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TMI Blog2019 (6) TMI 1573X X X X Extracts X X X X X X X X Extracts X X X X ..... 437 - ITAT AHMEDABAD] has held that the disallowance cannot exceed exempt income. In the facts of the case and judicial decisions in this regard, the addition made by the Assessing Officer is deleted and the disallowance is restricted to the amount of exempt income. - Decided against revenue. - I.T.A. No. 1079/Ahd/2016, I.T.A. No. 1178/Ahd/2016 - - - Dated:- 12-6-2019 - SHRI PRAMOD KUMAR, VICE PRESIDENT AND Ms. MADHUMITA ROY, JUDICIAL MEMBER For the Assessee : Shri P. M. Mehta, A.R. For the Revenue : Shri Vinod Tanwani, Sr. D.R. ORDER PER Ms. MADHUMITA ROY - JM: These two cross appeals filed by the assessee and revenue are against the same order dated 01.02.2016 passed by the Commissioner of Income Tax (Appeals)-7, Ahmedabad under section 143(3) of the Income Tax Act, 1961 (hereinafter referred as to the Act ) arising out of the order dated 31.12.2014 passed by the ITO, Ward 2(1)(3), Ahmedabad for the Assessment Year 2012-13. Since both the appeals relate to the same assessee, the same are heard analogously and are being disposed of by a common order. ITA No. 1079/Ahd/2016 A.Y. 2012-13: 2. The assessee has filed the following grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Learned Advocate appearing for the assessee prays before us for the addition to be restricted to 30% of the total addition made under section 40(a)(ia) of the Act. In support of his contention he has also relied upon the judgment of different Courts including the judgment passed by the Learned Tribunal, Delhi Bench in the matter of Smt. Kanta Yadav-vs-ITO in ITA No.6312/Del/2016 for A.Y. 2012- 13. The Learned representative appearing for the revenue has failed to controvert such contention made by the assessee. 5. Heard the respective parties, perused the relevant materials available on record including the judgment relied upon by the authorized representative appearing for the assessee. The relevant portion of the said judgment passed by the Hon ble Delhi ITAT Bench while dealing in the identical issue is as follows: 6. We have considered rival submissions and find that issue is covered in favour of the assessee by order of ITAT Jaipur Bench in the case of Shri Rajendra Yadav vs. ITO and Smt. Sonu Khandelwal vs. ITO. In these orders it was held that the disallowance u/s 40(a)(ia) to be restricted to 30% of the addition. In these orders the Tribunal has considered the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amend or alter any ground or add new ground, which may be necessary. 8. Ground No.1 The revenue has challenged the order passed by the Learned CIT(A) in restricting the disallowance to the extent of exempt income u/s 14A of the Act. 9. In this particular case, during the course of assessment proceeding upon perusal of the Profit and Loss account, it was noticed by the Learned AO that the assessee has debited an amount of ₹ 7,48,58,635/- under various heads including Administrative and Other Expenses, Director s Remuneration, salary etc. It also appears from the Balance Sheet that the assessee invested in shares, the dividend income whereof is exempt under Income Tax Act, 1961. The assessee s case was this that the assessee earned dividend income of ₹ 1,06,939/- and therefore the disallowance should be restricted to the said amount of dividend income. However, the assessee itself disallowed voluntarily ₹ 2,06,868/-. But applying the provision of Section 14A r.w.r. 8D the Learned AO worked out the disallowance at ₹ 2,45,941/-. Thus, the balance amount of ₹ 39,072/- was further disallowed u/s 14A of the Act and added to the total income of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he judgment passed by the Co-ordinate Bench in the matter of M/s Amruta Quarry Works, relevant portion dealing with the identical issue is as follows: 6. The ld. Counsel for the assessee contends that the assessee does not want to go with any other factual arguments except that by amendment in Section 40(a)(ia) brought in by Finance (No.2) Act, 2014, which reads as under:- 14.4 Accordingly, Section 40(a)(ia) of the Income-tax Act has been amended to provide that in case of non-deduction of tax at source or non- payment of tax so deducted on payments made to residents as specified in section 40(a)(ia) of the Income-tax Act, the disallowance shall be restricted to 30% of the amount of expenditure claimed. 6.1 Ld. Counsel for the assessee then contends that the amendment is clarificatory in nature inasmuch as in clause 14.3 of the explanatory notes in this behalf mentioned as under:- 14.3 As mentioned above, in case of non-deduction of tax at source or non- payment of tax so deducted from certain payments made to residents, the entire amount of expenditure on which tax was deductible is disallowed under section 40(a)(ia) for the purposes of computing income under the h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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