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2013 (7) TMI 312 - AT - Income TaxDisallowance u/s 14A r.w.r. 8D - additional ground taken before the CIT(A) against disallowance - Held that - It is not disputed that the assessee had filed the appeal well within the prescribed time. The assessee had only raised an additional ground, that too, within the disclaimer ground, which says, Your Petitioner craves leave to add, alter, amend and/or withdraw any or all the above grounds of appeal . In this ground, the assessee has already sought the permission of the CIT(A) to add any ground. The issue is now squarely covered by the decision CIT vs Pruthvi Brokers and Shareholders P. Ltd. (2012 (7) TMI 158 - BOMBAY HIGH COURT) wherein held assessee is entitled to raise not merely additional legal submissions before the appellate authorities but is also entitled to raise additional claims before them, therefore, admit the additional ground and restore the issue to the file of the AO, who shall adjudicate on the issue afresh. In favour of assessee.
Issues:
Admission of additional ground of appeal u/s 14A read with Rule 8D - Whether the CIT(A) erred in not admitting the additional ground of appeal raised before him. Analysis: The appeal was filed by the assessee against the order of CIT(A) 3, Mumbai, challenging the disallowance u/s 14A read with Rule 8D of the Income Tax Act, 1961. The assessee contended that the additional grounds of appeal should have been admitted by the CIT(A) as they were well within the time limit and no new evidence was furnished. The AO computed a disallowance of Rs. 4,61,869/- under Rule 8D due to interest paid on loans for investments in shares. The CIT(A) rejected the additional ground as not admitted, citing the decision in Jute Corp. of India Ltd. vs. CIT, emphasizing that additional grounds must be bona fide and could not have been raised earlier for good reason. Certain other additions were also made against the assessee, who filed an appeal before the CIT(A). During the appeal proceedings, the assessee submitted additional grounds against the disallowance u/s 14A. The CIT(A) sought comments from the AO, who stated that the additional ground was a delay in filing and should be decided under Rule 46A. The CIT(A) relied on the Jute Corp. case and rejected the additional ground as not admitted, leading to the assessee appealing to the ITAT. Before the ITAT, the assessee argued that the additional ground was raised during the appeal and was part of the assessment order. Citing a Bombay High Court case, the assessee claimed the right to raise additional claims before appellate authorities. The ITAT considered the arguments and the grounds raised, noting that the issue was within the assessment order and the assessee had filed the appeal within the prescribed time. Relying on the Bombay High Court case, the ITAT admitted the additional ground and directed the AO to adjudicate on the issue afresh. In conclusion, the ITAT allowed the appeal filed by the assessee, admitting the additional ground for further consideration by the AO.
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