2022 (1) TMI 1253 - AT - Income Tax

Tribunal directs fresh assessment, emphasizes detailed analysis for income tax disallowance

M/s. Holtec Consulting Pvt. Ltd. Versus The Addl. CIT, Special Range-4, New Delhi.

The Tribunal allowed the appeal for statistical purposes and directed the restoration of the matter to the file of the Assessing Officer for a fresh ... Disallowance u/s 14A read with Rule 8D - HELD THAT:- Since the facts of the case of the impugned appeal are identical to the facts of the case decided by the Tribunal in assessee’s own case in the preceding assessment years, therefore, respectfully following the decision of the Tribunal in assessee’s own case for the A.Ys. 2009-10 [2014 (7) TMI 1314 - ITAT DELHI], 2010-11 [2016 (8) TMI 1573 - ITAT DELHI], 2011-12 [2019 (11) TMI 1188 - ITAT DELHI], 2012-13 [2021 (3) TMI 1370 - ITAT DELHI], 2013-14 [2021 (2) TMI 1296 - ITAT DELHI] we restore the issue to the file of A.O. with a direction to decide the issue afresh in the light of decision of the Tribunal in assessee’s own case - Needless to say A.O. shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. Appeal of the Assessee is allowed for statistical purposes. Issues:1. Disallowance under section 14A of the Income Tax Act, 1961 read with Rule 8D.2. Correctness of disallowance calculation by the Assessing Officer.3. Applicability of Rule 8D in determining disallowance.4. Justification of the method adopted for disallowance.5. Restoration of the matter to the file of the Assessing Officer.Issue 1: Disallowance under section 14A of the Income Tax Act, 1961 read with Rule 8D:The appeal challenged the disallowance of Rs.1,03,35,000 made by the Assessing Officer under section 14A of the Income Tax Act, 1961. The Assessing Officer observed that the assessee had earned exempt income and had investments for the same, leading to the disallowance. The CIT(A) upheld this disallowance citing the application of Rule 8D and the inadequacy of the assessee's explanations. The Tribunal noted the disallowance made and upheld by the CIT(A) and found a similar issue in the assessee's earlier case. The Tribunal decided to restore the matter to the file of the Assessing Officer for fresh consideration.Issue 2: Correctness of disallowance calculation by the Assessing Officer:The Assessing Officer disallowed Rs.1,03,35,000 under section 14A read with Rule 8D, which the CIT(A) upheld. The CIT(A) justified the disallowance based on the investments made by the assessee and the exempt income earned. The Tribunal acknowledged the correctness of the disallowance calculation but decided to restore the issue to the Assessing Officer for further review based on the assessee's submissions and past decisions in similar cases.Issue 3: Applicability of Rule 8D in determining disallowance:The Assessing Officer applied Rule 8D to determine the disallowance under section 14A, which was upheld by the CIT(A). The Tribunal recognized the application of Rule 8D in this case but decided to send the matter back to the Assessing Officer for a fresh decision considering the specifics of the investments and income earned by the assessee.Issue 4: Justification of the method adopted for disallowance:The assessee contended that the nature of investments and income earned was not adequately analyzed by the Assessing Officer and the CIT(A). The Tribunal noted the lack of detailed analysis and decided to restore the issue to the Assessing Officer for a thorough review, aligning with past decisions in the assessee's earlier cases.Issue 5: Restoration of the matter to the file of the Assessing Officer:Given the similarities with the assessee's previous cases and the need for a more detailed analysis of investments and income, the Tribunal decided to restore the issue to the Assessing Officer for a fresh determination. The Tribunal directed the Assessing Officer to consider the issue in line with past decisions and after providing the assessee with a fair opportunity to present their case.In conclusion, the Tribunal allowed the appeal for statistical purposes and ordered the restoration of the matter to the file of the Assessing Officer for a fresh decision, emphasizing the importance of a detailed analysis of investments and income to determine the disallowance under section 14A of the Income Tax Act, 1961.