TMI Blog2022 (12) TMI 1467X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) should be restricted only to those investments on which exempt income was earned by the assessee during the impugned year, by placing reliance on the decision of Vireet Investments Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] is acceptable. We uphold the order of the ld. CIT(A) in directing the A.O. to recompute the disallowance only to the investments which have yielded exempt income during the impugned year. Appeal filed by the Revenue is dismissed. - SHRI PRASHANT MAHARISHI, AM AND MS. KAVITHA RAJAGOPAL, JM For the Assessee : Shri Vijay Mehta For the Revenue : Shri Vranda U. Matkarni ORDER Per Kavitha Rajagopal, J. M.: This appeal has been filed by the Revenue and the cross objection by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ACIT 3. Whether, on the facts and in the circumstances of the case and in law, Ld. CIT(A) was justified in allowing the appeal of the assessee and directing AO to recomputed the disallowance u/s 14A, even when such restriction is contrary to statutory provisions and CBDT's Circular No. 5 of 2014 dated 11.02.2014 which provides for disallowance of expenditure even where taxpayer in a particular year has not earned any exempt income 4. The brief facts of the case are that the assessee is a public limited company engaged in the business of trading in steel. The assessee filed its return of income dated 26.10.2017, declaring a loss of Rs.3,83,57,431/-. The assessee s case was selected for scrutiny and the assessment order u/s.14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at no other expenses should be considered for disallowance u/s. 14A, the ld. CIT(A) observed that the assessee has shown substantial commission expenses including expenses under the head other expenses , which has justified the applicability of the provisions of section 14A of the Act. The ld. CIT(A) relied on the decision of India Bulls Financial Services vs. DCIT [2016] 76 taxmann.com 26 (Del) that Hon ble Delhi High Court even if the A.O. has not recorded any dissatisfaction about the assessee s calculation, the A.O. s conclusion could not be rejected. The ld. CIT(A) stated that the primary onus lies on the assessee to provide the basis and the computation of the suo moto disallowance to show that the disallowance was not arbitrary. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 5 of 2014, which provides that expenses should be disallowed even when the assessee has not earned any exempt income. The ld. DR relied on the order of the A.O. 10. The ld. AR, on the other hand, contended that the assessee has suo moto disallowed Rs.1,263/-, pertaining to demat charges, which ought to have been considered by the ld. CIT(A). The ld. AR further stated that the expenditure for the purpose of section 14A should be restricted to the exempt income and relied on the decision of Nirved Traders Pvt. Ltd. vs. DCIT [2020] 421 ITR 142 (Bom). The ld. AR further stated that the amendment to the provision is prospective in nature and the same was held by the Hon ble Delhi High Court in the case of PCIT (Central) v. Era Infrastructur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as rightly held that the assessee has not made bifurcation of the expenses claimed under other expenses and in case of which the A.O. had to invoke Rule 8D of the Income Tax Rules. The suo moto disallowance of the assessee does not disentitle the A.O. from invoking the said provision. In this regard, we find justification in the order of the ld. CIT(A) in upholding the A.O. s action in invoking the provision of Rule 8D(2)(ii) by rejecting the assessee s contention that suo moto disallowance by the assessee warrants no further disallowances. The assessee s alternate claim is that the disallowance u/s. 14A read with Rule 8D(2)(iii) should be restricted only to those investments on which exempt income was earned by the assessee during the im ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
