Deleting the disallowance made by AO u/s 14A read with Rule 8D


Quick Summary
The Income Tax Appellate Tribunal (ITAT) in Chennai has ruled on an appeal concerning disallowances made under Section 14A of the Income Tax Act, read with Rule 8D. The assessee company, M/s. TCP Ltd., challenged the Assessing Officer's disallowance of interest expenditure, arguing that interest-bearing funds were not used for investments yielding exempt income. The tribunal considered the dividend income earned by the assessee and the expenditure disallowed by the assessee itself towards earning this exempt income.

Court :
ITAT Chennai

Brief :
This appeal filed by the Revenue is directed against order of the learned CIT(A)-18, Chennai dated 18.09.2017 and pertains to assessment year 2011-12.

Citation :
I.T.A.No.3069/Chny/2017

IN THE INCOME TAX APPELLATE TRIBUNAL , ‘D’ BENCH, CHENNAI

BEFORE SHRI V.DURGA RAO , JUDICIAL MEMBER
AND SHRI G.MANJUNATHA, ACCOUNTANT MEMBER

I.T.A.No.3069/Chny/2017

Assessment Year : 2011-12

The Deputy Commissioner of Income
Tax,
Central Circle-1(1)
Chennai.

Appellant

vs

M/s. TCP Ltd.
10, TCP SapthagiriBhavan
Karpagambal Nagar,
Mylapore, Chennai-600 004.

PAN: AAACT 3615K

Respondent

Appellant by : Ms. R.Anita, JCIT

Respondent by : Mrs. S.Vidya, C.A

Date of hearing : 22.07.2021

Date of Pronouncement : 28.07.2021

O R D E R

This appeal filed by the Revenue is directed against order of the learned CIT(A)-18, Chennai dated 18.09.2017 and pertains to assessment year 2011-12.

2. Brief facts of the case are that the assessee company is in the business of manufacturing and trading of chemicals and generation of power has filed its return of income for assessment year 2011-12 on 30.09.2011.

3.Being aggrieved by assessment order, the assessee preferred an appeal before the learned CIT(A). Before the
learned CIT(A), the assessee has challenged disallowances u/s.14A of the Act on the ground that the Assessing Officer has erred in disallowing of interest expenditure, even though the assessee has filed necessary evidence to prove that it has not used interest bearing funds for making investments in shares and securities which yield exempt income.

4. The first issue that came up for our consideration from ground no.2 of revenue appeal is disallowance of expenditure in relation to exempt income u/s.14A of the Income Tax Act, 1961. The facts with regard to impugned dispute are that the assessee has earned dividend income of Rs.6,99,349/-, which was claimed exempt u/s.10(34) of the Act. The assessee had also disallowed a sum of Rs.60,073/- as expenditure incurred towards earning exempt income.

5.In the result, appeal filed by Revenue is partly allowed for statistical purposes.
Order pronounced in the open court on 28th July, 2021.

Please find attached the enclosed file for the full judgement

FAQ :

The appeal was primarily concerned with disallowances made under Section 14A of the Income Tax Act, 1961, read with Rule 8D.

The appellant was the Deputy Commissioner of Income Tax, Central Circle-1(1), Chennai, and the respondent was M/s. TCP Ltd.

The assessee challenged the disallowance of interest expenditure, contending that it had not used interest-bearing funds for investments that generated exempt income.

The assessee earned a dividend income of Rs. 6,99,349/-, which was claimed as exempt under Section 10(34) of the Act.

Yes, the assessee had disallowed a sum of Rs. 60,073/- as expenditure incurred towards earning exempt income.

The appeal filed by the Revenue was partly allowed for statistical purposes.

 
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