2024 (9) TMI 1050 - AT - Income Tax

Addition u/s 14A r.w.r. 8D - there were investments from which income was not includible in the taxable income - assessee had suo moto disallowed a sum u/s 14A and in the computation of income - AO was of the view that expenses were not properly appropriated towards activities from taxable income generated and activities from which no taxable income was generated and explanation was called in this regard - HELD THAT - Respectfully following the order of the coordinate bench in the assessee s own case for the AY 2012-13 2023 (9) TMI 1551 - ITAT KOLKATA more so when the assessee himself had disallowed expenditure u/s 14A and the AO without giving any reason as to why the disallowance was not accepted and warranted the higher amount has applied Rule 8D the disallowance confirmed by CIT(A) cannot be sustained and is hereby set aside and the Ld. AO is directed to delete the addition. Hence, Ground No. 1 of the appeal is allowed.

Summary

Issues:
Delay in filing appeal for condonation, Disallowance u/s 14A read with Rule 8D, Reduction/deletion of interest levied u/s 234B.

Delay in filing appeal for condonation:
The appeal was filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals) with a delay of 4 days. The assessee submitted a petition along with an affidavit explaining the reasons for the delay. The Tribunal considered the application and found sufficient cause in the delay, thus condoning the delay and admitting the appeal for adjudication.

Disallowance u/s 14A read with Rule 8D:
The case involved disallowance of Rs. 35,22,568 under Section 14A of the Income Tax Act, 1961. The AO computed the disallowance based on Rule 8D, despite the appellant having suo moto disallowed a lesser amount under Section 14A. The AO did not provide any specific reasons for rejecting the appellant's calculation. The Ld. CIT(A) upheld the disallowance by the AO. However, the assessee relied on various judicial decisions and argued that Rule 8D cannot be applied if no exempt income is earned from the investments. The Tribunal, following the order in the assessee's own case for a previous assessment year, set aside the disallowance, directing the AO to delete the addition.

Reduction/deletion of interest levied u/s 234B:
The issue of interest levied u/s 234B was raised by the assessee in the grounds of appeal. However, the judgment does not provide detailed analysis or discussion on this issue, indicating that it was considered consequential or not requiring separate adjudication.

In conclusion, the Tribunal allowed the appeal filed by the assessee, primarily focusing on the disallowance u/s 14A read with Rule 8D. The Tribunal set aside the disallowance based on the appellant's argument that Rule 8D should not apply in the absence of exempt income from investments. The delay in filing the appeal was condoned, and the interest levied u/s 234B issue was not separately addressed in the judgment.