Tribunal allows appeal, deletes disallowance under Rule 8D(2)(ii) for notional expenses. Detailed order for disallowance under Rule 8D(2)(iii) directed. Condoned delay.

The Tribunal partly allowed the appeal, deleting the disallowance under Rule 8D(2)(ii) for notional expenses under section 14A of the Income Tax Act. The Tribunal directed a detailed order for disallowance under Rule 8D(2)(iii) and condoned the nine-day delay in filing the appeal, allowing further adjudication.

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Issues:
- Disallowance of notional expenses under section 14A of the Income Tax Act, 1961
- Condonation of delay in filing the appeal

Analysis:
1. Disallowance of Notional Expenses under Section 14A:
- The appeal pertains to disallowance of notional expenses amounting to Rs. 2,49,84,018/- for maintaining tax-free portfolio and earning tax-free income, as per section 14A read with Rule 8D of the Income Tax Rules, 1962 for the assessment year 2014-15.
- The Assessing Officer determined the disallowance at Rs. 2,51,76,518/-, out of which Rs. 1,92,500/- was voluntarily disallowed by the assessee. The Commissioner of Income Tax (Appeals) confirmed this disallowance under section 14A r.w. Rule 8D.
- The Tribunal noted that the assessee had earned dividend income and voluntarily disallowed Rs. 1,92,500/- as expenses to earn exempted income. However, the Assessing Officer did not provide reasons for deeming this amount unrealistic. As the assessee had admitted the expenses for earning exempt income, the disallowance under Rule 8D(2)(ii) was deemed incorrect and deleted.
- Regarding disallowance under Rule 8D(2)(iii), the Tribunal directed the Assessing Officer to consider only investments yielding exempt income for computing the average value of investments, in line with a Delhi Special Bench decision.

2. Condonation of Delay:
- The appeal was delayed by nine days, and the assessee filed a petition for condonation of the delay. The delay was condoned as the assessee demonstrated sufficient cause, and the appeal was admitted for adjudication.

Conclusion:
The Tribunal partly allowed the appeal for statistical purposes, deleting the disallowance made under Rule 8D(2)(ii) while directing a detailed order for disallowance under Rule 8D(2)(iii). The delay in filing the appeal was condoned, allowing the case to proceed for further adjudication.

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