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2021 (8) TMI 13 - AT - Income TaxDisallowance u/s 14A - Suo moto disallowance made by assessee - HELD THAT - On the facts as narrated above it is clear that ITAT in assessee's own case for earlier years has restricted the disallowance to the suo moto disallowance made by the assessee. There is no change in the facts and circumstances of the case. No reason whatsoever has been attributed by the assessing officer or CIT(A) as to why the suomoto disallowance by the assessee is not appropriate. CIT(Appeals) has referred to the decision of Supreme Court in Maxopp 2018 (3) TMI 805 - SUPREME COURT for the proposition referred above. From the reference to the honourable Supreme Court by the learned CIT(Appeals), we fail to understand how the same supports the case of the revenue here that without assigning any reason whatsoever as to why the suomoto disallowance proposed by the assessee on the facts of this case is to be rejected. Furthermore by choosing not to follow the ITAT decision in assessee's own case 2015 (11) TMI 1057 - ITAT MUMBAI learned CIT(Appeals) has displayed scant regard to the principle of judicial discipline. For these reasons narrated above the order of learned CIT(Appeals) cannot be sustained. We set aside the order of authorities below and direct that the suomoto disallowance proposed by the assessee in the submissions above - Decided partly in favour of assessee.
Issues: Disallowance under section 14A of the Income Tax Act, 1961
Analysis: 1. Issue: Disallowance under section 14A of the Act. - The appellant, a practicing doctor, earned various incomes including exempt income during the assessment year 2012-13. - The Assessing Officer (AO) disallowed an amount under section 14A of the Act, which the appellant contested. - The appellant argued that expenses debited to the capital account were not claimed in the Income & Expenditure account, and depreciation being an allowance was outside the purview of disallowance under section 14A. - The appellant cited precedents from the Special Bench of the Ahmedabad Tribunal and the Mumbai Tribunal to support their case. - The AO computed the disallowance without specific findings on expenses related to earning exempt income. - The appellant contended that no expenses were incurred to earn dividend income, hence disallowance under section 14A was not warranted. 2. Issue: CIT(A) upheld the disallowance. - The CIT(A) referenced a Supreme Court decision regarding expenditure incurred to earn dividend income. - Despite the appellant's arguments and citing of ITAT decisions in their own case, the CIT(A) confirmed the AO's order. 3. Issue: Appeal before ITAT. - The appellant appealed against the CIT(A)'s decision before the ITAT. - ITAT noted that in the appellant's previous cases, the disallowance was restricted to the suo moto disallowance made by the assessee. - ITAT found no reason provided by the AO or CIT(A) to reject the appellant's suo moto disallowance. - ITAT criticized the CIT(A) for not following the principle of judicial discipline by disregarding the ITAT decision in the appellant's own case. 4. Decision: - ITAT set aside the orders of the authorities below and directed that the appellant's suo moto disallowance of ?1,33,909 should be accepted. - The disallowance under section 14A was restricted to ?1,33,909 based on the ITAT decision in the appellant's own case for earlier years. - The appeal by the assessee was partly allowed, and the decision was pronounced on 12.07.2021.
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