DCIT, CentralCircle-1, New Delhi V. Blue Coast Hotels Ltd, New Delhi

ITA 2850/DEL/2022

AI Insights

The case involves an appeal by the Revenue against the order of the Commissioner of Income Tax (Appeals), which pertained to the assessment year 2017-18. The primary issue was the disallowance under section 14A read with rule 8D of the Income Tax Act, which the Assessing Officer initially set at Rs. 2,31,39,000 based on the dividend income from investments. However, the CIT(A) reduced this amount to Rs. 99,693, which was the actual dividend income earned by the assessee during the year. The Revenue challenged this reduction, but the Tribunal upheld the CIT(A)'s decision, referencing the judicial precedent that disallowances under section 14A cannot exceed the amount of exempt income.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 108368 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 07-06-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 04-12-2022
• Other Referred Cases: Caraf Builders & Constructions [P] Ltd 414 ITR 122
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AKANSHA BIRLA
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘B’ BENCH, NEW DELHI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI ANUBHAV SHARMA, JUDICIAL MEMBER ITA No. 2850/DEL/2022 [Assessment Year: 2017-18] The Dy. C.I.T. Vs. Blue Coast Hotels Ltd Central Circle - 1 415 – 417, Antriksh Bhawan New Delhi 22, Kasturba Gandhi Marg New Delhi PAN : AAACM 0037 G [Appellant] [Respondent] Date of Hearing : 08.06.2023 Date of Pronouncement : 12.06.2023 Assessee by : Ms. Akansha Birla, CA Revenue by : Ms. Parmita M. Biswas, CIT- DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, This appeal by the Revenue is preferred against the order of the Commissioner of Income Tax [Appeals], New Delhi-23 dated 06.09.2022 pertaining to assessment year 2017-18. 2 2. The sum and substance of the grievance of the Revenue is that the ld. CIT(A) erred in restricting the disallowance u/s 14A r.w.r 8D of the Act to Rs. 99,693/- against disallowance of Rs. 2,31,39,000/- made by the Assessing Officer. 3. Briefly stated, the facts of the case are that during the scrutiny assessment proceedings, the Assessing Officer noticed that the assessee has earned dividend from investments and invoking provisions of section 14A r.w.r 8D, the Assessing Officer computed the disallowance at Rs. 2,31,39,000/-. 4. Addition was challenged before the Id. CIT(A) and it was strongly contended that during the year under consideration, the assessee has earned dividend amounting to Rs. 99,693/- only. 5. Referring to various judicial decisions, the Id. CIT(A) was of the opinion that the disallowance u/s 14A r.w.r.r 8D cannot exceed the exempt income and, accordingly, directed the Assessing Officer to restrict the dividend to Rs. 99,693/-. 6. Before us, the ld. DR strongly supported the findings of the Assessing Officer. 3 7. Per contra, the ld. counsel for the assessee reiterated what has been stated before the lower authorities. 8. We have carefully perused the orders of the authorities below. The undisputed fact is that total exempt income during the year under consideration is Rs. 99,693/-. Therefore, the ratio laid down by the Hon'ble Jurisdictional High Court of Delhi in the case of Caraf Builders & Constructions [P] Ltd 414 ITR 122 squarely applies wherein the Hon'ble High Court has held that the disallowance u/s 14A of the Act cannot exceed the exempt income. We, therefore, decline to interfere. 9. In the result, the appeal filed by the Revenue in ITA No. 2850/DEL/2022 is dismissed. The order is pronounced in the open court on 12.06.2023. Sd/- Sd/- [ANUBHAV SHARMA] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 12 th JUNE, 2023. VL/ 4 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi Date of dictation Date on which the typed draft is placed before the dictating Member Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr.PS/PS Date on which the fair order is placed before the Dictating Member for pronouncement Date on which the fair order comes back to the Sr.PS/PS Date on which the final order is uploaded on the website of ITAT Date on which the file goes to the Bench Clerk Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order