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TMI Blog2022 (1) TMI 1029X X X X Extracts X X X X X X X X Extracts X X X X ..... ue. Addition u/s.14A r.w.s. 8D - CIT-A remitting back the issue of disallowance under section 14A for fresh consideration - HELD THAT:- It is well settled principle of law by the decisions of various courts, including decision of the Hon ble Delhi High Court in the case of Joint Investments Pvt.Ltd. [ 2015 (3) TMI 155 - DELHI HIGH COURT ] where it was categorically held that disallowances contemplated u/s.14A shall not exceed exempt income earned for relevant assessment year. In this case, the assessee has earned dividend income of ₹ 6,10,506/-, whereas the Assessing Officer has determined disallowance to the extent of ₹ 2,41,61,838/-. Therefore, we are of the considered view that the Assessing Officer has erred in disallowance of expenses in excess of exempt income earned for the year. Hence, we direct the Assessing Officer to restrict disallowance of expenses to the extent of exempt income earned by the assessee for relevant assessment year, while deciding the issue as per directions of the learned CIT(A). Contention of the Revenue with regard to powers of the learned CIT(A) in light of provisions of section 251(1)(a) - We find that at first stage, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed its return of income for assessment year 2015-16 on 31.08.2015 declaring taxable income of ₹ 86,37,28,050/-. The assessment has been completed u/s.143(3) of the Income Tax Act, 1961, on 14.03.2017 and determined total income at ₹ 89,53,89,888/- by inter-alia, making addition of ₹ 75 lakhs towards income from other sources being contribution received by trust u/s.56(2)(vii) of the Income Tax Act, 1961, and also addition towards disallowance u/s.14A of the Income Tax Act, 1961, in respect of expenditure relatable to exempt income amounting to ₹ 2,41,61,838/-. 4. The assessee carried the matter in appeal before first appellate authority. The learned CIT(A) for the reasons stated in his appellate order dated 22.11.2018 deleted additions made by the Assessing Officer towards income from other sources being contribution received by the trust u/s.56(2)(vii) of the Act, by following the decision of the ITAT., Chennai in assessee s own case for assessment year 2014-15 in ITA No.406 407/Mds/2017 dated 05.07.2017 by holding that contribution received by the assessee cannot be considered as income from other sources u/s.56(2)(vii) r.w.s. 2(24)(xv) of the Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidering relevant facts has very categorically held that the assessee is representative assessee as defined u/s.160(1)(iv) of the Act, and benefit derived by the assessee on behalf of beneficiaries is to be taxed as an individual and hence, any contribution received by the trust is taxable as income from other sources u/s.56(2)(vii) r.w.s. 2(24)(xv) of the Income Tax Act, 1961. The relevant findings of the Hon ble High Court are as under:- 78. We have given our findings as to the effect of the insertion of explanation to Section 2(31) and held against the assessee. It is no doubt true that no decision can be rendered dehors the facts. Therefore, we shall examine the facts which were noted by the authorities. As per the Deed of Trust and the Supplemental Deed, the trust is created to benefit the members of owner group and the senior leader group of Shriram Group who are identified as beneficiaries as per the scheme laid out in the Trust Deed. The method of determining the beneficiaries of the owner group and the senior leader group is also provided in the Deed of Trust. In Annexure B of the Deed of Trust dated 11.09.2006, 13 persons have been identified and their names are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an individual only. Consequently, the contribution of ₹ 25 Crores is to be assessed as income under Section 56(1) under the head income from other sources . 80. It is submitted on behalf of the assessee that it is not in dispute that in terms of Section 160(1)(iv), a trustee is a representative assessee for a beneficiary. However, the revenue cannot place reliance on Section 161 of the Act as the said provision will apply only when the income is specifically receivable on behalf of or for the benefit of any one person who are known or whose shares are determined. It is further submitted that in the assessee s case the beneficiaries are indeterminate and the individual shares of the income are also indeterminate and the voluntary contributions were received by the assessee Trust into their corpus and did not form part of the income distributed to the beneficiaries. This argument must necessarily fail for the reasons given by us earlier as we have held that the assessee is required to be assessed as an individual , the beneficiaries have been identified and are identifiable and Section 161 would apply because the income is specifically receivable on behalf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Hon'ble Supreme Court in the case of Maxopp Investments Ltd., vs. CIT (2018) 402 ITR 640(SC) and thus, for purpose of computing disallowance u/s.14A, all investments including investments made for strategic business purpose also needs to be considered. 12. The learned AR for the assessee, on the other hand, submitted that the issue is squarely covered in favour of the assessee by the decision of the Hon ble Delhi High Court in the case of Joint Investments Pvt.Ltd. 233 taxmann.com 117, where it was categorically held that disallowances contemplated u/s.14A shall not exceed exempt income of the assessee for relevant year. 13. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. It is well settled principle of law by the decisions of various courts, including decision of the Hon ble Delhi High Court in the case of Joint Investments Pvt.Ltd (supra), where it was categorically held that disallowances contemplated u/s.14A shall not exceed exempt income earned for relevant assessment year. In this case, the assessee has earned dividend income of ₹ 6,10,506/-, whereas the Assessing Officer has determi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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