Case Number: ITA 773/DEL/2020
Appellant: DCIT Central Circle-31, New Delhi
Respondent: Bhilwara Energy Ltd., New Delhi
Assessment Year: 2014-15
Result: Appeal dismissed
Case Filed on: 2020-02-12
Order Type: Final Tribunal Order
Date of Order: 2023-02-14
Pronounced on: 2023-02-14
The present appeal was filed by the Revenue against the order of the Commissioner of Income Tax (Appeals)-33, New Delhi, dated 16.09.2019. The case revolves around the disallowance of expenses under Section 14A of the Income Tax Act, 1961, read with Rule 8D of the Income Tax Rules, 1962.
The Revenue raised the following grounds of appeal:
The assessee, Bhilwara Energy Ltd., filed its return of income declaring a loss of Rs. 16.13 crores. The company had suo moto disallowed an amount of Rs. 9.9 crores, consisting of Rs. 9.5 crores in interest and Rs. 40 lakhs in other expenses, under Section 14A read with Rule 8D. Before the Assessing Officer (AO), the assessee argued that the amount was wrongly disallowed suo moto and sought remission from the returned income.
The CIT(A) considered the following judgments while making its decision:
The Income Tax Appellate Tribunal noted that the exempt income received by the assessee amounted to Rs. 2,093. It was established that the disallowance could not exceed the exempt income earned. The Tribunal emphasized that the state could not benefit from a mistake made by the taxpayer. Therefore, the Tribunal upheld the order of the CIT(A), granting relief to the assessee and dismissing the Revenue’s appeal.
The Tribunal concluded that the CIT(A)’s decision was correct, and the disallowance under Section 14A could not exceed the actual exempt income received. Thus, the Revenue’s appeal was dismissed.
Order Pronounced in the Open Court on 14/02/2023
Members:
Assistant Registrar: Ajay Kumar Keot, Sr. PS
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