TaxTMI 
TaxTMI 
2026 (8) TMI 387
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.... of the Income Tax Act, 1961 read with Rule 8D(2)(ii) of LT. Rules, 1962, therefore is liable to be deleted. 3. That the Ld. CLT(A), NFAC has erred in law and on facts in sustaining the impugned assessment order ignoring the fact - i. That the Ld. A.O. has erred in law and on facts in making arbitrary disallowance of Rs 55,80,540/- under section 14A of the Income Tax Act, 1961 read with Rule 8D(2)(11) of LT. Rules, 1962 ignoring the fact that total exempt income received during the year was only 26.37,044 as discussed in para 3.4 of the Assessment Order. therefore appropriate relief is allowable to the appellant. ii. That the Ld. A.O. has failed to consider and appreciate that there is a mismatch between income determined in the Assessment Order at Rs. 10,13.330/- and computation Sheet attached thereto showing total income at Rs. 41,04,308/-, therefore appropriate relief is allowable to the appellant. iii. That the Ld. A.O. has failed to consider and appreciate that the application filed us 154 of LT. Act, for rectification of mistake apparent from record and rejecting the same arbitrarily and without passing a speaking order. iv. That t....
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.... which in the opinion of the Assessing Officer was not justified. He, therefore, expressed his dissatisfaction with the accounts as above, and proceeded to compute the disallowance under section 14A in accordance with Rule 8D of the Income Tax Rules. Before doing so, he issued a show cause notice to the assessee. In response, the assessee submitted that the computation of disallowable expenses under Rule 8D worked out to Rs. 55,80,540/-, whereas the assessee only had exempt income of Rs. 26,37,044/-. Therefore, the as per settled position in law, the disallowance could not exceed the exempt income amounting to Rs. 26,37,044/-. The assessee placed reliance on the decisions of the Hon'ble Madras High Court in the case of PCIT vs. Investor Ventures Limited (2021) 123 taxman.com 378 (Madras); the decision of the Hon'ble Delhi High Court in the case of Joint Investment (P.) Ltd. vs. CIT (2015) 375 ITR 694 (Delhi) and the decision of the ITAT Jaipur Tribunal in the case of ACIT, Central-1 vs. Satish Kumar Agarwal (2018) 96 taxman.com 373 (Jaipur-Trib). However, the Assessing Officer did not accept the submission of the assessee. He recorded his belief that the facts of those cases were d....
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....) 375 ITR 694 (Delhi) and the decision of the ITAT Jaipur Bench in the case of ACIT, Central Circle-1 vs. Satish Kumar Agarwal (2018) 96 taxman.com (Jaipur- Trib.), wherein this matter had been considered and decided in favour of the assessee. The learned AR also drew our attention to the judgment of the Income Tax Appellate Tribunal, Lucknow Bench "B" in ITA No. 433/Lkw/2020, in the case of ACIT, Range-1, Lucknow vs. M/s. Mahendra Educational Pvt. Ltd., wherein the Tribunal, after considering the recent amendment to the Income Tax Act and various decisions rendered by various courts had held that the Explanation to Section 14A of the Income-tax Act inserted by Finance Act 2022, was prospective and could not be applied to Assessment Year 2017-18. The learned AR pointed out that at page 13 of its order in paragraph E.1, the Hon'ble ITAT had referred to various judicial precedents on which it was relying including the decision of the Hon'ble Delhi High Court in the case of Cheminvest Ltd. v. Commissioner of Income Tax (2015) 378 ITR 33 Delhi and PCIT v. GVK Project and Technical Services Ltd. (2019) 106 taxmann.com 180 (Delhi). The Bench had also placed reliance on the decision o....
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.... year was Rs. 19 lakhs. In these circumstances, we are not required to consider the case of the Revenue that the disallowance should be enhanced from Rs. 75.89 crores to Rs. 144.52 crores. Upper disallowance as held in Pr. CIT u. McDonalds India (P.) Ltd. ITA 725/2018 decided on 22nd October, 2018 cannot exceed the exempt income of that year. This decision follows the ratio and judgement of the Supreme Court in the case of Maxopp Investments Ltd. v. CIT [2018] 402 ITR 640/254 Taxman 325/91 taxmann. com 154 and the earlier judgements of the Delhi High Court in Cheminvest v. CIT [2015] 378 ITR 33/234 Тахтап 761/61 taxmann.com 118and CIT v. Holcim (P.) Ltd. [2015] 57 taxmann.com 28 (Delhi). Relevant portion of the judgement in McDonalds India (P.) Ltd. (supra) reads:- '8. The decision in the case of Maxopp Investment Ltd. (supra) is significant and does answer the question in issue. This decision does not support the Revenue as the Assessing Officer in the case of Maxopp Investment Ltd. (supra) had himself restricted the disallowance to the extent of exempt income. After referring to Walford Share and Stock Brokers P. Ltd. (supra) it wa....