Tribunal remands assessment for consideration of exempt income investments under Section 14A The Tribunal allowed the appeals of the Revenue and the cross-objections of the assessee for statistical purposes. The matter was remanded back to the ...
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Tribunal remands assessment for consideration of exempt income investments under Section 14A
The Tribunal allowed the appeals of the Revenue and the cross-objections of the assessee for statistical purposes. The matter was remanded back to the Assessing Officer for reevaluation in accordance with the law, directing consideration of only investments that had yielded exempt income for the assessment of disallowance under section 14A. The judgment was pronounced on 01/07/2021 by the Tribunal.
Issues: - Appeal against order of Ld. CIT(A) for assessment years 2008-09 and 2009-10. - Disallowance made under section 14A of the Income Tax Act.
Analysis: 1. The appeals and cross-objections arose from the order of the Ld. CIT(A) for assessment years 2008-09 and 2009-10 against the assessment framed by the Ld. AO. The delay in filing cross-objections was condoned due to the impact of the Covid-19 pandemic. The main issue in the appeals was the disallowance made under section 14A of the Act read with Rule 8D(2) of the Rules.
2. The assessee, a Non-Banking Finance Company, was engaged in various financial activities. The appeal for the assessment year 2008-09 and cross-objections were taken up together. The return of income for 2008-09 showed a loss, which was determined at a lower amount by the Ld. AO. The assessee had voluntarily disallowed a sum under section 14A, but the Ld. AO disagreed with the computation mechanism and made a higher disallowance.
3. The Ld. CIT(A) had incorrectly assumed the exempt income derived by the assessee, leading to a direction to restrict the disallowance. However, the actual exempt income was higher than stated. The matter was to be sent back to the Ld. AO for reevaluation in line with the law. The Tribunal directed the Ld. AO to consider only investments that had yielded exempt income for the assessment of disallowance under section 14A.
4. Ultimately, the appeals of the Revenue and the cross-objections of the assessee were allowed for statistical purposes. The judgment was pronounced on 01/07/2021 by the Tribunal.
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