2019 (12) TMI 1567 - AT - Income Tax

Disallowance u/s.14A - disallowance as liable to be restricted to the exempt income - HELD THAT - As it is noticed, the assessee has not filed an appeal against the confirmation of the disallowance u/s.14A and as the Revenue has not been able to point out any error in the order of the learned CIT(A) in restricting the disallowance u/s.14A being 0.5% of the average value of the investment, the order of the CIT(A) on the issue stands confirmed. Appeal of the Revenue is dismissed.

Summary

Issues: Appeal against reduction of disallowance u/s.14A from ?7.39 Crores to ?39,70,832 for Assessment Year 2013-14.

Analysis:
1. The appeal was filed by the Revenue against the order of the Commissioner of Income Tax (Appeals) reducing the disallowance u/s.14A from ?7.39 Crores to ?39,70,832 for the Assessment Year 2013-14.

2. Ms. R. Anita, JCIT represented the Revenue, while Mr. R. Vijayaraghavan, Advocate represented the Assessee during the proceedings.

3. The Departmental Representative supported the order of the Assessing Officer, while the Authorized Representative argued that the actual exempt income earned by the assessee was only ?1,12,921. Reference was made to the decision of the Delhi High Court in the case of Joint Investment Private Limited Vs. Commissioner of Income Tax, upheld by the Supreme Court in the case of ABCAUS, to support the contention that the disallowance should be restricted to the exempt income.

4. After considering the submissions and examining the record, it was noted that the assessee did not file an appeal against the disallowance of ?39,70,832. The Revenue failed to identify any error in the order of the Commissioner of Income Tax (Appeals) in limiting the disallowance u/s.14A to ?39,70,832, which was 0.5% of the average value of the investment. Consequently, the order of the Commissioner of Income Tax (Appeals) was upheld, and the appeal of the Revenue was dismissed.

5. The judgment was pronounced in open Court on 4th December 2019 in Chennai.