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TMI Blog2018 (3) TMI 1518X X X X Extracts X X X X X X X X Extracts X X X X ..... DELHI HIGH COURT] for restricting the addition to the extent of exempt income earned by the assessee. - Decided in against revenue - ITA No. 2172/Del./2016 - - - Dated:- 21-3-2018 - Shri H. S. Sidhu, Judicial Member And Shri L. P. Sahu, Accountant Member Appellant by : Shri Arun Kumar Yadav, Sr. DR Respondent by : Shri R.K. Kapoor, CA ORDER Per L.P. Sahu, A. M. This is an appeal filed by the Revenue against the order dated 08.02.2016 of the learned CIT(A)-20, New Delhi for the assessment year 2011-12 on the following grounds : 1. Whether on the facts and circumstances of the case in law, the Ld. CIT(A) is justified in restricting the addition to ₹ 47,91,971/- u/s 14A of the Income Tax Act, 1961 read with Rule 8D of the Income Tax Rules, 1962 out of the total disallowance of ₹ 1,06,41,818/- suo moto made by the assessee in the return of income? 2. Whether on the facts and on circumstances of the case and in law, the CIT(A) is justified in not upholding disallowance of ₹ 1,34,19,838/- u/s 14A of the Act without considering a legal principles that allowability of expenditure under the Act is not conditional upon the earning of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ducing the disallowance u/s. 14A has failed to consider the legal principles that allowability of expenditure under the Act is not conditional upon earning of exempt income. He, therefore urged to set aside the impugned order and to restore the assessment order. 4. On the other hand, the ld. AR of the assessee, relying on the impugned order, filed a written synopsis, which reads as under : The facts in brief are that the assessee filed its Return of Income, declaring a taxable income of ₹ 4,89,05,712/-.. The assessee had made a disallowance of ₹ 1,06,41,818/- u/s 14A read with Rule 8D in accordance with assessee's understanding at the time of filing of the Tax Return. However, since by the time the assessment was undertaken, the assessee had the benefit of Order passed by the learned CIT(A) in assessee's own case for the Assessment Year 2010-11. The assessee filed a revised disallowance u/s 14A based on the findings in such Order and a revised disallowance u/s 14A to ₹ 23,00,577/- was worked out as against ₹ 1,06,41,818/- which had been made by the assessee in its Return of Income. The Assessing Officer did not accept such revised disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted in 360 ITR 682 is enclosed for your honour's ready reference and records wherein also it has categorically been held by relying upon the various judgements as also the Board Circular that it is the duty of the Department to determine the correct taxable income as per the provisions of law. If an assessee omits to make a claim to which assessee is lawfully entitled to, then there is no bar in raising such claim for the first time even before the Tribunal even if it has not been raised before any of the authorities below i.e. AO/CIT(A). However, in the case of the assessee, the revised computation of disallowance u/s 14A was made before the Assessing Officer. It is only this claim which has been allowed by the learned CIT(A) by following the decision of jurisdictional High Court in the case of M/s. Joint investment Pvt. Ltd. As regards other claim of the Assessing Officer that the Department was before the Hon'ble ITAT in own Assessment Year 2010-11, it is respectfully submitted that even in Assessment Year 2010-11, the Hon'ble ITAT has noted the similar decision of Joint Investments Pvt. Ltd. and has referred back the matter of the file of the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A computed as per Rule 8D of IT Rules, 1962. 5. That during the course of assessment proceedings, the appellant had revised the calculation of disallowance under section 14A to be read with rule 8D. In the revised calculation the disallowance had come down to ₹ 23,00,577/-. {5.4} The appellant had revised the calculation under Rule 8D, taking cognizance of CIT-A order in his own case for A.Y 2010-11. The A.O had rejected the claim of the assessee citing Apex Court judgment in the case of Goetze (India) Ltd Vs CIT, 284ITR323, where it is held that A.O. has no power to amend a return unless a revised return is filed by the assessee. the A.O has further contended that even on merit also the submission of the assessee is fit to be rejected because the assessee has relied on the decision of the Ld. CIT(A)-IX in the assessee's case for the A.Y. 2010-11 against which the Department has preferred appeal before the ITAT, as the above computation of disallowance is not as per the provision of Rule 8D, which is pending as on date. {5.5} Basic issues that have emerged from the submissions of appellant and the A.O are; 1. Can appellate authority allow the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the power of the Income Tax Appellate Tribunal. The order has clearly stated that A.O does not have the power to entertain a fresh claim otherwise than by filing a revised return. However, the Apex Court has made it clear that it does impinge on the power of the Income Tax Appellate Tribunal. Question No.2: Hon'ble Delhi High Court in its order in the case of Joint investment Pvt Ltd Vs Commissioner of Income Tax, ITA, 117/2015 has contended as under; .....By no stretch of imagination can section 14A or Rule 3D be interpreted so as to mean that the entire tax exempt income is to be disallowed. The window for disallowance is indicated in section 14A, and is only to the4 extent of disallowing expenditure incurred by the assessee in relation to tax exempt income . This proportion or portion of the tax exempt income surely can not swallow the entire amount as has happened in this case... {5.6} I have taken into account CBDT circular No.1955. The relevant portion of the circular is reproduced as under; 3. Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , ITA 117/2015 that by no stretch of imagination can section 14A or Rule 8D be interpreted so as to mean that the entire tax exempt income is to be disallowed. Therefore, even on the merit of the calculation originally made by the appellant and also calculated by the A.O, the disallowance would be restricted to the exempt income i.e ₹ 47,91,971/-. Therefore in mv considered view the disallowances under Rule 8D would be restricted to ₹ 47.91.971/-. 6. A perusal of the impugned order reveals that the ld. CIT(A) has considered the issue in right perspective. The contention of the Assessing Officer that no claim of assessee could be accepted otherwise by way of revised return has also been properly met out by the ld. CIT(A) by relying on various decisions, wherein the findings of Hon ble Apex Court in Goetze (India) (supra) has been considered, inasmuch as the decision of Hon ble Supreme Court was limited to the power of Assessing Officer and did not impinge to the powers of Tribunal. The ld. CIT(A) in this regard has also taken into account CBDT Circular No. 1955 as reproduced in the impugned order, against which there is nothing on record from the side of Revenue. Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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