9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (8) TMI 1485 - AT - Income TaxDisallowance u/s. 14A r.w. Rule 8D(2)(iii) - contention of the assessee is that the disallowance u/s. 14A cannot be made beyond the expenditure debited to P & L account in relation to earning of exempt income - Held that - The total indirect expenditure debited by the assessee to P & L account is to the tune of ₹ 25,78,927/-. The claim of the assessee is expenditure to the tune of ₹ 22,43,620/- is not in relation to earning of exempt income. The expenditure that may be considered for making disallowance u/s. 14A is ₹ 3,35,307/- (Rs.25,78,927/- - ₹ 22,43,620/-). We observe that the assessee had furnished the details of indirect expenditure before the Commissioner of Income Tax (Appeals), however, the Commissioner of Income Tax (Appeals) has not considered the submissions of the assessee on this aspect. We find that in the case of Gillette Group India (P.) Ltd. Vs. Assistant Commissioner of Income Tax 2012 (6) TMI 406 - ITAT DELHI has restricted the disallowance u/s. 14A to the extent of expenditure debited to P & L account. Similar view has been taken in the case of Income Tax Officer Vs. Pioneer Radio Training Services Pvt. Ltd. 2015 (1) TMI 964 - ITAT DELHI and in the case of M/s. Search Enviro Ltd. Vs. ACIT 2012 (3) TMI 509 - ITAT MUMBAI - in principle we agree with the proposition mooted by the ld. AR - the indirect expenditure referred to by the ld. AR needs verification. Accordingly, we deem it appropriate to remit this issue back to the file of Assessing Officer to examine the expenditure relatable to earning exempt income and thereafter made disallowance u/s. 14A accordingly - Decided in favour of assessee for statistical purpose.
Issues:
Disallowance under section 14A of the Income Tax Act r.w. Rule 8D(2)(iii) for the assessment year 2010-11. Analysis: The appeal before the Appellate Tribunal ITAT Pune concerned the disallowance of ?10,92,618 under section 14A of the Income Tax Act r.w. Rule 8D(2)(iii) for the assessment year 2010-11. The assessee, a partnership firm engaged in real estate development business, challenged the disallowance made by the Assessing Officer before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) deleted the disallowance made under Rule 8D(2)(ii) but confirmed the disallowance of ?10,92,618 under Rule 8D(2)(iii). The assessee argued that the disallowance cannot exceed the actual expenditure incurred for earning exempt income, pointing out that a significant portion of the indirect expenditure debited to the Profit & Loss Account was unrelated to earning exempt income. The assessee relied on various judgments to support their position. The Department, represented by Shri Aseem Sharma, defended the order of the Commissioner of Income Tax (Appeals) and sought the dismissal of the appeal. After hearing both sides and examining the submissions and orders, the Tribunal observed that the only issue in the appeal was the confirmation of the disallowance of ?10,92,618 under section 14A r.w. Rule 8D(2)(iii). The assessee contended that the disallowance should be limited to the expenditure debited to the Profit & Loss account related to earning exempt income. The Tribunal noted that the Commissioner of Income Tax (Appeals) did not consider the submissions regarding the indirect expenditure provided by the assessee. Referring to relevant case law, including Gillette Group India (P.) Ltd. Vs. Assistant Commissioner of Income Tax, the Tribunal agreed in principle with the assessee's contention. However, the Tribunal found the need for verification of the indirect expenditure highlighted by the assessee. Therefore, the Tribunal remitted the issue back to the Assessing Officer for further examination and directed to make the disallowance under section 14A in accordance with the decisions cited. The appeal of the assessee was allowed for statistical purposes. In conclusion, the Appellate Tribunal ITAT Pune allowed the appeal of the assessee for statistical purposes, remitting the issue of disallowance under section 14A r.w. Rule 8D(2)(iii) back to the Assessing Officer for verification and appropriate action in line with relevant legal precedents.
|
