2021 (8) TMI 65 - AT - Income Tax

Disallowance u/s 14A - AO was of the opinion that to earn exempt income, the assessee must have incurred some expenditure and accordingly, computed the disallowance u/s 14A of the Act r.w.r 8D - HELD THAT - As decided in own case 2017 (11) TMI 1545 - ITAT DELHI AO has not even identified any specific item of expense he merely says that explanation of assessee is not correct as huge investment is made - There is no satisfaction of terms of s. 14A read with Rule 8 D. Copy of order for AY 08-09 is also placed as per which no disallowance u/s 14A was made, hence assessee is right in submitting that disallowance is also against the principle of consistency in the absence of any facts. - Decided in favour of assessee.

Summary

Issues:
Condonation of delay in filing appeals, Disallowance u/s 14A of the Income Tax Act.

Condonation of Delay:
The appeals were filed after the period of limitation and were barred by limitation. The assessee sought condonation of delay, explaining that the appeal papers were misplaced due to office renovation work. Affidavits were filed to support this claim. The assessee argued that there was no malafide intention to circumvent the law. The Revenue opposed the condonation, alleging intentional delay. The Tribunal found that the appeals were covered by an earlier order and that there was no malafide intention. Emphasizing that technicalities should not impede justice, the Tribunal condoned the delay.

Disallowance u/s 14A:
The issue pertained to disallowance made under section 14A of the Income Tax Act regarding exempt income earned by the assessee. The Assessing Officer computed disallowances for A.Ys 2011-12 and 2012-13 based on dividends received. The assessee contended that there was no direct expenditure attributable to the exempt income, citing a previous decision in their favor. Referring to the past history and a co-ordinate bench's findings, the Tribunal noted that no specific expenditure related to exempt income was identified. The Tribunal cited various legal precedents and held that there was no satisfaction under section 14A read with Rule 8D. Consequently, the disallowance was deleted, following the co-ordinate bench's decision. As no distinguishing decision was presented, the Tribunal directed the Assessing Officer to delete the disallowance.

This judgment from the Appellate Tribunal ITAT Delhi addressed issues concerning the condonation of delay in filing appeals and the disallowance under section 14A of the Income Tax Act. The Tribunal, after considering the circumstances, condoned the delay in filing the appeals. Regarding the disallowance under section 14A, the Tribunal found that there was no direct expenditure attributable to the exempt income and relied on past decisions to rule in favor of the assessee. Citing legal precedents, the Tribunal held that there was no satisfaction under section 14A read with Rule 8D, leading to the deletion of the disallowance. The judgment emphasized the importance of justice over technicalities and upheld the appeals of the assessee.