2026 (2) TMI 762

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... in law, the CIT(A) erred in upholding the action of the AO in invoking section 14A of the Act and thereby computing the total disallowance of Rs. 43,23,20,191/- u/s 14A of the Act read with Rule 8D of the Rules including Rs. 18,28,43,063/- suo moto disallowed by the Appellant. 2. The Appellant prays that in absence of any exempt income earned during the year and even otherwise under law, no disallowance u/s 14A of the Act is warranted and accordingly the AO be directed to delete the entire disallowance u/s 14A of the Act including the suo moto disallowance made by the Appellant. GROUND NO. II: LEVY OF INTEREST UNDER SECTION 234B OF THE ACT AMOUNTING TO Rs. 2,04,46,470/- 1. On the facts and circumstances of the case and in law, the CIT(A) erred in upholding the action of AO in levying interest u/s. 234B of the Act amounting to Rs. 2,04,46,470/-. 2. The Appellant prays that the levy of interest u/s. 234B of the Act be deleted." 3. The brief facts of the case are that the assessee E-filed its return by declaring total income Rs. 23,11,834/-. The case was selected for scrutiny under CASS. Accordingly, the notice was duly served to the assessee. T....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....regard to your proposal to disallow the entire interest expense of Rs 43.23.20 191 us 14A rwr. 8D(2)(1)(1) and the assessee frust most humbly reiterates the cate submissions filed by letter dtd 24 12 2018. In view of the same, we submit that the suo moto disallowance u/s14A made in the return of income be accepted without making any further disallowance for the assessment year 2016-17 under consideration We would also like to draw your attention to the assessment order of AY 2015-16 wherein the assessee's suo moto disallowance of Rs 20.14 crs was accepted in the scrutiny assessment order of AY 2015-16 without applying Rule 6D(2)(0)(0) and Hence, following the same, suo moto disallowance of Rs 18.28 cns for the assessment year under consideration be accepted without applying Rule 6D (2) as there is no change in facts during the year under consideration. We also submit that during the year under consideration, the assessee has not received any dividend income on its investments Without prejudice to our above contention that Rule 8D(2) should not be applied we humbly submit that if at all Rule 8D(2) is to be applied by you, then the aggregate disallowance u/s 14A....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....mpt income, no disallowance under section 14A of the Act including suo-moto disallowance of the assessee is warranted as under:- i) Tejaskiran Pharmachem Industries P. Ltd. v/s DCIT, ITA по. 3307/Mum/2014, order dated 13.12.2017; ii) Sajjan India Ltd. v/s ACIT. (2018) 89 taxmann.com 21 (Mum.); iii) Chand N. Bhojwani v/s DCIT, ITA no.272/Mum./2015, etc., order dated 28.07.2017; iv) HDFC Bank Ltd. v/s ACIT, ITA no.5480 & 5481/Mum./2019, order dated 24.08.2016; v) Chalet Hotels Ltd. v/s DCIT, ITA no.3747/Mum./2019, order dated 11.02.2021; vi) ACIT v/s Sundaram Multipap Ltd., ITA no. 6269/Mum./2017, etc., order dated 15.04.2019." 5. The Ld. AR contended that the assessee had erroneously made a suo motu disallowance of expenditure relatable to exempt income under section 14A of the Act in the return of income. It was submitted that during the course of the assessment proceedings, the assessee is entitled to rectify such an incorrect claim and withdraw the said disallowance. The Ld. AR further argued that a specific prayer was made before both the Ld. AO as well as the Ld. CIT(A) for withdrawal of the suo motu disallowa....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....cted to avoid distortions in the computation of both taxable as well as exempt income. 6.5.10 The calculation of disallowance u/s 14A is required to be made as per rule 8 D(2) and since appellant without applying Rule 8 D (2)suo-moto declared disallowances only at Rs. 18,28,62,017/- was incorrect hence, order of the A.O. calculating correct disallowance u/s 14A as per rule 8 D (2) is upheld and addition on account of balance amount which the appellant has not disallowed to earn exempt income amounting to Rs. 24,94,58,174/-is confirmed. 6.5.11 In view of above, it is clear that CBDT, in exercise of its powers under section 119 of the Act clarifies that Rule 8D read with section 14A of the Act provides for disallowance of the expenditure even where tax payer in a particular year has not earned any exempt income. 6.5.12 In view of the above, I am of the view that the disallowance u/s 14A has to be made towards expenses incurred on eaming of the exempted income. Therefore, the A.O. was correct in making disallowance of Rs. 24,94,58,174/- u/s 14A even if appellant had not earned any exempt income during the year under consideration. Hence, Ground of appeal No.....