Om Prakash Khaitan, New Delhi V. ACIT, Circle-61(1), New Delhi

ITA 3714/DEL/2019

AI Insights

The case involves an appeal by Om Prakash Khaitan against the order of the CIT(Appeals)-38, New Delhi, which confirmed an addition made under section 14A of the Income Tax Act read with Rule 8D, amounting to Rs.25,59,533 for the assessment year 2015-16. The addition was initially made by the Assessing Officer during scrutiny assessment proceedings, noting that the assessee had earned exempt income and failed to justify the absence of related expenditures. The assessee contested this decision, arguing that similar issues had been resolved in their favor in previous years by the High Court. The Tribunal, referencing decisions from the High Court, ruled in favor of the assessee, directing the deletion of the disputed addition.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 113347 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 26-04-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 28-04-2019
• Other Referred Cases: AY 2011-12 and 2013-14
• Laws Referred To: Income Tax Act, Rule 8D
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

I.T.A.No.3714/Del/2019 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “E” NEW DELHI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI ANUBHAV SHARMA, JUDICIAL MEMBER आ.अ.स ं /.I.T.A No.3714/Del/2019 /Assessment Year:2015-16 Om Prakash Khaitan Khaitan House, B-1, Defence Colony, New Delhi. ब म Vs. ACIT Circle 61(1) New Delhi. PAN No. AHJPK7370H अ Appellant /Respondent िनधा रतीक ओरसे /Assessee by Shri S.P. Aggarwal, CA & Shri Abhishek Aggarwal, Adv. राज वक ओरसे /Revenue by Ms. Sarita Kumari, CIT DR स ु नवाईक तारीख/ Date of hearing: 27.04.2023 उ ोषणाक तारीख/Pronouncement on 28.04.2023 आदेश /O R D E R PER N.K. BILLAIYA, A.M. This appeal by the Assessee is preferred against the order of the Ld.CIT(Appeals)-38, New Delhi dated 26.03.2019 pertaining to AY 2015-16. 2. The solitary grievance of the assessee is that the CIT(A) erred in confirming addition made u/s 14A of the Act read with Rule 8D amounting to Rs.25,59,533/-. 3. Briefly stated the facts are that during the course of the scrutiny assessment proceedings the AO noticed that the assessee has earned I.T.A.No.3714/Del/2019 2 exempt income. Assessee was asked to show-cause why disallowance should not be made u/s 14A read with Rule 8D. In its reply, the assessee submitted that it has not incurred any direct or indirect expenditure in connection with investments made in securities and mutual funds from where it iha earned exempt income. It was explained that assessee has paid portfolio management charges amounting to Rs.66,338/- and STT at Rs.23,412/-. It was pointed out that Rs.89,750/- has been suo moto added back by the assessee while computing its return of income. Therefore, no further disallowance is to be made. This submission of the assessee was dismissed by the AO who proceeded to compute the disallowance u/s 14A read with Rule 8D at Rs.25,59,533/-. Assessee carried the matter before CIT(A) but without any success. 4. Before us the Counsel for the assessee vehemently stated that the facts are similar to the facts of AY 2011-12 and 2013-14, where the issue has been decided in favour of the assessee and against the Revenue by the Hon’ble Jurisdictional High Court of Delhi. 5. Per contra, the DR strongly supporting the assessment order stated that the facts are clearly distinguishable and read the operative part of the assessment order. 6. We have given a thoughtful consideration to the orders of the authorities below. At the very outset, we have to state that the facts of the year under consideration are no different than the facts considered in I.T.A.No.3714/Del/2019 3 AY 2011-12 and 2013-14, wherein by a separate order of even date in ITA No.4701/Del/2018 and 4702/Del/2018. We have decided this issue in favour of the Assessee and against the Revenue by following the decision of the Hon’ble Jurisdictional High Court of Delhi. For our detailed discussion therein, we direct the AO to delete the addition of Rs.25,59,533/-. 7. In the result, appeal of the assessee is accordingly allowed. Order pronounced in the open court on 28/04/2023 Sd/- Sd/- (ANUBHAV SHARMA) (N.K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 28.04.2023 *Kavita Arora, Sr. P.S. Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order Assistant Registrar, ITAT: Delhi Benches-Delhi