KREDENCE MULTI TRADING LIMITED, MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX-6(3)(2), MUMBAI

ITA 474/MUM/2023

AI Insights

The case involves Kredence Multi Trading Limited, which appealed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, concerning the assessment year 2014-15. The primary issue in the appeal was the disallowance of Rs.33,57,250 made under Section 14A of the Income Tax Act, 1961, read with Rule 8D of the Income Tax Rules, 1962. The disallowance was contested as it exceeded the exempt income of Rs.2,83,358 earned by the assessee during the relevant period. The Tribunal's decision focused on ensuring that the disallowance under Section 14A r.w.r. 8D should not exceed the exempt income, a principle well-established in tax jurisprudence.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 132052 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 18-04-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 16-02-2023
• Laws Referred To: Income Tax Act, 1961, Income Tax Rules, 1962
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

vk;dj vihyh; vf/kdj.k eqacbZ ihB ß,pÞ eaqcbZ Jh fodkl voLFkh] U;kf;d lnL;],oa Jh vejthr flag] ys[kkdkj lnL; ds le{k IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “H” BENCH BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER vk-vk-la- 474@eaqcbZ@2023 ¼fu-oa- 2014&15½ ITA No.474/MUM/2023 (A.Y.2014-15) Kredence Multi Trading Limited 509-510, Navratan Premises Cop Society Limited, PD Mello Road Carnac Bunder Mumbai-400 009 PAN No. AAACS0778A ..... vihykFkhZ/Appellant cuke Vs. Assistant Commissioner of Income Tax, 6 (3) (2), Aayakar Bhavan Mumbai-400 020 ..... izfroknh/Respondent vihykFkhZ }kjk@Appellant by : Shri Rahul Hakani, Adv. izfroknh }kjk@Respondent by : Smt. Anne Varghese, Sr. AR lquokbZ dh frfFk@Date of hearing : 19/04/2023 ?kks”k.kk dh frfFk@Date of pronouncement : 25/04/2023 vkns’k/ 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 (hereinafter referred to as “the CIT(A)”) dated 21.12.2022, for the assessment year 2014-15. P a g e | 2 ITA No.474/MUM/2023 (A.Y.2014-15) KREDENCE MULTI TRADING LTD. 2. Shri Rahul Hakani appearing on behalf of the assessee submits that the grievance of assessee in appeal is against disallowance of Rs.33,57,250 u/s 14A of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) r.w.r. 8D of the Income Tax Rules,1962 (hereinafter referred to as “the Rules”). The Ld. Authorised Representative (AR) submits that during the period relevant to the assessment year under appeal, the assessee has earned dividend income exempt from tax Rs.2,83,358/-. The assessee has made suo-moto disallowance of Rs.1,09,357/- u/s 14A of the Act. The Assessing Officer (AO) invoking the provisions of Rule 8D and made further disallowance of Rs.33,57,250/-. The CIT(A) has upheld the disallowance made by the AO. The Ld. AR submitted that short prayer of the assessee is that disallowance u/s 14A of the Act may be restricted to the exempt income earned. 3. On the other hand, Smt. Anne Varghese representing the Department vehemently defended the impugned order and prayed for dismissing appeal of the assessee. Both sides heard. It is an undisputed fact that the assessee has earned exempt income of Rs.2,83,358/- during the relevant period. The AO has computed total disallowance u/s 14A r.w.r. 8D at Rs.34,66,606/-. The assessee has suo-moto disallowed Rs.1,09,357/- u/s 14A of the Act. It is no more res-integra that disallowance u/s 14A r.w.r. 8D cannot be more than the exempt income earned during the relevant period. Therefore, we direct the AO to restrict disallowance to the extent of exempt income earned by the assessee during the period relevant to the assessment year under appeal. Needless to say, the AO shall consider suo-moto disallowance already made by the assessee while computing total disallowance. P a g e | 3 ITA No.474/MUM/2023 (A.Y.2014-15) KREDENCE MULTI TRADING LTD. 4. In the result, appeal of the assessee is allowed, in terms aforesaid. Order pronounced in the open court on Tuesday the 25 th day of April 2023. Sd/- Sd/- (AMARJIT SINGH) (VIKAS AWASTHY) Yks[kkdkj lnL;/ACCOUNTANT MEMBER U;kf;d lnL;/JUDICIAL MEMBER eaqcbZ/Mumbai, fnukad/Dated: 25/04/2023 Mahesh R. Sonavane izfrfyih vxzsf”kr of the Order forwarded to: 1. vihykFkh/The Appellant , 2. izfroknh/The Respondent. 3. vk;dj vk;qDr/ CIT 4. foHkkxh; izfrfu/kh] vk;- vih- vf/k-] eqacbZ/DR, ITAT, Mumbai 5. xkMZ QkbZy/Guard file. BY ORDER, //True Copy// (Dy. /Asst. Registrar)/ Sr. Private Secretary ITAT, Mumbai