2023 (8) TMI 1442 - AT - Income Tax

Rectification of mistake - computation of Disallowance u/s 14A r.w.s. 8D - contention of the assessee that AO has to confirm the disallowance of administrative expenses u/s14A and dismiss the appeal of the Revenue thereby contending that in earlier Assessment Year i.e. A.Y. 2010-11 the Hon ble High Court 2019 (6) TMI 1006 - GUJARAT HIGH COURT has deleted the disallowance made as observing that in a case where assessee was having sufficient funds available with it, more than amount invested for earning the dividend, the disallowance in respect of interest expenditure u/s 14A r.w.r. 8D of the Rules is not permissible - HELD THAT - From the perusal of 2023 (4) TMI 334 - ITAT AHMEDABAD the contentions of the Ld. AR that no satisfaction was recorded has been taken into account and after taking cognisance of the same, the Tribunal has come to the conclusion that the Assessing Officer has looked into the aspect of element of administrative expenses and directed the Assessing Officer to take 0.5% thereby invoking the said Rule i.e. Rule 8D. The contentions of the AR that current liabilities and provisions should not be reduced from the opening and closing stock of current assets should have been taken into account by the AO. As an impact, simplicitor directing the AO to confirm the disallowance and administrative expenses u/s 14A to the tune of Rs.15 lakhs will not be appropriate in the present Assessment Year and, therefore, the Revenue s appeal has been partly allowed for statistical purpose with direction to the Assessing Officer to take all the element into account as well as administrative expenses which has been incurred by the assessee should be taken into account while allowing the same in the actual amount of administrative expenses and not on the superficial basis. At the time of hearing, the Ld. AR relied upon the decision of Saurashtra Kutch Stock Exchange Limited 2008 (9) TMI 11 - SUPREME COURT but in the present case the same it will not be applicable as the earlier decisions of Hon ble High Court in Assessee s own case has been considered and each assessment year has to be looked independently on factual aspects especially expenses and interest earned. Therefore, there is no need to interfere with the order and there is no need to rectify the same. Decided against assessee.

Summary

Issues involved:
The issues involved in this case pertain to the disallowance of interest and administrative expenses under Section 14A read with Rule 8D, as well as the proper consideration of current liabilities and provisions in relation to the opening and closing stock of current assets.

Dispute over disallowance of administrative expenses:
The assessee filed three Miscellaneous Applications regarding the order passed by the Tribunal, specifically challenging the disallowance of administrative expenses under Section 14A. The Ld. AR argued that the disallowance should be limited to Rs.15,00,000 based on previous rulings, and requested the Tribunal to confirm this disallowance and dismiss the Revenue's appeal. The Ld. DR opposed this review, stating that the assessee's request for a review should not be entertained.

Consideration of relevant material:
After hearing both parties, the Tribunal considered the arguments presented. The Ld. AR contended that the Assessing Officer should confirm the disallowance of administrative expenses to the tune of Rs.15,00,000 based on past judgments. The Tribunal acknowledged the Ld. AR's argument regarding the lack of recorded satisfaction but concluded that the Assessing Officer had indeed considered the element of administrative expenses. The Tribunal partially allowed the Revenue's appeal for statistical purposes, directing the Assessing Officer to consider all elements and actual administrative expenses incurred by the assessee.

Judgment and dismissal of Miscellaneous Applications:
The Tribunal dismissed all three Miscellaneous Applications filed by the assessee for Assessment Year 2011-12. The Tribunal upheld the decision regarding the disallowance of administrative expenses and directed the Assessing Officer to consider all relevant elements and actual expenses incurred by the assessee. The Tribunal emphasized the need to assess each year independently based on factual aspects, leading to the dismissal of the Miscellaneous Applications.

Conclusion:
The Tribunal's decision upheld the partial allowance of the Revenue's appeal for statistical purposes, emphasizing the importance of considering all relevant elements and actual expenses incurred by the assessee. The dismissal of the Miscellaneous Applications indicated the Tribunal's adherence to independent assessment of each year based on factual aspects.