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ITAT deleted disallowance claim u/s 14A (of Income Tax Act, 1961) r.w. Rule 8D (of Income Tax Rules, 1962) on tax free income
ITAT deleted disallowance claim u/s 14A (of Income Tax Act, 1961) r.w. Rule 8D (of Income Tax Rules, 1962) o…
Assessee was into trading in shares. His return of income was taken up for scrutiny. He had earned dividend income of Rs 12,04,572, on shares held as stock-in-trade. AO made disallowance u/s 14A (of Income Tax Act, 1961) r.w. Rule 8D (of Income Tax Rules, 1962), on tax free income. CIT(A) rejected assessee's appeal. ITAT held that CIT(A) had erred in not following the order of Tribunal in asessee's own case, wherein the Tribunal had rejected appeal of Department on identical set of facts-501488
1. The assessee was engaged in the business of trading in shares. He filed his return of income for the assessment year 2012-13 declaring total income at Rs 1,73,590/-. Thereafter, the assessee filed revised return of income. However, there was no change in the total income declared. The case of the assessee was selected for scrutiny and accordingly notice u/s. 143(2) (of Income Tax Act, 1961) was issued to the assessee. During the period relevant to the assessment year 2012-13, the assessee had earned dividend income of Rs 12,04,572/-. The said dividend income was earned by the assessee on the shares held as stock-in-trade. During the course of scrutiny assessment proceedings, the Assessing Officer made disallowance of Rs 46,89,748.83/- u/s. 14A (of Income Tax Act, 1961) r.w. Rule 8D (of Income Tax Rules, 1962) , on the tax free income earned by the assessee.
2. CIT(A) rejected assessee's appeal.
3. On appeal, the ITAT held as under:
"4. We observe that the Commissioner of Income Tax (Appeals) has erred in not following the order of Tribunal in asessee's own case. The Co-ordinate Bench of the Tribunal had rejected the appeal of Department for assessment year 2010-11 on identical set of facts. The Commissioner of Income Tax (Appeals) should have maintained 'Judicial Propriety' in following the order of Appellate Authority.
As of now we restrain ourselves from commenting on the judicial indiscipline committed by the Commissioner of Income Tax (Appeals) and expect that he shall be more careful in future in honouring the orders of the higher Appellate Authorities.
5. In view of the facts of the case and documents on record the impugned order is set aside disallowance of Rs 46,89,749/- u/s. 14A (of Income Tax Act, 1961) r.w. Rule 8D (of Income Tax Rules, 1962) is deleted and the appeal of the assessee is Allowed.”
Case Reference - Shri Paresh Pritamlal Mehta V/s. Income Tax Officer.
IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH, PUNE
BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM
ITA No. 1715/PN/2015
(Assessment Year : 2012-13)
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