2026 (5) TMI 52

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....Unit, (hereinafter referred to as "Ld. AO"), u/s 143(3) r.w.s. 144B of the Act for Assessment Year 2020-21. 2. Brief facts of the case are that, assessee filed return of Income of Rs. 157,79,76,960/- on 14.02.2021. The return was processed u/s 143(1)(a) at Rs. 679,57,40,550/-. The case was selected for scrutiny under CASS. Notice u/s 143(2) was issued on 29.06.2021. Notices u/s 142(1) along with questionnaire were issued on 15.12.2021 and 14.03.2022. Letter dated 05.03.2022 and show cause notice dated 08.09.2022 were issued. Assessee submitted reply and documents. 2.1. On completion of proceedings Ld. AO vide order dated 29.09.2022 made addition of Rs. 3,44,64,263/-, on account of disallowance u/s 14A of the Act. 3. Against order d....

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....ning the impugned disallowance with preconceived notions, relying on irrelevant judgments, recording perverse findings and also by arbitrarily brushing aside the detailed submissions/evidences/material/judgments placed on record, which were furnished in order to support the fact that there was no need for making /sustaining any disallowance under section 14A of the Act. 2. That the learned Commissioner of Income Tax (Appeals) has grossly erred in law and on facts by sustaining a disallowance of a sum of Rs. 29, 612/- on account of ESI/PF. 3. The appellant craves leave to add, amend, alter, or withdraw any ground of appeal at the time of hearing. 5. Ld. Authorized Representative for appellant-assessee submitted that, Ld.....

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....d works out to nearly 110 per cent of that sum, ie Rs. 52,56,197. By no stretch of imagination can s. 14A or r. 8D be interpreted so as to mean that the entire tax exempt income is to be disallowed. The window for disallowance 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. ............... 5.2. Similar is position in Pr. Commissioner of Income-tax-2 Vs. Caraf Builders & Constructions (P.) Ltd. decided on 13.11.2018 reported as [2019] 101 taxmann.com 167 (Delhi) and Deputy Commissioner of Income-tax Vs. Jite Shipyard ....