Is expenditure necessary to earn exempt income?

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘A’ BENCH,
NEW DELHI [THROUGH VIDEO CONFERENCE]
BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND
SHRI K.N. CHARY, JUDICIAL MEMBER
ITA No. 2770/DEL/2018 [A.Y 2011-12]
&
ITA No. 2771/DEL/2018 [A.Y 2012-13]

BIO MED PVT LTD
C – 96, Site – 1, B.S. Road
Industrial Area, Ghaziabad

PAN: AABCB 3477 C

Appellant

Vs.

The Addl. C.I.T

Range - 2

Ghaziabad

Respondent

Assessee by : Shri Akhilesh Kumar, Adv
Revenue by : Shri Jagdish Singh Dahia, Sr. DR
Date of Hearing : 26.07.2021
Date of Pronouncement : 26.07.2021

ORDER

Both the above captioned appeals by the assessee are preferred against the order of the CIT(A) - Aligarh, dated 13.01.2016 pertaining to A.Ys 2011-12 and 2012-13.

2. Since common grievance is involved in both the appeals, they were heard together and are disposed of by this common order for the sake of convenience and brevity.

3. The ld. counsel for the assessee filed an application for condonation of delay in filing the appeals. The ld. counsel for the assessee stated that Shri S.P. Garg, Managing Director of the assessee company handed over the appeal papers to one Shri Pushkar Pandey who works in the office of the ld. counsel for the assessee. Both Shri S.P. Garg and Shri Pushkar have filed affidavits to show that the appeal papers were misplaced due to office renovation work and could only be discovered after substantial lapse of time and immediately thereafter, appeals were filed.
4. During the course of scrutiny assessment proceedings, the Assessing Officer noticed that the assessee has received dividend from UTI Liquid Plus Fund and dividend from shares of other companies. The Assessing Officer was of the opinion that to earn exempt income, the assessee must have incurred some expenditure and accordingly,
computed the disallowance u/s 14A of the Act r.w.r 8D amounting to Rs. 12,24,394/- in A.Y 2011-12 and Rs. 10,01, 542/- in A.Y 2012-13.

5. As no distinguishing decision has been brought to our notice, respectfully following the findings of the co-ordinate bench [supra] we direct the Assessing Officer to delete the impugned disallowance.
 In the result, the appeals of the assessee in ITA Nos. 2770 & 2771/DEL/2018 are allowed.
The order is pronounced in the open court in the presence of both the rival representative on 26.07.2021.

Please find attached the enclosed file for the full judgement