ITAT allows appeals on disallowance under Section 14A for A.Y. 2012-13 and A.Y. 2014-15

The ITAT allowed all three appeals by the assessee concerning disallowance under Section 14A r.w. Rule 8D for A.Y. 2012-13 and A.Y. 2014-15. In A.Y. 2012-13, the ITAT held that the addition made in the assessment was not sustainable as it was a double addition without new incriminating material. For A.Y. 2014-15, relying on precedent, the ITAT deleted the disallowance as no exempt income was derived. The appeals were allowed, and the judgment was pronounced on 22nd October 2021.

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Issues:
Appeals against CIT(A)'s orders involving Section 14A r.w. Rule 8D disallowance in A.Y. 2012-13 and A.Y. 2014-15.

Analysis:

Issue 1: Disallowance under Section 14A r.w. Rule 8D in A.Y. 2012-13:
The assessee challenged the disallowance of Rs. 6,82,685/- in A.Y. 2012-13. The ITAT noted that the Assessing Officer had already made the disallowance in the regular assessment for A.Y. 2012-13, rendering the subsequent addition in the Section 143(3) r.w.s. 153A assessment as a double addition. The CIT(A) had not addressed this issue on merits. The ITAT held that the impugned addition was not sustainable as it was not based on any new incriminating material and had already been considered in the Section 143(3) assessment. Consequently, the assessee's appeal for A.Y. 2012-13 (ITA No. 438/Hyd/2020) was allowed.

Issue 2: Disallowance under Section 14A r.w. Rule 8D in A.Y. 2014-15:
In the appeals for A.Y. 2014-15, the ITAT referred to a previous decision where a similar disallowance was deleted as no exempt income was derived. Citing case law, the ITAT deleted the disallowance of Rs. 9,61,911/- each in both appeals for A.Y. 2014-15 (ITA Nos. 439 & 440/Hyd/2020). The ITAT followed the precedent and accepted the assessee's appeals for A.Y. 2014-15.

Issue 3: Applicability of Section 115JB MAT provision(s):
The judgment also mentioned the applicability of Section 115JB Minimum Alternate Tax (MAT) provision(s) concerning the impugned disallowance. However, the specific details or implications of this provision were not elaborated upon in the judgment.

In conclusion, all three appeals by the assessee were allowed based on the above analysis, with the ITAT directing a copy of the order to be placed in the respective case files. The judgment was pronounced in open court on 22nd October 2021.

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