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2023 (3) TMI 1197 - HC - Income TaxDisallowance u/s 14A - Whether or not the calculation of disallowable expenses made by the respondent/assessee, on its own, u/s 14A as correct? - assessee had earned dividend income which was excluded from total income in terms of Section 10(34) - Tribunal has accepted the method of calculation put forth by assessee, and observed that the method adopted in the AY in issue, was also followed, as well as accepted by the appellant/revenue, in other assessment years - HELD THAT - Tribunal invoked the rule of consistency as enunciated by the Supreme Court in Radha Soami Satsang v Commissioner of Income Tax 1991 (11) TMI 2 - SUPREME COURT and, thus, dismissed the appeal of the revenue. Assessee had also filed cross-appeal against the order of CIT (Appeals) to the extent that he had upheld the disallowance of amount equivalent to Rs 1.97 crores on account of administrative personal expenses. Tribunal via impugned order dismissed the appeal of the respondent/assessee. As pertinent to note that the appellant/revenue took recourse to provisions of Rule 8D of the Income Tax Rules, 1962 to support its plea that the disallowance had to be calculated through different methodology. Tribunal held that the said rule was applicable only from AY 2008-09. Revenue, does not dispute this aspect of the matter, in view of the judgment rendered by the Supreme Court in Commissioner of Income Tax 5 Mumbai Vs. Essar Teleholdings Ltd. 2018 (2) TMI 115 - SUPREME COURT We are not inclined to interfere with the impugned order, as according to us, no substantial question of law arises for consideration.
Issues:
1. Condonation of delay in re-filing the appeal. 2. Correctness of disallowable expenses calculation under Section 14A of the Income Tax Act, 1961. Condonation of Delay: An application was filed seeking condonation of a 416-day delay in re-filing the appeal. The respondent had no objection to the delay being condoned, and the court accordingly disposed of the application. Correctness of Disallowable Expenses Calculation under Section 14A: The appeal was against the Income Tax Appellate Tribunal's order concerning Assessment Year 2006-07. The main issue was whether the respondent's calculation of disallowable expenses under Section 14A of the Act was correct. The respondent had excluded dividend income of Rs. 86,88,44,673 from total income under Section 10(34) and calculated disallowance under Section 14A at Rs. 55,59,79,000. This calculation included Rs. 55,37,89,473 for interest expenses and Rs. 21,89,527 for administrative expenses based on estimation. The Tribunal accepted this calculation method, citing consistency with previous years and invoking the rule in Radha Soami Satsang v Commissioner of Income Tax. The Tribunal also dismissed the respondent's cross-appeal regarding the disallowance of administrative personal expenses amounting to Rs. 1.97 crores. Rule 8D Applicability: The appellant/revenue argued for the application of Rule 8D of the Income Tax Rules, 1962, for calculating disallowance. However, the Tribunal held that this rule was applicable only from Assessment Year 2008-09. Mr. Zoheb Hossain, representing the appellant/revenue, did not contest this decision, referring to the Supreme Court judgment in Commissioner of Income Tax 5 Mumbai Vs. Essar Teleholdings Ltd. Consequently, the court found no substantial question of law to consider and dismissed the appeal. In conclusion, the High Court of Delhi addressed the issues of delay condonation and the correctness of disallowable expenses calculation under Section 14A of the Income Tax Act, 1961. The court granted condonation of delay, upheld the Tribunal's decision on the calculation method, and dismissed the appeal based on the inapplicability of Rule 8D for the relevant assessment year.
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