M/S. Ahiliabai Sardessai, , Panaji V. Income Tax Officer, Ward 2(4), Panaji

ITA 8/PAN/2021

AI Insights

The case involves an appeal by M/s. Ahiliabai Sardessai against the order of the National Faceless Appeal Centre (NFAC), which confirmed the disallowance made under section 14A read with Rule 8D(2)(iii) of the Income Tax Rules, 1962, during the assessment year 2014-15. The appellant, a partnership firm engaged in mining, had filed a return declaring a loss, which was revised. The Assessing Officer made additions to the loss declared, which were contested by the appellant. The Tribunal's decision to allow the appeal was based on the absence of any incurred expenditure to earn exempt income, aligning with a previous decision in the appellant's favor for a different assessment year.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136955 (ITAT-PANAJI)
• Duration Of Justice: 2 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 13-06-2021
• Other Referred Cases: ITA No.450/PAN/2018
• 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: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI – VIRTUAL COURT BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER आयकर अपील सं. / ITA No.08/PAN/2021 िनधाᭅरण वषᭅ / Assessment Year : 2014-15 M/s. Ahiliabai Sardessai, 301, Lotus Court, M. G. Road, St. Inez Junction, Panaji- 403001. PAN : AAGFA9044G Vs. ITO, Ward-2(4), Panaji. Appellant Respondent आदेश / ORDER PER INTURI RAMA RAO, AM: This is an appeal filed by the assessee directed against the order of the National Faceless Appeal Centre, Delhi [‘NFAC’] dated 26.03.2021 for the assessment year 2014-15. 2. Briefly, the facts of the case are that the appellant is a partnership firm engaged in the business of mining. The Return of Income for the assessment year 2014-15 was filed on 30.09.2014 declaring a loss of Rs.4,92,14,101/- and the same was revised at loss Assessee by : Shri N. J. Prabhudesai Revenue by : Shri N. Shrikanth Date of hearing : 17.08.2023 Date of pronouncement : 29.08.2023 ITA No.08/PAN/2021 2 of Rs.6,47,68,218/-. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward-2(4), Panaji-Goa (‘the Assessing Officer’) vide order dated 29.12.2016 passed u/s 143(3) of the Income Tax Act, 1961 (‘the Act’) at a total loss of Rs.5,83,57,432/-. While doing so, the Assessing Officer made addition of Rs.15,65,088/- u/s14A and Rs.48,45,698/- u/s 41(1) of the Act. 3. Being aggrieved by the above additions, an appeal was filed before the NFAC, who vide impugned order, confirmed the disallowance u/s 14A r.w. Rule 8D(2)(iii) of the Income Tax Rules, 1962 (‘the Rules’) and deleted the addition u/s 14A r.w. Rule 8D(2)(ii). The ld. CIT(A) also deleted the addition on account of sundry creditors of Rs.48,45,698/-. 4. Being aggrieved by the disallowance u/s 14A r.w. Rule 8(D)(2)(iii), the appellant is in appeal before us in the present appeal. 5. Before us, it is contended that the appellant had not incurred any expenditure to earn the exempt income and, therefore, the question of disallowance u/s 14A r.w. Rule 8(D)(2)(iii) does not ITA No.08/PAN/2021 3 arise. He also placed reliance on the decision of the Co-ordinate Bench of the Tribunal in assessee’s own case for the assessment year 2015-16 vide ITA No.450/PAN/2018 dated 30.08.2022, wherein, the Co-ordinate Bench of the Tribunal deleted the addition. 6. On the other hand, ld. Sr. DR placing reliance on the orders of the lower authorities submits that the addition should be sustained. 7. We heard the rival submissions and perused the material on record. The issue in the present appeal relates to the quantum of disallowance u/s 14A r.w. Rule 8D(2)(iii). The appellant took a consistent view that no expenditure was incurred to earn the exempt income. The lower authorities rejected the contention of the appellant by noting that the quantum of higher magnitude involvement cannot be made without a proper analysis of market conditions, which requires the expertise and, therefore, rejected the contention of the appellant that no expenditure was incurred and computed the quantum of amount of disallowance in accordance with the provisions of Rule 8D(2)(iii) of the Rules. From perusal of the findings of the lower authorities, it would be clear that the rejection of the contention of the appellant that no expenditure was ITA No.08/PAN/2021 4 incurred to earn the exempt income is not based on the satisfaction reached having regard to the books of account. Therefore, rejection of the contention of the appellant is not tenable in the eyes of law. Respectfully, following the decision of the Co-ordinate Bench of the Tribunal in assessee’s own case (supra), we direct the Assessing Officer to delete the addition u/s 14A r.w. Rule 8D(2)(iii). Thus, the grounds of appeal filed by the assessee stand allowed. 8. In the result, the appeal filed by the assessee stands allowed. Order pronounced on this 29 th day of August, 2023. Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 29 th August, 2023. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The Pr. CIT concerned. 4. DR, ITAT, Panaji. 5. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.