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2019 (5) TMI 94 - AT - Income TaxAddition made on account of interest accrued on outstanding debt - HELD THAT - CIT(A) had also deleted the addition by placing reliance on the Co-ordinate bench decision of this Tribunal in assessee s own case for the earlier years and hence, we find no infirmity in the order of the CIT(A). Accordingly, ground Nos. 1 2 raised by the revenue for both the years are dismissed. Addition made on account of disallowance u/s.14A r.w.r. 8D - HELD THAT - We find that this issue has already been dealt by this Tribunal in assessee s own case 2016 (12) TMI 1771 - ITAT MUMBAI wherein, it was held that amount already disallowed by the assessee is fair and reasonable and the AO without recording any satisfaction as to why the disallowance made by the assessee is incorrect cannot automatically proceed to make disallowance by applying the computation mechanism under rule 8D(2) of the rules. Respectfully following the same, we find no infirmity in the order of CIT(A).
Issues involved:
1. Addition of interest accrued on outstanding debt. 2. Deletion of disallowance under section 14A of the Income Tax Act. Issue 1: Addition of interest accrued on outstanding debt The appeal addressed whether the Commissioner of Income Tax (Appeals) was justified in deleting the addition made on account of interest accrued on outstanding debt. The Tribunal referred to previous decisions in the assessee's favor, highlighting that the issue was covered by earlier judgments. The Tribunal emphasized the legal interpretation of the right to recover interest income during the pendency of a suit, citing relevant sections of the Civil Procedure Code. The Tribunal also considered the decision of the Jurisdictional High Court and the reasoning of the CIT (A) before concluding that the deletion of the addition was fair and reasonable. Consequently, the Tribunal upheld the order of the CIT (A) and dismissed the grounds raised by the revenue for both assessment years. Issue 2: Deletion of disallowance under section 14A of the Income Tax Act The second issue revolved around the deletion of the addition made on account of disallowance under section 14A of the Income Tax Act read with rule 8D of the rules. The assessee had claimed exempt dividend income and voluntarily disallowed a certain amount under section 14A. However, the Assessing Officer disagreed with the disallowance and invoked the computation mechanism under rule 8D(2), resulting in a higher disallowance. The Commissioner of Income Tax (Appeals) relied on a previous Tribunal decision in the assessee's case to delete the disallowance made by the Assessing Officer. The Tribunal, following the same reasoning, found the disallowance made by the Assessing Officer to be incorrect without proper justification. Consequently, the Tribunal upheld the order of the CIT (A) and dismissed the revenue's appeal for both assessment years. In conclusion, the Appellate Tribunal ITAT Mumbai, in the cited judgment, addressed two main issues related to the addition of interest accrued on outstanding debt and the deletion of disallowance under section 14A of the Income Tax Act. The Tribunal extensively analyzed legal interpretations, previous decisions, and relevant provisions of the law to arrive at its conclusions. The judgment emphasized consistency with earlier rulings and upheld the decisions of the Commissioner of Income Tax (Appeals) in both matters, ultimately dismissing the appeals of the revenue for the respective assessment years.
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