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TMI Blog2020 (6) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... action of the Ld. CIT(A) in deleting the addition made by AO u/s. 14A of the Income-tax Act, 1961 (hereinafter referred to as the "Act") read with Rule 8D of the Income-tax Rules (hereinafter referred to as the "Rules"). 4. Briefly stated facts are that in this case the original assessment u/s. 143(3) of the Act was completed vide order dated 30.03.2013 determining the total loss of Rs. 73,30,08,230/- against the returned loss as per the revised return amounting to Rs. 74,33,47,643/-. Subsequently, revision proceedings were initiated by the Pr. CIT-2 Kolkata u/s. 263 of the Act on the following issues: i) there was an over assessment of Long Term Capital Loss on sale of shares. ii) disallowance u/s. 14A was computed in the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CBDT Circular No-5/2014 dated 11.02.2014 clarifies the disallowance of expenses u/s 14A of the Act. As per AO, the Circular clarifies that it is not necessary that exempt income should necessarily be included in a particular years of income, for disallowance to be triggered. Also section 14A of the Act does not use the word 'income of the year' but 'income under the Act'. This indicates that for invoking disallowance under section 14A, it is not material that the assessee should have earned such exempt income during the financial year under consideration. Thereafter the AO computed the disallowance u/s. 14A read with rule 8D at Rs. 5,27,95,595/- after adjusting the disallowance considered by the assessee at Rs. 52,28,028/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le jurisdictional ITAT, the AO is directed to recalculate the disallowance of those shares, which has yielded dividend income while taking the investment. In view of above, the appellant shall furnish before the AO the details in the matter. The AO is also directed to verify the same and accordingly re-compute the disallowance u/s 14A r.w. Rule 8D. The AO shall allow the appellant an opportunity of hearing before passing any order in this regard. This ground is therefore allowed for statistical purposes. The AR of the appellate has also filed copy of Hon'ble supreme Court Judgement in the case of state bank of Patiala on last date of hearing and argued to restrict the disallowance to the extent of exempt income. As regards to rest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. State Bank of Patiala [2017] 393 ITR 476/88 taxmann.com 667 (Pun). & Har.) decided on 27.02.2017 wherein after considering the relevant provision and the case law on the point, it was recorded as under: - "After hearing learned counsel for the parties, we notice that the issue on merits has been decided in favour of the assessee in State Bank of Patiala's case (supra) [(2017) 78 Taxman.com 3]. The amount of disallowance under Section 14A was restricted to the amount of exempt income only and not at a higher figure." The Hon'ble Supreme Court vide order dated 08.11.2018 in the case of State Bank of Patiala vs Pr. CIT, Patiala reported under (2018) 99 taxmann.com 286 (SC) has dismissed the SLP filed by the department against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee had computed the disallowance u/s. 14A taking into consideration only the shares on which dividend income was earned and claimed as exempt. The AO has computed the disallowance u/s. 14A read with Rule 8D at a sum of Rs. 5,80,23,623/- taking the entire investments held by the assessee as on 31.03.2011 and 31.03.2012, resulting in enhancement of the disallowance by Rs. 5,27,95,595/-. On appeal the Ld. CIT(A) has given relief to the assessee by holding that the amount of disallowance u/s. 14A should be restricted to the amount of exempt income only and not a higher figure. Against this decision of the Ld. CIT(A), the revenue has preferred this appeal. We note that the decision impugned in the factual back-drop could not be disputed by the L ..... X X X X Extracts X X X X X X X X Extracts X X X X
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