M/S. Ahiliabai Sardessai, , Panaji V. Assistant Commissioner of Income Tax Circle 1(1), Panaji

ITA 73/PAN/2020

AI Insights

The case involves two appeals by the assessee, M/s. Ahiliabai Sardessai, against the orders of the Commissioner of Income Tax (Appeals)-1, Panaji, for the assessment years 2013-14 and 2016-17. The primary issue in both appeals was the disallowance made under Rule 8D(2)(iii) of the Income Tax Rules concerning expenses incurred in earning exempt income. The AO had initially disallowed a total of Rs.22,82,208 under Rule 8D(2), which was partially upheld by the CIT(A). The ITAT found that the methodology used by the AO needed re-evaluation and thus remanded the matter back to the AO.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 132796 (ITAT-PANAJI)
• Duration Of Justice: 3 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: WT(D)
• Next Hearing Date: 10-09-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 21-06-2020
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A; 73

Judgement Text

आयकर अपीलीय अधिकरण न्यायपीठ पणजी में । IN THE INCOME TAX APPELLATE TRIBUNAL, PANAJI (Through Virtual Court) BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER आयकर अपील सं. / ITA Nos.73 & 74/PAN/2020 धििाारण वर्ा / Assessment Years : 2013-14 & 2016-17 M/s. Ahiliabai Sardessai, 301, Lotus Court, M.G. Road, St. Inez Junction, Panaji-Goa - 403001 PAN : AAGFA9044G .......अपीलार्थी / Appellant बिाम / V/s. Asst. Commissioner of Income Tax, Circle – 1(1), Panaji-Goa ......प्रत्यर्थी / Respondent Assessee by : Shri N.J. Prabhudesai Revenue by : Smt. Ashwini Hosmani सुिवाई की तारीख / Date of Hearing : 11-09-2023 घोर्णा की तारीख / Date of Pronouncement : 20-09-2023 आदेश / ORDER PER S.S. VISWANETHRA RAVI, JM : These two appeals filed by the assessee against the separate order dated 24-02-2020 and 29-01-2020 passed by the Commissioner of Income Tax (Appeals)-1, Panaji [‘CIT(A)’] for assessment years 2013-14 and 2016- 17. 2 ITA Nos. 73 & 74/PAN/2020, A.Ys. 2013-14 & 2016-17 2. Since, the issues raised in both the appeals are similar basing on the same identical facts. Therefore, with the consent of both the parties, we proceed to hear both the appeals together and to pass a consolidated order for the sake of convenience. 3. First, we shall take up appeal in ITA No. 73/PAN/2020 for A.Y. 2013-14. 4. We find that this appeal was filed with a delay of 59 days. After hearing both the parties, we condone the said delay. 5. The assessee raised four grounds of appeal amongst which the only issue emanates for our consideration is as to whether the CIT(A) justified in restricting the addition made by the AO under Rule 8D(2)iii) of the Rules. 6. On perusal of the assessment order, we note that the assessee earned exempt income of Rs.1,23,40,571/- and the AO asked the assessee to work out the disallowance u/s. 14A r.w. Rule 8D of the Rules. It was explained that no expenditure was incurred on the investments and the AO rejected the same. The AO disallowed total disallowance under Rule 8D(2) to an extent of Rs.22,82,208/-. The CIT(A) deleted the disallowance made by the AO under Rule 8D(2)(i) & (ii) and confirmed the disallowance under Rule 8D(2)(iii) of the Rules. 7. Before us, the ld. AR placed on record the order of this Tribunal in assessee’s own case for A.Y. 2014-15. On perusal of the same, we find the 3 ITA Nos. 73 & 74/PAN/2020, A.Ys. 2013-14 & 2016-17 same is not applicable to the facts on hand, wherein, the present case AO rejected the contention of the assessee incurring no expenditure in earning exempt income. It is settled principle that the disallowance of expenditure should be relating to those investments which yielded exempt income. As noted above, the AO agitated methodology under Rule 8D(2)(iii) taking into consideration average investments and therefore, we deem it proper to remand the issue to the file of AO for its fresh consideration for making disallowance of expenditure taking into consideration those investments which yielded exempt income. The assessee is liberty to file evidences, if any, in support of its claim. Thus, the grounds raised by the assessee are allowed for statistical purpose. 8. In the result, the appeal of assessee is allowed for statistical purpose. ITA No. 74/PAN/2020, A.Y. 2016-17. 9. We find that this appeal was filed with a delay of 85 days. After hearing both the parties, we condone the said delay. 10. We find that the facts in ITA No. 74/PAN/2020 are identical to ITA No. 73/PAN/2020, except the variance in amount. Since, the facts in ITA No. 74/PAN/2020 are similar to ITA No. 73/PAN/2020, the findings given by us while deciding the appeal of assessee in ITA No. 73/PAN/2020 would mutatis mutandis apply to ITA No. 74/PAN/2020, as well. Accordingly, the appeal of assessee is allowed for statistical purpose. 4 ITA Nos. 73 & 74/PAN/2020, A.Ys. 2013-14 & 2016-17 11. To sum up, both the appeals of assessee are allowed for statistical purpose. Order pronounced in the open court on 20 th September, 2023. Sd/- Sd/- (R.S. Syal) (S.S. Viswanethra Ravi) VICE PRESIDENT JUDICIAL MEMBER पुणे / Pune; ददिांक / Dated : 20 th September, 2023. रधव आदेश की प्रधतधलधप अग्रेधर्त / Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The CIT(A)-1, Panaji. 4. The Pr. CIT, Panaji. 5. धवभागीय प्रधतधिधि, आयकर अपीलीय अधिकरण, पणजी, / DR, ITAT, Panaji. 6. गार्ा फ़ाइल / Guard File. //सत्याधपत प्रधत// True Copy// आदेशािुसार / BY ORDER, वररष्ठ धिजी सधिव / Sr. Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune