITR 108 (Del) has held that the average value of investments, for the purposes of Rule 8D(2)(iii), should be confined to those securities in respect of which exempt income is earned and not the total investments. Similar view has been taken ITA No.1380/PUN/2018 Poonawalla Shares & Securities Pvt. Ltd., 3 by the Special Bench of the Tribunal in the case of ACIT vs. Vireet Investments (P) Ltd. (2017) 165 ITD 27 (Del) (SB). In view of the afore referred precedents, we set aside the impugned order to this extent and remit the matter to the file of the AO for re-computing the disallowance under Rule 8D(2)(iii) by considering only such investments, in calculating the average value of investments, which yielded exempt income during the year. The assessee will be allowed hearing opportunity in such fresh proceedings. 6. In the result, the appeal is partly allowed for statistical purposes. Order pronounced in the Open Court on 08 th July, 2022. Sd/- Sd/- (S.S. VISWANETHRA RAVI) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT प ु णे Pune; दनांक Dated : 08 th July, 2022 Satish ITA No.1380/PUN/2018 Poonawalla Shares & Securities Pvt. Ltd., 4 आदेश क त ल प अ े षत/ Copy of the Order is forwarded to: 1. अपीलाथ / The Appellant; 2. यथ / The Respondent; 3. The CIT(A)-3, Pune 4. 5. The Pr.CIT-2, Pune िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, पुणे “A” / DR ‘A’, ITAT, Pune 6. गाड फाईल / Guard file आदेशान ु सार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune Date 1. Draft dictated on 07-07-2022 Sr.PS 2. Draft placed before author 07-07-2022 Sr.PS 3. Draft proposed & placed before the second member JM 4. Draft discussed/approved by Second Member. JM 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *