2019 (5) TMI 1306

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....er of Income-tax (Appeals)-50, Mumbai [hereinafter in short "Ld.CIT(A)"] dated 20.04.2016. 2. In all these appeals the Revenue has raised the following common ground except for the figures: - (i) "Whether on facts and circumstances of the case and in law, the Ld CIT(A) erred in restricting the disallowance u/s 14A to the extent of exempt income and thereby deleting the addition of Rs. 2,20,11,094/- made by the Assessing Officer ignoring the fact that the Assessing Officer has rightly made a disallowance u/s 14A as per working of Rule 8D of the Income Tax Act, 1962". 3. At the outset, Ld. Counsel for the assessee submitted that on identical issue came up for hearing before the Tribunal for the A.Y. 2011-12 in ITA.No. 7255/MUM/....

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....year. The Ld. CIT (A) has restricted the disallowance to the exempt income by following the decisions of the Hon'ble High Delhi Court. The operative part of the order of the Ld. CIT (A) reads as under:- "5.3 I have considered the stand of the A.O as well as the submissions of the appellant. It has been explained by the ld. A/R that during the year the appellant has received exempt income of Rs. 50,545/-. As per decision of Hon'ble Delhi High Court in the case of Cheminvest Ltd. as well as other judicial pronouncements relied by the Ld. A/R. In view of the facts and circumstances of the case, as well as judicial pronouncements, the addition made u/s 14A for the present assessment year is restricted to the exempt income of Rs. 50,545....

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....e is indicated in s. 14A, and is only to the extent of disallowing expenditure "incurred by the assessee in relation to the tax exempt income". This proportion or portion of the tax exempt income surely cannot swallow the entire amount as has happened in this case." 8. In the present case, the assessee has earned the exempt income of Rs. 50,445/- during the previous year, against which the AO made disallowance of Rs. 1,10,39,577/- u/s 14A read with rule 8D. In the first appeal the Ld. CIT(A)has restricted the disallowance to the amount of exempt income. Under these circumstances, we are of the considered view that the order passed by the Ld. CIT (A) is in accordance with the principles of law laid down by the Hon'ble High Court in ....