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2021 (12) TMI 1378 - AT - Income TaxDisallowance u/s 14A r.w.r 8D - CIT-A restricted disallowing to exempt income earned by the assessee - HELD THAT - We find that the total exempt income earned by the assessee during the year was Rs.382/-. Ld. AO noted that assessee has huge investments mainly on unquoted strategic investments in subsidiary companies and proceeded to make a disallowance u/s 14A at Rs.21, 15, 14, 527/- u/s 14A of the Act read with Rule 8D(2) of the Income-tax Rules 1962. CIT (A) referring to the judgments of Hon ble Delhi High Court in case of Cheminvest Limited 2015 (9) TMI 238 - DELHI HIGH COURT and CIT vs. Holcim India Pvt. Ltd. 2014 (9) TMI 434 - DELHI HIGH COURT held that disallowance u/s 14A cannot exceed the exempt income. The aforesaid finding of the ld. CIT (A) is in accordance with law as propounded by the Hon ble Delhi High Court. So we do not find any infirmity in the findings returned by the ld. CIT (A) and the same is accordingly upheld. Consequently the appeal filed by the Revenue is hereby dismissed.
Issues involved:
Restriction of disallowance under section 14A of the Income-tax Act, 1961. Analysis: The appeal was filed by the Revenue against the order passed by the ld. CIT (A) for the assessment year 2015-16. The only issue raised by the Revenue was regarding the disallowance under section 14A of the Act. The ld. CIT (A) had restricted the disallowance from Rs. 21,15,14,527 to Rs. 382, which was the exempt income earned by the assessee during the year. The ld. AO had observed that the assessee had significant investments, particularly in unquoted strategic investments in subsidiary companies, and thus made a disallowance under section 14A at Rs. 21,15,14,527. However, the ld. CIT (A) referred to judgments of the Hon'ble Delhi High Court in specific cases and held that the disallowance under section 14A cannot exceed the exempt income earned. The ld. CIT (A)'s decision was in line with the legal principles established by the Hon'ble Delhi High Court. Therefore, the Tribunal found no fault in the ld. CIT (A)'s findings and upheld the decision. Consequently, the appeal filed by the Revenue was dismissed. The order was pronounced on December 8, 2021, after the conclusion of the hearing.
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