2018 (10) TMI 1694 - AT - Income Tax

Disallowance u/s 14A r.w.r. 8D - addition offered suo motu by the assessee - HELD THAT - AO has not shown any dissatisfaction with the disallowance under section 14A r.w.r. 8D offered suo motu by the assessee. Learned Departmental Representative has not disputed this factual aspect. In view of these discussions the impugned disallowance under section 14A r.w.r. 8D as challenged in appeal before us stands deleted. In the result appeal of the assessee is allowed. DR fairly accepts that if the appeal of the assessee on this issue i.e. 14A disallowance is to be allowed the grievance raised by the revenue will be rendered infructuous. As the appeal of the assessee on this issue is allowed the appeal of the revenue on this issue is indeed rendered infructuous.

Summary

Issues Involved:
Challenge to correctness of the order dated 20th January 2016 passed by CIT (A) for assessment under section 143(3) of the Income Tax Act, 1961, for the assessment year 2010-11. Adjudication on whether Assessing Officer can invoke rule 8D r.w.s. 14A without recording dissatisfaction with the suo motu disallowance offered by the assessee.

Analysis:

1. The appeal was filed challenging the order passed by the CIT (A) for the assessment year 2010-11 under section 143(3) of the Income Tax Act, 1961. The primary issue highlighted during the hearing was whether the Assessing Officer could invoke rule 8D r.w.s. 14A without expressing any dissatisfaction with the disallowance offered by the assessee under section 14A. The assessee's counsel pointed out that a similar issue had been decided in the assessee's favor by a co-ordinate bench in the previous assessment year, and a copy of that decision was submitted for reference.

2. The Departmental Representative did not contest the submissions made by the assessee's counsel but relied on the lower authorities' stance. The Tribunal, after considering the facts and the precedent set in the assessee's previous case, concluded that they saw no reason to deviate from the earlier decision. Consequently, the Tribunal decided to delete the disallowance of &8377;1,58,31,847/- under section 14A r.w.r. 8D. It was noted that the Assessing Officer had not expressed any dissatisfaction with the disallowance made by the assessee under section 14A r.w.r. 8D, a fact that was undisputed by the Departmental Representative.

3. As a result of the Tribunal's decision to allow the assessee's appeal, the Departmental Representative acknowledged that the revenue's grievance would become irrelevant if the assessee's appeal on the 14A disallowance issue was upheld. Therefore, the revenue's appeal on this matter was deemed infructuous and subsequently dismissed. In summary, the Tribunal allowed the assessee's appeal and dismissed the revenue's appeal, pronouncing the judgment on October 17, 2018.