Adurjee & Bros Pvt.Ltd, Pune V. Deputy Commissioner of Income-tax, Circle - 1 (1), Pune

ITA 426/PUN/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 0306 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 17-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH, ‘A’ PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER आयकर अपील सं. / ITA No.426/PUN/2019 नधा रण वष / Assessment Year : 2015-16 Adurjee & Bros. Pvt. Ltd., Sarosh Bhavan, 16-B/1, Dr. Ambedkar Road, Pune - 411 001 Maharashtra PAN : AABCA4890J Vs. DCIT, Circle-1(1), Pune Appellant Respondent आदेश / ORDER PER R.S. SYAL, VP : This appeal by the assessee is directed against the order dated 10-01-2019 passed by the CIT(A)-1, Pune in relation to the assessment year 2015-16. 2. The only issue raised in this appeal is the confirmation of disallowance of Rs.44,35,887/- u/s.14A of the Income-tax Act, 1961 (hereinafter also called ‘the Act’). 3. Briefly stated, the facts of the case are that the assessee earned exempt income of Rs.64,20,228/- and offered Assessee by Shri R.S. Abhyankar Revenue by Shri Arvind Desai Date of hearing 06-07-2022 Date of pronouncement 06-07-2022 ITA No.426/PUN/2019 Adurjee & Bros Pvt. Ltd., 2 disallowance u/s.14A to the tune of Rs.19,84,341/-. The Assessing Officer (AO) invoked the provisions of section 14A read with Rule 8D of the Income-tax Rules, 1962 and computed the further amount disallowable at Rs.44,35,887/-. The ld. CIT(A) countenanced the disallowance. Aggrieved thereby, the assessee has come up in appeal before the Tribunal. 4. We have heard both the sides and gone through the relevant material on record. The only contention of the ld. AR was that the addition under Rule 8D of the Income-tax Rules, 1962 should be made by considering only such investments which yielded tax free dividend income. Other grounds challenging the improper satisfaction by the AO before making the disallowance etc. were not pressed. Such other grounds, ergo, stand dismissed. 5. Now coming to the issue pressed before the Tribunal, it is seen that the Hon'ble Delhi High Court in ACB India Ltd. vs. CIT (2015) 374 ITR 108 (Del) has held that the average value of investments, for the purposes of Rule 8D(2)(iii), should be confined to those securities in respect of which exempt income is earned and not the total investments. Similar view has been taken by the Special Bench of the Tribunal in the case of ACIT vs. ITA No.426/PUN/2019 Adurjee & Bros Pvt. Ltd., 3 Vireet Investments (P) Ltd. (2017) 165 ITD 27 (Del) (SB). In view of the afore referred precedents, we set aside the impugned order to this extent and remit the matter to the file of the AO for re-computing the disallowance under Rule 8D(2)(iii) by considering only such investments, in calculating the average value of investments, which yielded exempt income during the year. The assessee will be allowed hearing opportunity in such fresh proceedings. 6. In the result, the appeal is partly allowed for statistical purposes. Order pronounced in the Open Court on 06 th July, 2022. Sd/- Sd/- (S.S. VISWANETHRA RAVI) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; िदनांक Dated : 06 th July, 2022 सतीश ITA No.426/PUN/2019 Adurjee & Bros Pvt. Ltd., 4 आदेश की ितिलिप अ ेिषत/Copy of the Order is forwarded to: 1. अपीलाथ / The Appellant; 2. 3. थ / The Respondent The CIT(A)-1, Pune 4. 5. The Pr.CIT-1, Pune DR, ITAT, ‘A’ Bench, Pune 6. गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune Date 1. Draft dictated on 06-07-2022 Sr.PS 2. Draft placed before author 06-07-2022 Sr.PS 3. Draft proposed & placed before the second member JM 4. Draft discussed/approved by Second Member. JM 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *