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TMI Blog2024 (11) TMI 491X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-Tax Act, 1961 [hereinafter referred to as "Act"] for the Assessment year [A.Y.] 2021-22, wherein assessee's appeal has been allowed and the addition made by the Assessing Officer, vide assessment order dated 30.12.2022 have been deleted. 2. The brief facts related to the appeal state that:- 2.1. The assessee is a Housing Finance Company and engaged in the business of money lending to Housing and earned interest thereon. Assessee company e-filed its original return of income on 14.03.2022, declaring total income at Rs. 1249,24,66,610/-. Thereafter the return was revised on 31.03.2022, declaring total income at Rs. 1249,24,66,610/-. The original return was duly processed on 01.07.2022 and 22.09.2022 u/s. 143(1) of the Act. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d an appeal before learned CIT(A), who partly allowed assessee's appeal with direction to assessee to give bifurcation of investments that earned exempt income and that did not result into exempt income before assessing officer and also directed assessing officer to compute disallowance u/s. 14A, taking average investments that have yielded the exempt income earned by the assessee. 4. Appellant revenue has raised following grounds under appeal: "i. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in holding that investment which yielded exempt income are only to be considered for the purpose of disallowance u/s. 14A r.w.r. 8D(2) and to exclude such investment which did not earn exempt in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned CIT(A) is justified in holding that the investments, which yielded exempt income, are only to be considered for the purpose of disallowance u/s. 14A r/w Rule 8 D(2) and to exclude such investments which did not earn exempt income? 2) Whether learned CIT(A) is justified in holding that the penal charges paid to NHB are allowable as business expenditure? 8. Learned departmental representative for the appellant revenue has submitted that the investments which did not earn exempt income are also required to be considered for the purpose of computation of disallowance u/s. 14A in view of clarificatory explanation of section 14A(1) of the Act. Further submitted that the penal charges imposed upon assessee by NHB are penalty, hence no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017-18, took the view that the disallowance u/s. 14A is to be restricted to the exempt income earned during the year. Further, taking support from the decision of special bench ITAT Delhi in ACIT V. Vineet Investment (P) Ltd. [2017]82 taxman.com 415 (Delhi-Trib.)(SB) held that the investments that yielded exempt income during the year have to be considered for computing average investments for the purpose of rule 8D. Learned CIT(A), thus followed his predecessor in favour of the assessee. 12. The co-ordinate bench of ITAT Mumbai in ITA No. 2683/MUM/2023 in assessee's own case for A.Y. 2020-21 has followed Vineet Investments (P) Ltd (Supra), reiterating that the investment that yielded exempt income during the year only have to be conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act. This disallowance has been deleted by learned CIT(A). Learned representative for the AR has referred (i) Mangal Keshav Security Ltd. v ACIT 4(3), Mumbai [2017]85 taxmann.com 226(Mumbai-Trib), wherein the co-ordinate bench of this Tribunal with reference to TRF Ltd. V CIT [2010] (SC) 323 ITR 397/190 taxmann.com 391 held that the penalty levied by stock exchange on stock broker for failure to maintain KYC form etc. being compensatory in nature was allowable as deduction u/s. 37(1). Learned AR has further referred (ii) EON Hadapsar, Infrastructure (P) Ltd. V ACIT. Central circle-2(1), Pune, [2016] 71 taxmann.com 115(Pune-Trib), wherein the co-ordinate Pune bench of this Tribunal has held that the explanation to section 37(1) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amount paid by the assessee was in exercise of the option conferred upon him under the very law or scheme concerned, the assessing authority has to regard such payment as business expenditure of the assessee, allowable under Section 37 of the I.T. Act, as an incident of business laid out and expended wholly and exclusively for the purposes of the business. However, if such payment of the assessee is that which is made in exercise of the option given to such assessee by the law or the statutory scheme, there arises no need for assessing authority to go into-the question whether the payment could be regarded as that made as a measure of business expediency, for it cannot ignore the fact in that the law or the statutory scheme enables incurr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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