Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2020 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (11) TMI 224 - AT - Income TaxDisallowance u/s 14A r.w.r. 8D on interest expenditure - assessee company is a partner in partnership firm and share of profit has been claimed as exempt u/s 10(2A) - HELD THAT:- Situation in the present case amply display that institution of legal proceedings would be useless and “AO” has failed to understand the situation and failed to appreciate the settlement reached by the assessee. AO also not brought on record whether assessee is likely to receive the rent in near future rather he accepted the fact that it is irrecoverable. The rental income can be brought to tax only when the assessee has actually received or likely to receive or certainty of receiving in the near future. In the given case, the assessee has no certainty of receipt of any rent and as and when assessee reaches an agreement to settle the dispute, it is equal to satisfying the forth conditions in the Rule 4 of the I. T. Rules, 1962. Therefore, in our considered view, the addition of rent is unjustified. Accordingly, we direct AO to delete the addition. Resultantly, Ground no. 1(i) is allowed. TDS on unrealised rent - licensee has deducted TDS and declared the same in the TDS return - HELD THAT:- Assessee has not received rental income for the previous assessment year and any Security/ Rental deposit available is to be adjusted first for old outstanding and if there is any amount remaining unadjusted, the extra rental advance will be adjusted in the current assessment year outstanding. It is undisputed that the rental advance was adjusted for previous assessment year dues and nothing was available for outstanding rent of current assessment year. Therefore, there is no reason for Ld. CIT(A) to give such direction. Therefore, we are inclined to accept the submission of the assessee. Accordingly, this ground of assessee also allowed. Common administrative expenses for the purpose of disallowance u/s 14A - HELD THAT:- We are partly in agreement with Ld. CIT(A) that sometimes, the determination of disallowance under rule 8D is absurd. We may have to go by practical or depending on the facts of the case. The Ld. CIT(A) has accepted that the common other administrative expenses are ₹ 78,52,422/-. Assessee has incurred these other administrative expenses for the whole business and Ld. CIT(A) has missed this point and the other administrative expenses incurred for the remaining activities. We do not agree with him on this aspect. The right way of calculating this share of other administrative expenses are to calculate the portion of exempt income to the total income earned by the assessee. In this case, assessee has earned total income of ₹ 71,53,93,800/- and earned exempt income of ₹ 243,71,741/-. The ratio of exempt income to total income is ₹ 3.41%. Therefore, we direct AO to disallow 3.41% of the other common administrative expenses for the purpose of disallowance u/s 14A.
|