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TMI Blog2019 (6) TMI 1573X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by the ITO, Ward - 2(1)(3), Ahmedabad for the Assessment Year 2012-13. Since both the appeals relate to the same assessee, the same are heard analogously and are being disposed of by a common order. ITA No. 1079/Ahd/2016 A.Y. 2012-13: 2. The assessee has filed the following grounds of appeal:- "1. On the facts and circumstances of the appellant's case, Learned. CIT(A) has erred in confirming disallowance of Rs. 52,45,749/- made in view of provisions of section 40(a)(ia) for non- deduction of TDS on payment made to Marketing Agencies towards sales promotion expenses. 2. On the facts and circumstances of the appellant's case, Learned. CIT(A) has erred in confirming disallowance of Rs. 87,130/- in view of provisions of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prise respectively towards Transportation charges. Further that, an amount of Rs. 5,49,100/- was also disallowed by the Learned AO u/s 40(a)(ia) for non-deduction of TDS on payment made towards consultancy charges. Such disallowance were also confirmed by the Learned CIT(A) in appeal preferred by the assessee. Hence the instant appeal before us. 4. At the time of hearing of the instant appeal, the Learned Advocate appearing for the assessee prays before us for the addition to be restricted to 30% of the total addition made under section 40(a)(ia) of the Act. In support of his contention he has also relied upon the judgment of different Courts including the judgment passed by the Learned Tribunal, Delhi Bench in the matter of Smt. Kanta Yad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion the observation made by the Hon'ble ITAT Delhi Bench as above. It also appears that the issue is squarely covered by the aforesaid judgment. Hence, respectfully following the same we set aside and modify the orders passed by the authorities below. We further direct the Learned AO to restrict the addition to 30% of the total addition made on account of deduction of TDS u/s 40(a)(ia) of the Act. 6. In the result, assessee's appeal is partly allowed. ITA No.1078/Ahd/2016 for A.Y. 2012-13: 7. The instant appeal filed by the revenue with the following grounds: 1. "The Ld.CIT(A) has erred in law and on facts in restricting the disallowance to the extent of exempt income U/S.14A of the Act, without properly appreciating the facts of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y etc. It also appears from the Balance Sheet that the assessee invested in shares, the dividend income whereof is exempt under Income Tax Act, 1961. The assessee's case was this that the assessee earned dividend income of Rs. 1,06,939/- and therefore the disallowance should be restricted to the said amount of dividend income. However, the assessee itself disallowed voluntarily Rs. 2,06,868/-. But applying the provision of Section 14A r.w.r. 8D the Learned AO worked out the disallowance at Rs. 2,45,941/-. Thus, the balance amount of Rs. 39,072/- was further disallowed u/s 14A of the Act and added to the total income of the assessee which was in turn restricted to the exempt income by the Learned CIT(A) in appeal. Hence, the appeal before us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant had only disallowed an amount of Rs. 2,06,864/- on its own. The appellant has submitted that it had earned exempt income in the form of dividend of Rs. 1,06,939/- and had suomoto made a disallowance of Rs. 2,06,868/- which in any case exceeded the exempt income. Hence, no further disallowance was justified. It is seen that the Hon'ble Ahmedabad Tribunal in the case of Chudgar Ranchhodlal Jethalal Vs. DCIT (OSD), Range-1 in ITA No. 245/Ahd/2013 dated 20.03.2015 has held that the disallowance cannot exceed exempt income. In the facts of the case and judicial decisions in this regard, the addition made by the Assessing Officer is deleted and the disallowance is restricted to the amount of exempt income." We have carefully consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty." 6.2 Since the amendment has been brought to remove the hardship caused to the assessee, the amendment assumes the character of being clarificatory in nature and is retrospectively applicable. Reliance is placed on Five Members Constitution Bench of Supreme Court in the case of CIT vs. Vatika Township Private Limited, reported in (2014) 367 ITR 466 (SC), wherein it has been observed that in case the amendment is brought to remove the hardship caused to the assessee, the same assumes the character of being clarificatory in nature. 6.3 Ld. Counsel for the assessee contends that the amendment to Section 40(a)(ia) brought in by Finance (No.2) Act, 2014 may be held as retrospectively applicable; in view thereof 30% of the amount on which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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