The Income Tax Appellate Tribunal (ITAT), New Delhi Bench while dismissing the appeal of the revenue held that disallowance under section 14A gets restricted to the extent of exempt income.
The assessee, DLF Universal Ltd. is engaged in carrying out the business of real estate development. The assessment in the case of appellant-company was completed at a total income of (-)Rs.364,56,79,110 by the Assessing Officer under section 143(3) of the Act, thereby making addition or disallowance of Rs.2,53,10,424 under section 14A read with Rule 8D. The assessee company has itself offered for assessing a sum of Rs.6,37,302 on account of direct expenses attributable to earning of tax free dividend income of Rs.4,30,621.
The assessee preferred the first statutory appeal before the CIT(A) who allowed the appeal of the assessee holding that the total tax-free dividend income earned by the assessee is Rs.4,30,621 and the disallowance in the assessee’s case under section 14A read with Rule 8D shall, therefore, be not more than Rs.4,30,621.
The coram headed by the Vice President, G.S.Pannu while dismissing the appeal of the revenue and in relief to the DLF Universal limit the disallowance to the extent of exempt income of Rs.4,30,621.
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