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2025 Supreme(Online)(ITAT) 7489
INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH)
SHRI SUDHIR KUMAR, J, SHRI MANISH AGARWAL, AM
PTC India Ltd. – Appellant
Versus
DCIT – Respondent
ITA No.961/Del/2023 | ITA No.3225/Del/2024
For the Appellants/Petitioners: Shri Salil Kapoor, Adv., Ms. Soumya Singh, Adv.
For the Respondents: Shri D S Sidhu, CIT DR
The court highlighted the necessity for the Assessing Officer to record satisfaction before disallowing expenses related to exempt income under Section 14A of the Income Tax Act.
Headnote:(A) Income Tax Act, 1961 - Section 14A - Disallowance for expenses related to exempt income - Assessment year 2018-19 - Tribunal examines satisfaction recorded by the Assessing Officer as per the Income Tax Act for disallowance under Section 14A r.w.s Rule 8D - Revenue’s appeal against delay of 461 days is condoned based on bona fide reasons - Disallowance of Rs. 17,09,49,711/- upheld for lack of proper verification - Court clarifies investment yielding exempt income must be considered for calculating disallowance under Rule 8D. (Paras 12, 16)
(B) Income Tax Act, 1961 - Section 14A - Surcharge on delayed payments - Tribunal dismisses Revenue’s appeal regarding addition by following precedent and directs the Assessing Officer to verify claims against realized surcharge income. (Paras 20-23)
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| 1. the income tax appeal involves the scrutiny of the assessing officer’s compliance with section 14a relating to tax deductions on exempt income. (Para 1 , 2 , 4) |
| 2. the court analyzed provisions governing disallowance under section 14a and found a need for clear documentation of necessity for disallowance. (Para 6 , 16 , 21) |
| 3. previous decisions regarding surcharge on delayed payments were applied to determine taxability based on actual realized income. (Para 17 , 22 , 23) |
ORDER
PER MANISH AGARWAL, AM :
The present cross-appeals are filed by assessee and the Revenue against the order dated 03.02.2023 passed by Ld. Commissioner of Income Tax (A), National Faceless Appeal Centre (“NFAC”), Delhi [“Ld. CIT(A)”] in Appeal No. NFAC/2017-
18/10017467 u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 25.03.2021 passed u/s 143(3) r.w.s. 143(3A) & 143(3B) of the Act pertaining to assessment year 2018- 19.
2. The appeal of the Revenue is delayed by 461 days. Alongwith appeal memo, a petition is filed for condonation of delay wherein it is stated that due to high pendency of time barring matters, the appeal could not be filed in time. As the delay is Bonafide, it is submitted by the AO that the approval was taken from the Competent Authority for filing the appeal from Ld. Pr. CIT after following the new procedure and thus due to these reasons delay was occurred, He requested for condonation of delay.
3. Heard the contentions of both the parties and perused the material available on record. In the instant case, the order of Ld. CIT(A) was delivered through online on 03.02.2023 thus, it was served upon the assessee as well as on the AO on the very same day however, the appeal is filed by the revenue before the Tribunal on 08.07.2024 thus, it is delayed by 461 days. In the prayer filed, it is stated by the AO that he was preoccupied in heavy time barring issues and therefore, could not be able to file the appeal in time. It is further requested by the AO that this being the first occasion and it will not happen in future thus, delay be condoned.
4. Considering the submissions made by the AO, the delay is condoned and the appeal of the Revenue is admitted to decide on merits.
ITA No.961/Del/2023 [Assessment Year : 2018-19] [Assessee’s appeal]
5. First, we take the appeal of the assessee in ITA No.961/Del/2023 [Assessment Year 2018-19] wherein assessee raised following grounds of appeal:-
1. That on the facts and circumstances of the case and in law, the Commissioner of Income-tax (Appeals) ["Ld. CIT(A)"] has erred in upholding the addition of Rs. 17,09,49,711/- under section 14A of the Income-tax Act, 1961 ("the Act") read with Rule 8D of the Income-tax Rules, 1962 ("the Rules") based on the incorrect appreciation of facts and law and hence this action of Ld. CIT(A) is illegal, bad in law and deserves to be deleted.
2. That the Assessment Order passed and the addition/disallowance made under Section 14A of the Act are illegal, bad in law and is liable to be deleted.
3. That the Ld. CIT(A) has failed to take a judicious view of the facts and circumstances and the Ld. CIT(A) has failed to consider the legal position and various judgments pronounced by various courts. The Ld. CIT(A) was not justified in law in upholding the addition of Rs 17,09,49,711/-.
4. That on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the following:
a. That the Assessing Officer ("AO") has incorrectly invoked the provision of section 14A of the Act without recording satisfaction in reaching a finding as to the nexus of any expenditure incurred during the year with investments made or exempt income earned. The facts and circumstances do not warrant the invocation of Sec 14A.
b. That the majority of investments were made in the past years which yielded the dividend in the subject year and no direct or indirect expenditure was incurred by the Appellant in connection with making a
