ITO, New Delhi V. M/s. Moderate Leasing & Capital Services Ltd., New Delhi

ITA 4706/DEL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2980 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 30-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 27-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HK CHOUDHURY
• Assessee Lawyers: PREMJIT S KASHYAP
• Keywords: Earning of tax free income
• Section: 143(3); 14A; 12

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E : NEW DELHI BEFORE SHRI I.C.SUDHIR , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 4706/DEL/2014 (ASSESSMENT YEAR: 2009 - 10 ) ITO, WARD - 5(4), NEW DELHI VS. MODERATE LEASING AND CAPITAL SERVICES LTD, 415, MODI TOWERS, 98, NEHRU PLACE, NEW DELHI PAN:AAACM6945K (APPELLANT) (RESPONDENT) REVENUE BY : SH. HK CHOUDHURY, CIT DR ASSESSEE BY: SH. PREMJIT S KASHYAP, CA DATE OF HEARING 30/05 / 2017 DATE OF PRONOUNCEMENT 31 / 05 / 2017 O R D E R PER PRASHANT MAHARISHI, A. M. 1. THIS APPEAL IS PREFERRED BY REVENUE AGAINST THE ORDER OF THE LD CIT(A) - V, NEW DELHI DATED 06.06.2014 BY WHICH THE DISALLOWANCE OF RS. 99047514/ - MADE BY THE LD ASSESSING OFFICER U/S 14A OF THE INCOME TAX ACT VIDE ORDER U/S 143(3) OF THE ACT DATED 05.12.2011 FOR AY 2009 - 10 WAS DELETED. 2. THE REVENUE HAS PREFERRED FOLLOWING GROUNDS OF APPEAL : - 1. WHETHER ON THE FACT S AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN DELETING THE ADDITIONS OF RS. 99047514/ - MADE BY THE AO ON ACCOUNT OF DISALLOWANCE U/S 14A READ WITH RULE 8D. 1.1 WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A ) HAS IGNORED THAT THE DISALLOWANCE WAS MADE ACCORDING TO THE SECTION 14A READ WITH RULE 8D OF THE INCOME TAX RULE? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) HAS IGNORED THAT THE FACTS OF ASSTT. YEAR 2011 - 12 ARE NOT SI MILAR TO THE ASSTT. YEAR 2009 - 10? 3. THE BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME ON 29.09.2009 FOR RS. 3176580/ - . DURING THE YEAR THE ASSESSEE HAS RECEIVED A SUM OF RS. 1700/ - AS DIVIDEND AND CLAIMED THE SAME AS EXEM PT. THE LD ASSESSING OFFICER AFTER SHOW CAUSE MADE DISALLOWANCE U/S 14A OF THE ACT AMOUNTING TO RS. 99047514/ - APPLYING PROVISIONS OF RULE 8D. THE ASSESSEE CONTESTED THE SAME BEFORE THE FIRST APPELLATE AUTHORITY WHO RECOMPUTED THE DISALLOWANCE U/S 14A OF T HE ACT APPLYING RULE 8D OF THE INCOME TAX RULES AFTER REMAND REPORT OF THE ASSESSEE AT PAGE 2 OF 2 RS. 264/ - THEREFORE, OUT OF TOTAL DISALLOWANCE MADE BY THE ASSESSING OFFICER OF RS. 99047514/ - HE DIRECTED DISALLOWANCE TO BE RESTRICTED TO RS. 264/ - ONLY. THEREFORE, TH E REVENUE IS IN APPEAL BEFORE US. 4. THE LD DR RELIED UPON THE ORDERS OF THE LD ASSESSING OFFICER AND THE LD AR RELIED UPON THE ORDER OF THE LD CIT(A). 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE ORDERS OF THE LOWER AUTHORITIES. ADMITTEDLY NO DISALLOWANCE HAS BEEN MADE BY THE ASSESSEE DESPITE EARNING EXEMPT INCOME OF RS. 1700/ - . THEREFORE, THE PROVISIONS OF RULE 8D SHALL APPLY AND DISALLOWANCE NEEDS TO BE RECOMPUTED. THE LD FIRST APPELLATE AUTHORITY HAS RECOMPUTED THE DISALLOWANCE UNDER RULE 8D AND RESTRICTED THE DISALLOWANCE TO RS. 264/ - ONLY. NO INFIRMITY WAS POINTED OUT BEFORE US IN THE COMPUTATION CONFIRMED BY THE LD FIRST APPELLATE AUTHORITY. HOWEVER , THE HON'BLE DELHI HIGH COURT IN CASE OF JOINT INVESTMENT PVT. LTD. VS. CIT 3 72 ITR 694 HAS HELD THAT DISALLOWANCE U/S 14A CANNOT SWALLOW THE ENTIRE AMOUNT AS IT HAS HAPPENED IN THIS CASE AS PER ASSESSMENT ORDER. THEREFORE, FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT WE ARE OF THE OPINION THAT AS THE EXEMPT INCOME ITSEL F IS RS. 1700/ - ONLY THE DISALLOWANCE CANNOT EXCEED THAT SUM. HENCE, NO FURTHER DISALLOWANCE CAN BE MADE. THEREFORE, THE APPEAL OF THE REVENUE IS DESERVES TO BE DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DEMISED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 1 / 0 5 / 2017 . - S D / - - S D / - ( I.C. SUDHIR ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 3 1 / 0 5 / 2017 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI