KAWALJIT SINGH CHOUDHARY, MUMBAI V. ACIT CIRCLE-25(2) , MUMBAI

ITA 359/MUM/2023

AI Insights

The case involves an appeal by Kawaljit Singh Choudhary against the order of the Commissioner of Income Tax (Appeals), which disallowed Rs.4,17,577 under Section 14A of the Income Tax Act, 1961, for the Assessment Year 2013-14. The disallowance was initially computed by the Assessing Officer using Rule 8D, considering the interest earned by the assessee as interest expenditure for investment purposes. The assessee argued that the dividend income, which was the basis for the disallowance, was earned from shares held as stock-in-trade and that no expenditure was incurred for earning this exempt income. The Tribunal, after considering the facts, decided to restrict the disallowance to the amount of exempt income actually earned.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136071 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: H
• Next Hearing Date: 10-04-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 06-02-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

म ु ंबई ठ “एच ”,म ु ंबई , ए ं म ज त # ं$, ेख े म' IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “ H ”, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER& SHRI AMARJIT SINGH , ACCOUNTANT MEMBER ं.359/म ु ं/2023 ( -. . 2013-14) ITA NO.359/MUM/2023(A.Y.2013-14) Kawaljit Singh Choudhary, B/112, Mittal Park Society, 44, J.R.Mhatre Marg, JVPD Scheme, Ruia Park, Mumbai – 400 049. PAN: AEXPC-4542-E ...... ./Appellant ब- म Vs. ACIT CIRCLE -25(2), Kautilya Bhavan, BKC, Bandra(E), Mumbai 400 051 ...../ त /Respondent . 0 / Appellant by : Ms. Neelam C. Jadhav / त 0 /Respondent by : Shri Manoj Mishra & Shri Mudit Srivastava ु - ई 1 त / Date of hearing : 11/04/2023 234 1 त / Date of pronouncement : 11/04/2023 ेश/ORDER PER VIKAS AWASTHY, JM: This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [ in short ‘the CIT(A)’] dated 16/12/2022, for the Assessment Year 2013-14. 2 ITA NO.359/MUM/2023(A.Y.2013-14) 2. The solitary issue raised in the appeal by the assessee is against disallowance of Rs.4,17,577/- u/s. 14A of the Income Tax Act, 1961 [in short ‘the Act’]. 3. Ms. Neelam C. Jadhav appearing on behalf of the assessee submits that the assessee has earned dividend income of Rs.1,09,353/-. The Assessing Officer invoked Rule 8D and recomputed the disallowance u/s. 14A of the Act to Rs.4,17,577/-. The assessee is engaged in trading of shares. The dividend earned by the assessee is in respect of shares held as stock-in-trade. The Assessing Officer while making disallowance u/s. 14A of the Act has erred in taking interest earned by the assessee as interest expenditure for investment purpose. The assessee has not incurred any expenditure for earning exempt income. The ld. Authorized Representative for the assessee prayed for deleting the disallowance made u/s. 14A of the Act. The ld. Authorized Representative for the assessee made an alternate prayer that disallowance u/s. 14A r.w. Rule 8D cannot be more than exempt income earned, hence, disallowance may be restricted to exempt income earned during the relevant period. 4. Per contra, Shri Manoj Mishra representing the Department vehemently defended the impugned order and prayed for dismissing appeal of the assessee. 5. Both sides heard, orders of authorities below examined. It is an undisputed fact that the assessee has earned dividend income of Rs.1,09,353/- during the period relevant to the assessment year under appeal. No suo-motu disallowance was made by the assessee for earning exempt income. Taking 3 ITA NO.359/MUM/2023(A.Y.2013-14) into consideration entire facts, we accept the alternate prayer of the assessee and restrict the disallowance u/s. 14A of the Act to the extent of exempt income earned during the relevant period. The appeal by assessee is partly allowed, in the terms aforesaid. 6. In the result, appeal by assessee is partly allowed. Order pronounced in the open court on Tuesday the 11 th day of April, 2023. Sd/- Sd/- (AMARJIT SINGH ) (VIKAS AWASTHY) ेख /ACCOUNTANT MEMBER /JUDICIAL MEMBER म ु ंबई/ Mumbai, 6 - ं /Dated 11/04/2023 Vm, Sr. PS(O/S) त ल प अ े षतCopy of the Order forwarded to : 1. ./The Appellant , 2. / त / The Respondent. 3. The PCIT 4. 7 8 / त - , . . ., म ु बंई/DR, ITAT, Mumbai 5. 8 9: ; < /Guard file. BY ORDER, //True Copy// (Dy./Asstt.Registrar)/Sr. Private Secretary ITAT, Mumbai