This document provides a detailed analysis of the ITAT case ITA No. 3714/DEL/2019 for the assessment year 2015-16, involving appellant Om Prakash Khaitan, New Delhi, and respondent ACIT, Circle-61(1), New Delhi. The appeal addresses the disallowance made under Section 14A of the Income Tax Act.
Om Prakash Khaitan, the appellant, filed his return of income for the AY 2015-16, which was assessed by the ACIT, Circle-61(1), New Delhi. The case revolves around the disallowance of expenses related to exempt income under Section 14A of the Income Tax Act, read with Rule 8D of the Income Tax Rules.
The appeal was filed by Om Prakash Khaitan against the order dated 26.03.2019 passed by CIT(A)-38, New Delhi for the assessment year 2015-16. The primary grievance of the appellant was the confirmation of the addition made under Section 14A of the Act, amounting to Rs. 25,59,533.
During the scrutiny assessment proceedings, the AO noticed that the appellant had earned exempt income. The appellant was asked to show cause why disallowance should not be made under Section 14A read with Rule 8D. In response, the appellant submitted that he had not incurred any direct or indirect expenditure in connection with investments made in securities and mutual funds from where he earned exempt income. It was explained that the appellant had paid portfolio management charges amounting to Rs. 66,338 and STT at Rs. 23,412, and had suo moto added back Rs. 89,750 while computing his return of income. However, the AO dismissed this submission and proceeded to compute the disallowance under Section 14A read with Rule 8D at Rs. 25,59,533. The appellant carried the matter before CIT(A), but the appeal was dismissed.
The tribunal, comprising Shri N.K. Billaiya, Accountant Member, and Shri Anubhav Sharma, Judicial Member, heard the appeal. The counsel for the appellant argued that the facts of the case were similar to those of AY 2011-12 and 2013-14, where the issue had been decided in favor of the appellant and against the Revenue by the Hon’ble Jurisdictional High Court of Delhi.
The tribunal noted that the facts of the year under consideration were no different than the facts considered in AY 2011-12 and 2013-14. By a separate order of even date in ITA No. 4701/Del/2018 and 4702/Del/2018, the tribunal had decided this issue in favor of the appellant and against the Revenue by following the decision of the Hon’ble Jurisdictional High Court of Delhi. Based on this, the tribunal directed the AO to delete the addition of Rs. 25,59,533.
The ITAT concluded that the appeal filed by Om Prakash Khaitan be allowed, and the addition of Rs. 25,59,533 made under Section 14A be deleted. The decision was pronounced in the open court on 28th April 2023.
In the result, the appeal of the appellant was allowed. The order was pronounced in the open court on 28.04.2023.
This case highlights the appellant’s successful challenge against the disallowance made under Section 14A of the Income Tax Act. The tribunal’s decision to follow the precedent set by the Hon’ble Jurisdictional High Court of Delhi reaffirms the principles applied in similar cases from previous assessment years.
Case Review: Om Prakash Khaitan vs ACIT Circle-61(1) – Assessment Year 2015-16
Manage the increasing number of hearings effortlessly by leveraging the legal AI revolution We are India's Leading revolutionary AI-powered legal platform where you can get enough insights into top cases and judgements.
Research Platform