2021 (4) TMI 462 - AT - Income Tax

Disallowance u/s 14A r.w. Rule 8D - direct and administrative expenses - HELD THAT - We notice that as followed the tribunal s order in assessee s case itself for A.Y 2013- 14 2018 (8) TMI 2024 - ITAT HYDERABAD that only exempt income yielding investments deserve to be considered for the purpose of Rule 8D disallowance computation. The Revenue is equally fair in its substantive ground in not pinpointing any distinction on facts or law in these twin assessment years. We thus adopt judicial consistency to affirm CIT (A) s impugned directions. Revenue s formal appeal rising this solitary substantive grievance fails therefore. Addition u/sec 115JB MAT issue qua sec 14A disallowance - HELD THAT - This tribunal s special bench in VIREET INVESTMENT (P.) LTD. 2017 (6) TMI 1124 - ITAT DELHI has decided the issue to assessee s favour. Thus Rule 27 petition is partly allowed to this limited extent.

Summary

Issues involved:
1. Disallowance under section 14A r.w. Rule 8D for AYs 2010-11 & 2014-15.

Analysis:

Issue 1: AY 2010-11 Disallowance under section 14A r.w. Rule 8D:
- The Revenue appealed against the CIT (A)'s decision to restrict the Assessing Officer's disallowance under section 14A r.w. Rule 8D to the extent of investments yielding exempt income.
- The CIT (A) based his decision on judicial precedents stating that only investments yielding exempt income should be considered for disallowance under Rule 8D.
- The Tribunal upheld the CIT (A)'s directions, emphasizing the need for consistency and rejecting the Revenue's appeal.
- The Tribunal found no distinction in facts or law for the AYs in question and affirmed the CIT (A)'s decision, leading to the dismissal of the Revenue's appeal.

Issue 2: AY 2014-15 Disallowance under section 14A r.w. Rule 8D:
- The Revenue sought to challenge the CIT (A)'s decision to restrict the disallowance under section 14A r.w. Rule 8D to investments yielding exempt income only.
- The CIT (A) directed the Assessing Officer to recalculate the disallowance based on investments yielding exempt income, in line with judicial precedents.
- The Tribunal considered the appellant's Rule 27 petition, which sought to restrict the disallowance to the amount of exempt income earned during the year.
- The Tribunal partially allowed the Rule 27 petition, aligning with previous decisions and rejecting the Revenue's appeal against the CIT (A)'s directions.
- The Tribunal referred to a special bench decision supporting the appellant's position on the MAT issue related to section 14A disallowance.

In conclusion, the Tribunal dismissed the Revenue's appeals for both AYs 2010-11 and 2014-15, while partially allowing the appellant's Rule 27 petition in the latter case. The decisions were based on the consistent application of legal principles and precedents regarding the disallowance under section 14A r.w. Rule 8D.