2019 (6) TMI 151 - HC - Income Tax

Disallowance u/s 14A read with Rule 8D - alleged that investments in various equity funds and shares of different companies was made indirectly from the loan funds - HELD THAT - Similar issue decided in Principal Commissioner of Income Tax-I, Chandigarh v. M/s Vardhman Chemtech Private Limited, Chandigarh 2018 (10) TMI 1037 - PUNJAB AND HARYANA HIGH COURT wherein the appeal filed by the revenue against the deletion of disallowance under Section 14A of the Act read with Rule 8D of the Rules, was dismissed.

Summary

Issues:
- Appeal under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal regarding disallowance under Section 14A read with Rule 8D.

Analysis:
1. The appeal was filed by the revenue challenging the order of the Income Tax Appellate Tribunal (ITA) regarding the disallowance under Section 14A of the Income Tax Act, 1961 read with Rule 8D of the Income Tax Rules, 1962 for the assessment year 2013-14. The Tribunal had deleted the addition made by the Assessing Officer, leading to the present appeal by the revenue.

2. The assessee, engaged in various business activities, had filed its return of income declaring 'nil' income for the assessment year 2013-14. The Assessing Officer, during scrutiny, observed investments in equity funds and shares financed by loans, disallowing an amount under Section 14A read with Rule 8D. The Commissioner of Income Tax (Appeals) allowed the appeal, leading to the revenue's challenge before the Tribunal.

3. The Tribunal, in its order, upheld the decision of the Commissioner of Income Tax (Appeals) and dismissed the revenue's appeal. During the hearing, it was noted that a similar matter had been previously adjudicated by the High Court in a judgment where the appeal filed by the revenue was dismissed concerning the same disallowance under Section 14A read with Rule 8D.

4. Given the precedent set by the previous judgment of the High Court, the present appeal was also dismissed in line with the decision in the earlier case. The court found that the matter was already settled by the previous ruling, leading to the dismissal of the revenue's appeal in this case as well.