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ITAT deleted the disallowance made by AO u/s 14A (of Income Tax Act, 1961)
ITAT deleted the disallowance made by AO u/s 14A (of Income Tax Act, 1961)
Assessee manufactured textile machineries on job work basis. It declared income of Rs 35 crores. On scrutiny, AO made additions on excess claim of deduction u/s 80IB (of Income Tax Act, 1961) and disallowance u/s 14A (of Income Tax Act, 1961). CIT(A) confirmed additions. ITAT held that AO had ignored that assessee had added security transaction tax and management fees to its income in relation to expenditure incurred for earning exempt income, and there was no reason to sustain addition u/s 14A (of Income Tax Act, 1961).-501658
1. Assessee company was into manufacturing of textile machineries and their spare parts on job work basis.
2. It declared an income of Rs.35,37,28,110.
3. Pursuant to scrutiny proceedings, AO made assessment after making additions on excess claim of deduction u/s 80IB (of Income Tax Act, 1961) and disallowance u/s 14A (of Income Tax Act, 1961).
4. CIT(A) confirmed the additions.
On appeal, the ITAT held as under:
5. We find that ld. Assessing Officer completely ignored the facts appearing in the computation of total income wherein assessee has added back security transactions tax of Rs.69,482/- and management Asst. Year 2008-09 fees of Rs.11,09,173/- to the net profit as per profit and loss account.
6. In the given situation where the assessee has himself added a sum of Rs.11,71,455/- to its total income in relation to expenditure incurred for earning exempt income then there remains no reason to sustain the addition of Rs.8,84,542/- as made by ld. Assessing Officer under the provisions of section 14A (of Income Tax Act, 1961).
7. We therefore, delete the same and allow the appeal of assessee.
Case Reference - Alidhara Textool Engineers P. Ltd. Vs. DCIT.
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD '' C " BENCH - AHMEDABAD
Before Shri Rajpal Yadav, JM, & Shri Manish Borad, AM.
ITA No. 2738/Ahd/2011
(Asst. Year:2008-09)
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