Case Number: ITA 1124/DEL/2020
Appellant: Hexa Securities & Finance Company Limited, New Delhi
Respondent: DCIT Circle-11(1), New Delhi
Assessment Year: 2015-16
Result: 2015-16
Case Filed On: 2020-03-19
Order Type: Final Tribunal Order
Date of Order: 2022-11-10
Pronounced On: 2022-11-10
This case involves Hexa Securities & Finance Company Limited’s appeal against the order of the Deputy Commissioner of Income Tax (DCIT), Circle-11(1), New Delhi, pertaining to the assessment year 2015-16. The appeal was filed to contest the disallowance under Section 14A of the Income Tax Act, 1961.
Hexa Securities & Finance Company Limited filed its return of income for the assessment year 2015-16, declaring an income of Rs. 5,98,91,720/-, which included a disallowance of Rs. 40,82,500/- under Section 14A. During the assessment proceedings, the assessee revised its computation of disallowance to Rs. 9,073/-, arguing that the disallowance should be limited to the amount of investments that earned exempt income.
During the hearing on 07.11.2022, the assessee’s counsel argued that the disallowance should be limited to the amount of exempt income earned, citing the decisions of the Hon’ble jurisdictional High Court in the case of ACB India Ltd. vs. CIT (374 ITR 108) and Joint Investments Pvt. Ltd. vs. CIT (372 ITR 694). The counsel also contended that the amendment to the Income-tax Act is prospective, as held in Pr.CIT (Central)-2 vs. M/s. Era Infrastructure (India) Ltd. (ITA 204/2022) and CBDT Circular No. 23 dated 03.11.2022.
On the other hand, the Revenue’s representative argued that the CIT(A) was correct in upholding the disallowance and that the entire investment should be considered for computing the disallowance under Section 14A.
The Income Tax Appellate Tribunal (ITAT) noted that the Hon’ble Supreme Court in the case of Goetze (India) Ltd. (284 ITR 323) held that the AO and CIT(A) have no power to entertain a claim otherwise than through a revised return of income. However, the ITAT also noted that their order does not impinge upon the powers of ITAT to admit claims otherwise.
Considering the various case laws cited by the assessee’s counsel, the ITAT found it appropriate to remit the issue to the file of the AO. The AO was directed to reconsider the issue afresh, taking into account the case laws cited by the assessee. The ITAT emphasized that the assessee should be provided an opportunity of being heard.
The ITAT set aside the appellate order dated 20.01.2020 and remitted the issue to the file of the AO for fresh consideration. The decision was pronounced in the open court on 10th November, 2022, by Shamim Yahya, Accountant Member, and Yogesh Kumar US, Judicial Member.
In conclusion, the appeal by Hexa Securities & Finance Company Limited was allowed for statistical purposes. The case was remitted to the AO for fresh consideration, providing the assessee an opportunity to present its case based on the cited case laws.
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