ABHAICHAND VENDRAVAN (HUF), COIMBATORE V. ITO NON CORPORATE WARD I(4), COIMBATORE

ITA 272/CHNY/2023

AI Insights

The case involves M/s. Abhaichand Vendravan (HUF), which appealed against the confirmation of a disallowance of Rs. 20.58 Lacs under section 14A of the Income Tax Act for the Assessment Year 2012-13. The disallowance was initially computed by the Assessing Officer using Rule 8D, which was upheld by the Commissioner of Income Tax (Appeals). The Tribunal heard the arguments and decided to limit the disallowance to the amount of exempt income actually earned by the assessee, and also directed a re-computation of the carry forward of losses.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 134248 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 21-06-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 01-03-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Rule 8D
• Section: 143(3); 14A

Judgement Text

आयकर अपीलीय अिधकरण “बी” ायपीठ चे ई म । IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, CHENNAI माननीय ी महावीर िसंह, उपा ! एवं माननीय ी मनोज कुमार अ&वाल ,लेखा सद) के सम!। BEFORE HON’BLE SHRI MAHAVIR SINGH, VP AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं./ ITA No.272/Chny/2023 (िनधा*रण वष* / As sessment Year: 2012-13) M/s. Abhaichand Vendravan (HUF) 500, R.G. Street Coimbatore-641 001. बनाम / V s . ITO Non-Corporate Ward-1(4) Coimbatore. थायीलेखासं./जीआइआरसं./PAN/GIR No. A AC H A-0 156-M (अपीलाथ /Appellant) : ( थ / Respondent) अपीलाथ कीओरसे/ Appellant by : Shri N. Arjun Raj (C.A)-Ld.AR थ कीओरसे/Respondent by : Shri D. Hema Bhupal (JCIT)- Ld. DR सुनवाईकीतारीख/Date of Hearing : 22-06-2023 घोषणाकीतारीख /Date of Pronouncement : 22-06-2023 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aggrieved by confirmation of disallowance u/s 14A for Rs.20.58 Lacs for Assessment Year (AY) 2012-13, the assessee is in further appeal before us. The impugned order has been passed by learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] on 04-01-2023 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) r.w.s. 263 of the Act on 26-12-2017. Having heard rival submissions and after perusal of case records, the appeal is disposed-off as under. The 2 ITA No.272/Chny/2023 assessee being resident HUF is stated to be engaged in money lending business. 2. During assessment proceedings, it transpired that the assessee maintained common pool of funds and it paid interest of Rs.181.03 Lacs. The assessee made investment in equity shares and earned exempt income of Rs.4.59 Lacs. Accordingly, Ld. AO proceeded to compute disallowance u/s 14A. The assessee submitted that no expenditure was incurred to earn the exempt income. However, rejecting the same, Ld. AO applied Rule 8D and computed aggregate disallowance of Rs.20.58 Lacs which was interest disallowance u/r 8D(2)(ii) for Rs.18.55 Lacs and indirect expenditure disallowance u/r 8D(2)(iii) for Rs.2.03 Lacs. The income was thus computed at Rs.20.58 Lacs. The Ld. AO further noted that the assessee had carry forward of losses to the extent of Rs.16.07 Lacs and considering the assessed income, there would be no carry forward loss for future years. The Ld. CIT(A) upheld the action of Ld. AO against which the assessee is in further appeal before us. 3. The submissions of Ld. AR are limited i.e., the disallowance should be restricted to the extent of exempt income earned by the assessee during the year. Concurring with the same, we direct Ld. AO to restrict the disallowance to the extent of exempt income earned by the assessee during the year. Another plea is the correct computation of carry forward of losses. It would be suffice on our part to direct Ld. AO to re-compute the carry forward and set-off of losses in accordance with law. The assessee is directed to provide necessary computations, in this regard. No other ground has been urged before us. 3 ITA No.272/Chny/2023 4. The appeal stand allowed to the extent indicated in the order. Order pronounced on 22 nd June, 2023. Sd/- Sd/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) उपा23 / VICE PRESIDENT लेखा सद5 / ACCOUNTANT MEMBER चे7ई Chennai; िदनांक Dated :22-06-2023 DS आदेशकीAितिलिपअ&ेिषत/Copy of the Order forwarded to : 1. अपीलाथ /Appellant 2. थ /Respondent 3. आयकरआयु?/CIT 4. िवभागीय ितिनिध/DR 5. गाडDफाईल/GF