Kirloskar Chillers Private Limited, Pune V. The Income Tax Officer, Ward-14(3), Pune

ITA 403/PUN/2023

AI Insights

The case involves Kirloskar Chillers Private Limited appealing against an order from the National Faceless Appeal Centre (NFAC), Delhi, which confirmed a disallowance made under Section 14A of the Income Tax Act read with Rule 8D(2)(iii) of the Income Tax Rules. The disallowance pertained to expenses claimed by the assessee in earning exempt dividend income. The Income Tax Officer had initially disallowed a part of the claimed expenses, which was contested by the assessee. The NFAC dismissed the appeal by relying on a Supreme Court decision that was not directly relevant to the specific grounds of appeal regarding the disallowance under Rule 8D(2)(iii). Both parties agreed that the matter should be remanded for a fresh examination of the specific disallowance issue.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 132834 (ITAT-PUNE)
• Duration Of Justice: 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-05-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 09-04-2023
• Other Referred Cases: Checkmate Services P. Ltd. in Civil Appeal No. 2833 of 2016
• Laws Referred To: Income Tax Act, Rule 8D(2)(iii)
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rule 8D
• Section: 14A

Judgement Text

आयकर अपीलीय अधिकरण “ए” न्यायपीठ पुणे में । IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, PUNE BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER आयकर अपील सं. / ITA No.403/PUN/2023 धििाारण वर्ा / Assessment Year : 2017-18 Kirloskar Chillers Private Limited, 8 th Floor, Cello Platina, Fergusson College Road, Shivajinagar, Pune – 411005 PAN : AABCK1730B .......अपीलार्थी / Appellant बिाम / V/s. The Income Tax Officer, Ward – 14(3), Pune ......प्रत्यर्थी / Respondent Assessee by : Shri Kiran B. Sanmane Revenue by : Shri Ramnath P. Murkunde सुनवाई की तारीख / Date of Hearing : 15-05-2023 घोषणा की तारीख / Date of Pronouncement : 15-05-2023 आदेश / ORDER PER S.S. VISWANETHRA RAVI, JM : This appeal by the assessee against the order dated 14-02-2023 passed by the National Faceless Appeal Centre, Delhi (“NFAC”) for assessment year 2017-18. 2. The assessee raised three grounds of appeal amongst which the only issue emanates for our consideration is as to whether the CIT(A), NFAC, Delhi justified in confirming the disallowance made u/s. 14A of the Act r.w. Rules 8D(2)(iii) of the Rules in the facts and circumstances of the case. 2 ITA No.403/PUN/2023, A.Y. 2017-18 3. At the outset, we note that both the authorities fairly conceded that the NFAC, Delhi dismissed the appeal of assessee by placing reliance on the decision of Hon’ble Supreme Court in batch of cases, lead case being Checkmate Services P. Ltd. in Civil Appeal No. 2833 of 2016 which is not at all relevant to dismiss the grounds raised by the assessee against the order of AO in making disallowance under Rule 8D(2)(iii) of the Rules. 4. We note that the assessee claimed the dividend of Rs.59,47,564/- as exempt. The AO asked the assessee to submit the working of expenses incurred in earning such dividend income. The ld. AR submits that the assessee explained that it disallowed Rs.8,528/- on its own as expenditure incurred in earning the said dividend. The AO did not accept the same, proceeded to apply the methodology contemplated under Rule 8D(2)(iii) of the Rules and disallowed Rs.8,50,060/- in addition to the assessee’s own disallowance. The same was challenged before the NFAC, Delhi. On perusal of the impugned order from page 18, we note that NFAC, Delhi instead of disposing the grounds challenged by the assessee against the disallowance made by the AO by applying Rule 8D(2)(iii), dismissed the appeal of assessee by applying decision of Hon’ble Supreme Court in batch of cases, lead case being Checkmate Services P. Ltd. (supra). Both the parties fairly conceded before us that there was no finding as to the grounds raised by the assessee in respect of disallowance made by the AO under Rule 8D(2)(iii) and prayed to remand the matter to the file of NFAC, Delhi for its fresh consideration. On perusal of the impugned order, we note that the decision of Hon’ble Supreme Court in batch of cases, lead case being Checkmate Services P. Ltd. (supra) was pleased to hold that delay in payment of Employee’s contribution to the respective fund within due date of respective acts, is an income in the hands of the employer, as is admittedly was not the issued before the NFAC, Delhi. Therefore, taking 3 ITA No.403/PUN/2023, A.Y. 2017-18 into consideration the submissions of ld. AR and ld. DR and in the facts and circumstances of the case, we deem it proper to remand the matter to the file of NFAC, Delhi to decide the issue raised by the assessee in accordance with law. Thus, the order passed by the NFAC, Dehi is set aside and the grounds raised by the assessee are allowed for statistical purpose. The assessee is liberty to file evidence, if any, in support of its claim. 5. In the result, the appeal of assessee is allowed for statistical purpose. Order pronounced in the open court on 15 th May, 2023. Sd/- Sd/- (Inturi Rama Rao) (S.S. Viswanethra Ravi) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; दिनाांक / Dated : 15 th May, 2023. रदव आदेश की प्रधिधलधप अग्रेधर्ि / Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The concerned CIT, Pune. 4. दवभागीय प्रदतदनदि, आयकर अपीलीय अदिकरण, “ए” बेंच, पुणे / DR, ITAT, “A” Bench, Pune. 5. गार्ड फ़ाइल / Guard File. //सत्यादपत प्रदत// True Copy// आिेशानुसार / BY ORDER, वररष्ठ दनजी सदचव / Sr. Private Secretary आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune