ITAT directs acceptance of appellant's disallowance, limits section 14A disallowance based on previous cases.

The ITAT set aside the lower authorities' orders and directed the appellant's suo moto disallowance of Rs. 1,33,909 to be accepted. The disallowance under section 14A was limited to this amount based on the ITAT decision in the appellant's previous cases. The appeal was partly allowed, with the decision pronounced on 12.07.2021.

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Issues: Disallowance under section 14A of the Income Tax Act, 1961

Analysis:
1. Issue: Disallowance under section 14A of the Act.
- The appellant, a practicing doctor, earned various incomes including exempt income during the assessment year 2012-13.
- The Assessing Officer (AO) disallowed an amount under section 14A of the Act, which the appellant contested.
- The appellant argued that expenses debited to the capital account were not claimed in the Income & Expenditure account, and depreciation being an allowance was outside the purview of disallowance under section 14A.
- The appellant cited precedents from the Special Bench of the Ahmedabad Tribunal and the Mumbai Tribunal to support their case.
- The AO computed the disallowance without specific findings on expenses related to earning exempt income.
- The appellant contended that no expenses were incurred to earn dividend income, hence disallowance under section 14A was not warranted.

2. Issue: CIT(A) upheld the disallowance.
- The CIT(A) referenced a Supreme Court decision regarding expenditure incurred to earn dividend income.
- Despite the appellant's arguments and citing of ITAT decisions in their own case, the CIT(A) confirmed the AO's order.

3. Issue: Appeal before ITAT.
- The appellant appealed against the CIT(A)'s decision before the ITAT.
- ITAT noted that in the appellant's previous cases, the disallowance was restricted to the suo moto disallowance made by the assessee.
- ITAT found no reason provided by the AO or CIT(A) to reject the appellant's suo moto disallowance.
- ITAT criticized the CIT(A) for not following the principle of judicial discipline by disregarding the ITAT decision in the appellant's own case.

4. Decision:
- ITAT set aside the orders of the authorities below and directed that the appellant's suo moto disallowance of Rs. 1,33,909 should be accepted.
- The disallowance under section 14A was restricted to Rs. 1,33,909 based on the ITAT decision in the appellant's own case for earlier years.
- The appeal by the assessee was partly allowed, and the decision was pronounced on 12.07.2021.

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