Avinash Ramchandra Phadnis, Pune V. Income-tax Officer, Ward - 11(2), Pune

ITA 2105/PUN/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2431 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 08-09-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT . / ITA NO.2105/PUN/2017 / ASSESSMENT YEAR : 2014-15 AVINASH RAMCHANDRA PHADNIS, 1205/01/10, SHREE SHIVAJI NAGAR, PUNE 411 004 PAN : ABQPP4715L VS. ITO, WARD-11(2), PUNE (APPELLANT) (RESPONDENT) / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE ORDER PASSED BY THE CIT(A)-1, PUNE, ON 29-06-2017 IN RELATION TO THE A.Y. 2014-15. 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE CONFIRMATION OF DISALLOWANCE OF RS.14,72,451/- MADE BY THE AO U/S.14A OF THE INCOME TAX ACT, 1961 (HEREINAFTER ALSO CALLED AS THE ACT). APPELLANT BY NONE RESPONDENT BY SHRI RAJESH GAWLI DATE OF HEARING 12-11-2018 DATE OF PRONOUNCEMENT 13-11-2018 ITA NO.2105/PUN/2017 AVINASH RAMCHANDRA PHADNIS 2 3. SUCCINCTLY, THE FACTS OF THE CASE ARE THAT THE ASSESSEE EARNED EXEMPT DIVIDEND INCOME, WHICH FIGURE HAS BEEN GIVEN AT RS.1,82,362/- IN THE GROUNDS OF APPEAL BEFORE THE TRIB UNAL. NO DISALLOWANCE WAS OFFERED U/S.14A OF THE ACT READ WITH RULE 8D OF THE INCOME TAX RULES, 1962. THE AO INVOKED THE PROVISIONS OF RULE 8D AND MADE DISALLOWANCE AMOUNTING TO RS.14,72,451/-. THE LD. CIT(A) SUSTAINED SUCH DISALLOW ANCE. 4. I HAVE HEARD THE LD. DR AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS FOUND THAT THE ASSESSEE EARNED DIVIDEND INCOME OF RS.1,82,362/-, WHICH WAS CLAIMED AS EXEMPT. T HE HON'BLE DELHI HIGH COURT IN THE CASE CHEMINVEST LTD. VS. CIT (2015) 378 ITR 33 (DEL) HAS HELD THAT IF THERE IS NO EXEMPT INCOME, THERE CAN BE NO QUESTION OF MAKING ANY DISALLOWANCE U/S 14A OF THE ACT. SIMILAR VIEW HAS BEEN TAKEN BY THE HON'BLE D ELHI HIGH COURT IN CIT VS. HOLCIM INDIA P. LTD. (2014) 90CCH 081-DEL-HC . THE NET EFFECT OF THESE DECISIONS IS THAT THE DISALLOWANCE U/S 14A GETS RESTRICTED TO THE EXTENT OF EXEMPT INCOME, EVEN IF THE PROVISIONS OF THE SECTION ARE ATTRACTED. SIMILAR VIEW HAS BEEN TAKEN BY THE DELHI BENCH OF THE TRIBUNAL IN SEVERAL CASES INCLUDING INDO HONGKONG INDUSTRIES PVT. LTD. VS. DCIT IN ITA NOS. 2611 & 2612/DEL/2015 VIDE ITS ITA NO.2105/PUN/2017 AVINASH RAMCHANDRA PHADNIS 3 ORDER DATED SEPTEMBER, 2018, TO WHICH I AM A PARTY. NO CONTRARY DECISION HAS BEEN BROUGHT TO MY NOTICE BY THE LD. DR. IN VIEW OF THE ABOVE PRECEDENTS, WHICH ARE SQUARELY APP LICABLE TO THE FACTS OF THE INSTANT CASE, I LIMIT THE DISALLOWANCE TO TH E EXTENT OF EXEMPT INCOME OF RS.1,82,362/-. 5. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH NOVEMBER, 2018. SD/- (R.S.SYAL) / VICE PRESIDENT PUNE; DATED : 13 TH NOVEMBER , 2018 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT (APPEALS)-1, PUNE 4. / THE PR. CIT-1, PUNE 5. , , SMC / DR SMC, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, / TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE ITA NO.2105/PUN/2017 AVINASH RAMCHANDRA PHADNIS 4 DATE 1. DRAFT DICTATED ON 12-11-18 2. DRAFT PLACED BEFORE AUTHOR 12-11-18 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER - 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. - 5. APPROVED DRAFT COMES TO THE SR.PS/PS 12-11-18 6. KEPT FOR PRONOUNCEMENT ON 13-11-18 7. FILE SENT TO THE BENCH CLERK 13-11-18 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. *