9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (11) TMI 862 - AT - Income TaxDisallowance u/s 14A r.w.r. 8D - assessee has not shown suo moto disallowance for earning exempt income - HELD THAT - As assessee has given complete details of expenses incurred by assessee for earning taxable income. The total turnover of the assessee for the year under consideration is Rs. 127.39 crore and total administrative expenses is Rs. 79.58 lakhs only. Surprisingly, the AO determined the disallowance u/s 14A of Rs. 2.70 crore, which is not in consonance with the proviso attached with Rule 8D(2). The disallowance of section 14A cannot swallow the entire expenses administrative or otherwise which were incurred for earning taxable income. AR in his submission categorically contended that total administrative expenses claimed by the assessee apart from disallowance related to exempt income is only 0.62% of their total turnover. Assessee while referring such administrative expenses submitted that the director s remunerations claimed during the year is only Rs. 18.00 lakhs and some percentage of directors remuneration/salary may be disallowed. We find merit in such submission of ld. AR of the assessee, therefore, we direct that apart from suo moto disallowance being 1.00 % of dividend income, direct expenses and 25% of director s remuneration would be sufficient to meet the end of justice, so far is disallowance under Rule 8D is concern. AO is directed accordingly. In view of the aforesaid factual and legal discussion, the ground no.1 and 2 of appeal are partly allowed. Disallowance u/s 80G for the want of registration certificate - HELD THAT - Before ld. CIT(A), the assessee filed copy of receipt of donations as well as receipt of donation to both the trusts containing registration under section 80G along with their PAN. We find that copy of certificate under section 80G of both the trusts is placed on record along with the copy of receipt to both the trusts. We further find that the assessee claimed 50% deduction of donation to such trusts. CIT(A) on his satisfaction granted deduction under section 80G on verification of facts. In our view, the order of ld. CIT(A) is based on verification of facts, which does not require interference at out end. Decided against revenue.
Issues Involved:
1. Disallowance under Section 14A of the Income Tax Act. 2. Disallowance under Section 80G of the Income Tax Act. Summary: Issue 1: Disallowance under Section 14A These appeals by the Revenue challenge the deletion of disallowance under Section 14A for AY 2017-18 and 2018-19. The Revenue contends that the assessee did not furnish details of expenses incurred for earning exempt income and did not make disallowance under Section 14A in the original or revised return. The Assessing Officer (AO) noted that the assessee earned exempt income aggregating Rs. 68.45 crore but only disallowed Rs. 4,59,140/- in the revised computation. The AO issued a show-cause notice and subsequently made a disallowance of Rs. 2.70 crore under Section 14A by invoking Rule 8D. The CIT(A) deleted the disallowance, relying on the assessee's own case for earlier years and the decision of the jurisdictional High Court in PCIT vs. Sintex Industries Ltd. The CIT(A) found that the assessee had sufficient interest-free funds and had already disallowed 1% of the dividend income and direct expenses. The Tribunal held that the AO did not objectively satisfy the requirements of Section 14A and that the assessee had provided detailed bifurcation of expenses related to exempt income. The Tribunal directed a total disallowance of Rs. 25,17,090/- for AY 2018-19 and Rs. 13,39,559/- for AY 2017-18, including 25% of the director's remuneration. Issue 2: Disallowance under Section 80GThe AO disallowed Rs. 39,75,000/- for AY 2018-19 due to the absence of 80G certificates for donations made to certain trusts. The CIT(A) allowed relief of Rs. 6,75,000/-, accepting the receipts containing the registration details under Section 80G. The Tribunal upheld the CIT(A)'s decision, verifying that the registration certificates were submitted during the appellate stage and that the CIT(A)'s order was based on factual verification. Conclusion:The Tribunal partly allowed the Revenue's appeals for both AY 2017-18 and 2018-19, modifying the disallowance under Section 14A but upholding the CIT(A)'s decision on the disallowance under Section 80G. Order pronounced on 20/11/2023 in the open court.
|
