Tribunal Upholds CIT(A) Decision on Section 14A Disallowance

The Tribunal upheld the decisions of the ld. CIT(A) regarding the deletion of addition under section 14A and disallowance for the computation of book profit. The appeals filed by the Revenue were dismissed due to delayed appeals being condoned, and the disallowance under section 14A was correctly restricted to the extent of exempt income earned. The orders were pronounced on September 21, 2022, at Chennai.

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Issues:
- Delayed appeals due to COVID-19 pandemic
- Deletion of addition under section 14A of the Income Tax Act
- Disallowance under section 14A for computation of book profit under section 115JB

Analysis:
1. Delayed Appeals due to COVID-19 Pandemic:
- Both the appeals by the Revenue were delayed by 55 days due to the COVID-19 outbreak, which was condoned, allowing the appeals for adjudication.

2. Deletion of Addition under Section 14A:
- The main issue in both appeals was the deletion of addition towards disallowance made under section 14A of the Income Tax Act. The Assessing Officer disallowed expenses related to earning exempt income under Rule 8D. The ld. CIT(A) directed the Assessing Officer to restrict the disallowance to the extent of exempt income earned for both assessment years.
- The Tribunal upheld the ld. CIT(A)'s decision based on various judicial precedents, restricting the disallowance under section 14A to the extent of exempt income earned. The disallowance was found to be correctly restricted, and the Revenue's appeal was dismissed.

3. Disallowance under Section 14A for Computation of Book Profit:
- The Assessing Officer made disallowances under section 14A for the computation of book profit under section 115JB. However, the ld. CIT(A) observed that the computation under section 115JB should be made without resorting to the computation under section 14A read with Rule 8D.
- The ld. CIT(A) allowed the appellant's ground on this issue, following the decision of the Special Bench and the jurisdictional Tribunal. The Tribunal rejected the Revenue's argument based on the Finance Act, 2022 amendment to section 14A, stating that the amendment would apply from April 1, 2022, onwards.
- The Tribunal found no infirmity in the ld. CIT(A)'s order on this issue and dismissed the Revenue's ground, leading to the dismissal of both appeals filed by the Revenue.

4. Conclusion:
- The Tribunal upheld the decisions of the ld. CIT(A) regarding the deletion of addition under section 14A and disallowance for the computation of book profit. The appeals filed by the Revenue were dismissed, and the orders were pronounced on September 21, 2022, at Chennai.

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