2020 (2) TMI 1695 - AT - Income Tax

Disallowance u/s 14A r.w.r 8D(2)(i) and (2) - Calculation of levy of interest u/s 234A and 234B of the Act in respect of self assessment tax paid u/s 140A - HELD THAT - We direct the Assessing Officer to comply with the directions of Tribunal in group cases of assessee 2019 (4) TMI 214 - ITAT PUNE and decide the same. AO shall give reasonable opportunity of hearing to the assessee while deciding the issues. Thus, the grounds raised by the assessee are partly allowed as above.

Summary

Issues involved:
1. Disallowance under section 14A of the Income Tax Act, 1961 read with Rule 8D(2)(iii) of the Income-tax Rules, 1962.
2. Calculation of interest under section 234A and 234B of the Act in respect of self-assessment tax paid under section 140A of the Act.

Issue 1: Disallowance under section 14A of the Income Tax Act, 1961 read with Rule 8D(2)(iii) of the Income-tax Rules, 1962:
The assessee, engaged in Real Estate Development and Construction, filed a return declaring total income for the Assessment Year 2013-14. The Assessing Officer made disallowances under section 14A read with Rule 8D(2)(iii) of the Act. The CIT(A) upheld the disallowance. The Tribunal found that the issue was similar to a previous year's case and directed to delete the enhancement of disallowance made by the CIT(A). The disallowance was restricted to common expenses incurred by the assessee. The Tribunal partially decided this issue in favor of the assessee based on previous decisions.

Issue 2: Calculation of interest under section 234A and 234B of the Act in respect of self-assessment tax paid under section 140A of the Act:
The assessee filed the return beyond the due date under section 139(1) of the Act. The AO determined interest under section 234A. The CIT(A) directed the AO to follow a CBDT Circular. The Tribunal observed that the dispute was regarding the calculation of interest, not the duration for which interest is chargeable. Referring to a Supreme Court judgment, the Tribunal held that the amount of self-assessment tax paid before the due date should be reduced from the interest calculation. The Tribunal further clarified that even if self-assessment tax was paid after the due date but before filing the return, it should also be considered for reducing the interest amount. The Tribunal set aside the CIT(A)'s order and remitted the matter to the AO for fresh calculation of interest, considering all self-assessment tax payments. The Tribunal directed the AO to comply with its directions in similar group cases of the assessee.

This judgment addressed the issues of disallowance under section 14A and calculation of interest under sections 234A and 234B. The Tribunal partially allowed the appeal, providing relief to the assessee based on previous decisions and legal principles established by the Supreme Court.