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2022 (1) TMI 1029 - AT - Income TaxAddition towards contribution received by the assessee as income u/s.56(2)(vii) r.w.s 2(24)(xv) - Private Discretionary Trusts (PDTs) is not to be treated as an individual, but as AOP for purpose of taxation - HELD THAT:- We find that the Hon’ble Madras High Court had considered an identical issue in assessee’s own case [2020 (12) TMI 736 - MADRAS HIGH COURT]for assessment year 2014-15 and after considering 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. We reverse order of the learned CIT(A) and sustain additions made by AO towards contribution received by the Trust as income liable to be taxed u/s.56(2)(vii) of the Income Tax Act, 1961. Accordingly, ground no.2 & 3 are decided in favour of the Revenue. 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 learned CIT(A) had given relief to the assessee in light of decision of the Hon’ble Delhi High Court in the case of Joint Investments Pvt.Ltd.(supra) and thus, we are of the considered view that there is no error in the reasons given by the learned CIT(A) to remit the issue back to file of the Assessing Officer to recompute disallowance u/s.14A of the Income Tax Act, 1961. Hence, the grounds taken by the Revenue are rejected.
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